Tech titans clash over scraps of limited time

Reuters

2 days ago

NEW YORK, May 27 (Reuters Breakingviews) - Any smartphone is a window to a jostling crowd of apps: Meta Platforms' (META.O), opens new tab Facebook and Instagram, Alphabet's (GOOGL.O), opens new tab YouTube, Apple's (AAPL.O), opens new tab messaging service, and so on. The only constraint is the number of minutes in a day each user has to give them - a limit against which they appear to be straining. The U.S. government's lawsuit seeking to break up Meta helps to illustrate how this overstuffed colosseum has no room for new challengers unless old ones make way. Technology titans' battle to keep a hold of eyeballs is more perilously changeable than it may seem.
Trustbusters at the Federal Trade Commission allege that Mark Zuckerberg's empire stifled competition in a 'buy-or-bury strategy' as they push to unwind its acquisitions of photo-sharing app Instagram and messaging service WhatsApp. As is the way of such cases, much of the legal argument comes down to who exactly Meta competes with: select a narrow group, and its market dominance looks unassailable; expand the list, and Facebook might seem a drop in the bucket. The interesting result of this exercise is that it shows just how delicately balanced each app's hold on user attention is.
Take the government's line, for instance. The FTC argues that Meta's rivals are limited to the likes of disappearing-photos app Snap (SNAP.N), opens new tab and a privacy-based social network with 20 million users called MeWe. Under this definition, Meta's share of user time spent is a whopping 85%.
View the world like the $1.7 trillion social media giant's legal team, though, and it looks very different. When adding TikTok to the mix, Meta's share drops to 60%. It becomes even more feeble when YouTube enters the arena, declining to 30%.
Meta's core app, Facebook, began in 2004. Snap followed in 2011, while TikTok was released in 2016. The risk is that each new entrant innovates just enough to steal away the limited minutes in a day. Take the ByteDance-owned short-form video app. In 2019, TikTok consumed, on average, over 2 minutes of each U.S. adult's day. Five years later, that number increased to almost 18 minutes, according to analysis by advisory firm Epyllion. And just as, say, the popularity of TV show 'Survivor' led broadcasters to endlessly replicate the reality-show formula as they vied for viewers, a defensive copycat pattern plays out in social media, too. Instagram and YouTube, sensing a threat, quickly embraced similar short-form video feeds. As Meta itself admitted in court, after initial disruption, every app simply begins to look the same.
The maturing of the iPhone era makes this competition more desperate. When Facebook bought Instagram for $1 billion in 2012, smartphone penetration in the United States was 45%, according to the Pew Research Center. Every day, there were plenty of people booting up a web-connected phone and peering into app stores for the first time, ready to be courted by social media platforms. By 2024, smartphone adoption rates had doubled. Home screens are now cluttered with apps.
Growth must therefore come by keeping users glued to their phones for longer, taking up more time out of their day. The decline of recreational activities in the real world implies that this has already happened. People spent 26 minutes on average each day reading in 2023, 10 fewer minutes than in 2003, according to the Bureau of Labor Statistics. Socializing and communicating fell even more, from 78 minutes in 2003 to 57 minutes in 2023. Hanging out with friends declined as mobile phone usage rose, with starker gaps among younger cohorts. Atsushi Katsuki, chief executive of Japanese beverage group Asahi, partially blamed, opens new tab digital entertainment, including video games, for the drop-off in consumption of beers like Peroni. 'Alcohol used to occupy a much bigger share of people's entertainment and joy,' he told the Financial Times in May.
So if there are fewer new users and fewer new minutes in the day to win, platforms must instead steal time from each other. As Zuckerberg himself, opens new tab put it, when asked why he bought Instagram: 'Building a new app is hard.' Capturing people's attention is incredibly valuable, difficult to dislodge -- and immediately claimed if it is. A couple of accidental natural experiments provide handy proof.
In October 2021, Facebook and Instagram experienced a six-hour global outage. Streaming television giant Netflix (NFLX.O), opens new tab materially benefitted. The company, which cites everything from the Sandman to Fortnite as competition, said it saw a 14% pop in engagement, opens new tab during Meta's unexpected downtime. Similarly, when TikTok was briefly banned at the beginning of the year, Facebook and Instagram noted a 37% uptick in usage, according to Meta's court presentations.
Americans may have reached peak attention - at least for now. Sleep, personal hygiene, at least some socialization: all of these are likely to stay constant. One of the few places left to win time might be from the workday. The pattern of labor has changed little in the past two decades, clocking in at a little under 8 hours on average per day. Maybe, if technologists' wildest dreams for artificial intelligence are realized, this will finally start to shift. The more productive a society becomes, after all, the more time it will have to waste. Until then, the app battle royale rages on.
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