Facebook, alarmed by teen usage drop, left investors in the dark

Rising internal concerns about young users was largely invisible to outsiders, forming the basis of a whistle-blower’s SEC complaint

In March, a group of researchers inside Facebook Inc. compiled a report for one of the company’s most powerful executives, Chief Product Officer Chris Cox. The paper included a series of charts and data highlighting a troubling trend that seemed to be accelerating: Facebook was losing popularity with teens and young adults.

One colorful graphic showed that “time spent” for U.S. teenagers on Facebook was down 16 per cent year-over-year, and that young adults in the U.S. were also spending 5 per cent less time on the social network. The number of new teen signups was declining, and perhaps most concerning was a series of slides showing that young people were taking much longer to join Facebook than they had in the past. Most people born before 2000 had created a Facebook account by age 19 or 20, the research showed. Now Facebook wasn’t expecting people born later to join the social network until they were much older, perhaps 24 or 25, if ever.

The report is among hundreds of internal documents collected by former Facebook employee-turned-whistle-blower Frances Haugen, who went public in early October with accusations that Facebook has been prioritizing profits over user safety and security. The documents were disclosed to the U.S. Securities and Exchange Commission and provided to Congress in redacted form by Haugen’s legal counsel. The redacted versions were obtained by a consortium of news organizations, including Bloomberg News. Some of the documents were previously used in stories on growth, teenagers and other topics by The Wall Street Journal. Taken together, the documents paint a stark picture of the years-long decline in growth metrics for key user groups, like teens and young adults in the U.S., on the flagship Facebook app. The internal reports, some of which haven’t previously been reported, show:

“What should we (particularly) optimize for among young adults?” one of the reports asked, referring to users between the ages of 18 and 29. “We don’t know enough to know.”

While Facebook has spent years studying its declining popularity among young people—an erosion that threatens the company’s advertising business, which has conquered an estimated 23.7 per cent of the global digital ad market—Facebook executives have been markedly less forthcoming about those concerns in public. The company’s tremendous business success has masked the persistent issues with young people. Facebook’s total audience has expanded consistently for years, and revenue has risen to nearly US$30 billion per quarter. The company’s market value is close to US$1 trillion. Those successes mean the declines among teens and young adults on Facebook have been almost invisible to outsiders. Facebook doesn’t break down its user numbers by age group, and it has evaded questions from Wall Street analysts about the main app’s popularity with young people.