The number of active Facebook users in the US and now the UK are in decline, with people frustrated with all the advertisements and the continued privacy issues.

A recent study by YouGov found that the number of people using Facebook has declined by a notable 9% since this time last year in the UK, with the social network losing about 10 million users in the US last year as well according to Nielsen. Since its (hugely overhyped and overpriced) IPO, Facebook has seen some choppy waters for the first time in its short existence.

Facebook managed to take over the reigns as the most popular social network from MySpace in part to do with the “cool factor” of only being available to college students, but more importantly the site was built with users in mind and not profit. Rupert Murdoch effective hammered the nail into MySpace’s coffin by thinking that the site was just a cash cow, with millions of users ripe for monetisation. They were not, and they left in droves.

Facebook is now seeing a similar problem, as they increase the number of ads and “suggested pages” being shown to users. With its huge trove of data, Facebook should be able to target ads to each user specifically and make the ads so useful that they don’t feel like advertisements, but instead just helping you to find the products and services you actually want to buy. And yet the ads that users see on the site are almost universally annoying and with little to do with their interests – something people have flagged up to these marketing research firms as the reason they are leaving the site.

Facebook has the problem that people use the site to connect with their real-life friends. If you want to follow a topic or interest group, then Twitter is a far more efficient platform to do so and offers short “to-the-point” discussions, with Quora there to pick up the longer form discussions when there is a need. And then there’s LinkedIn where people network for business, and blogging platforms WordPress and Tumblr where people publish their thoughts to the world. Facebook is the jack of all trades, but as these niche ways to connect online continue to pick-up steam, it is increasingly apparent that Facebook is master of none.

One area in which Facebook does still dominate its competitors is with photographs, where billions are uploaded to the platform every month. They also picked up rising star Instagram for a cool $1 billion to make sure that nothing is rocking that boat. Whilst many people use Facebook less and less, many come back to see the photographs others have shared about events and parties that have attended. Photography may be Facebook’s strongest area, but it is also where their privacy issues come to the fore. For people to share interesting and funny photos of them and their friends, they are increasingly looking to make sure that those photographs can only be seen by the relevant people and not parents, grandparents, or members of the media trolling for scoops. With Facebook’s continued “re-imagining” of privacy, users have been caught out too many times. That Facebook photos are also of a relatively low quality means that people are increasingly turning to Dropbox to share their photos with friends, keeping away from prying eyes.

So what does all this mean? Facebook is still the largest social network in the world by a huge margin and it could turn it all around by putting users above profits again. Sadly, since the IPO Zuckerberg and co are seeing pushback from investors who are looking to justify the company’s valuation and not looking long-term. Is 2013 the year that Facebook starts to look like the new MySpace? Only time will tell.


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