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Mobile Application and Cloud Strategies

Facebook Dominance Questioned After Snapchat Snub

Daily Insight | Raúl Castañón | November 18, 2013

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Could Facebook’s dominance of the social media market be coming to an end? Snapchat’s recent rejection of a U.S.$3 billion Facebook offer to buy the mobile picture-sharing service has many observers wondering.
 
The New York Times reports that while Facebook is still the most dominant social media firm today, its recent disclosure that fewer teens are using the site as well as Snapchat’s rejection are leading some to think it’s time has passed—and that firms with more mobile DNA (like Snapchat) are set to come to the fore. New Pew Internet stats bear this out, with 38 percent of users aged 18-39 citing “Facebook fatigue” and saying they expect to spend less time on Facebook this year. The Times also quotes some mobile developers saying Facebook is pushing them too hard to incorporate its tools in their apps, and many are loath to work with the social media firm. 
 
Yankee Group Senior Analyst Raúl Castañón comments
 
“The story here is not that Facebook is having a mid-life crisis and trying to be cool with the tweens; Facebook will become MySpace sooner or later. The question is why would Snapchat be worth U.S.$3 billion? The service has not generated any revenue, and the company has no clear business plan other than raising money from investors. This is Pets.com all over again, where speculation, and not actual value, is driving profit. If this trend continues, the value of companies like Snapchat will disappear faster than the text messages and photos teenagers are sending each other with this app.”
 
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