Facebook just saw a drop in users for the 1st time. Will Instagram follow?

Instagram, which Facebook acquired in 2012 for $1B, has been viewed as an antidote to slowing growth at Facebook, with revenue from ads on Instagram increasingly crucial to Meta.

TikTok, the COVID-19 pandemic and mobile data costs in India all helped draw people away from Facebook at an unprecedented rate last quarter. The big question is when will it be Instagram’s turn?

One forecaster, Insider Intelligence, does not expect Meta Platforms Inc’s Instagram social media service to lose users in the next three years. But its November estimates show Instagram’s growth in monthly users will fall to 5.8 per cent this year and 3.1 per cent by 2025 from 16.5 per cent last year.

Instagram, which the tech giant acquired in 2012 for $1 billion, has been viewed as an antidote to slowing growth at Facebook, with revenue from ads on Instagram increasingly crucial to Meta.

The company is putting those funds toward building out a new business selling virtual-reality goggles and related metaverse technologies. A decline in Instagram users and inability to raise ad prices could halt Meta Chief Executive Mark Zuckerberg’s ambitions.

Fewer people checked their Facebook every day per quarter than they did the year before for the first time ever during the last three months of 2021, Meta said on Wednesday. It was one of several troubling signs, along with profit below expectations and a disappointing revenue outlook, that dropped shares over 26 per cent on Thursday.

Meta Chief Financial Officer Dave Wehner on Wednesday told financial analysts part of the usage decrease for the main Facebook app and website came from fewer COVID-19 lockdowns, which have tended to generate a boom in online activity.

He also blamed rising internet costs for consumers in India and increasing interest in ByteDance Inc’s video-sharing app TikTok.

Meta does not regularly break out usage of Instagram, but analysts say TikTok is hurting Instagram’s growth, too.