Instagram is “no longer a photo-sharing app,” head Adam Mosseri admits as Facebook Inc (NASDAQ: FB) intensifies competition with TikTok and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) YouTube in short video clips, the Financial Times reported.
What Happened: Mosseri acknowledged the growing importance of video in driving online platforms and sought more focus on the medium.
Analysts voiced concerns over the shift from Facebook’s most vital engine of revenue growth that could jeopardize Instagram’s more than 1 billion users at a time when younger people are already increasing the amount of time they spend on other apps.
Mosseri talked about prioritizing private messaging, e-commerce, and influencers instead of its original mainstay of friends posting photos in a feed following competition from ByteDance-owned TikTok.
Social media companies are increasingly seeking to reposition themselves as entertainment or shopping destinations, which can be easier to monetize and less problematic in content moderation than individuals’ posts.
Meanwhile, many personal photos have migrated to messaging apps like Facebook-owned WhatsApp, Apple Inc’s (NASDAQ: AAPL) iMessage, and Telegram. At the same time, a new generation of social apps like Discord, Clubhouse, Poparazzi, and BeReal, is attracting attention from venture capitalists after many years where investment in Facebook alternatives had dropped off.
Instagram has already added more prominent links to Reels, its TikTok rival for short videos, and Shop, a collection of posts from retailers and influencers.
Soon, it plans to insert more of those kinds of posts into the main newsfeed, including from accounts that users do not already follow.
Instagram enjoyed a 4.7 rating out of 5 on Apple’s U.S. and U.K. App Stores, based on more than 24 million reviews.
Why It Matters: Facebook and Google account for nine of the top 10 apps based on time spent and the portion of the adult population that uses them, with YouTube in the first place and Instagram sixth.
Nearly a quarter of 16 to 34-year-olds admitted Instagram as their primary social media app. However, Instagram’s reach on iPhones declined 18% in 2020 year-on-year.
Younger teenagers are increasingly attracted to TikTok over Instagram or Snap Inc’s (NYSE: SNAP) Snapchat. Time spent on Facebook’s apps in the U.K. dropped 19.4% Y/Y to 29 minutes a day in 2020, while ByteDance jumped to 20 minutes last year.
Price action: FB shares closed higher by 1.92% at $354.39 on Thursday.
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