Main menu


Threads Does Not Guarantee Automatic Victory for Meta

The Twitter clone brings Mark Zuckerberg’s company a big opportunity—as well as two major risks.

Threads Does Not Guarantee Automatic Victory for Meta

Mark Zuckerberg's Threads, a Twitter-like platform, gained rapid popularity with 2 million users within two hours of its launch, followed by 10 million and 30 million within seven and twenty-four hours, respectively. This success has the potential to benefit Meta, its parent company, but it also poses risks. As Meta aims for cultural relevance and increased revenue, Threads may divert attention from its battle against TikTok and weaken the network effects of its core apps. Let's explore four opportunities and two significant risks associated with Threads.

Opportunity 1: Revenue Growth Potential

Compared to Twitter, which struggled to generate significant revenue due to its inferior ad system, Meta possesses world-class ad targeting and optimization tools. Leveraging these tools for a Twitter-like product like Threads could yield substantial financial gains. In the previous year, Meta generated nearly $40 per user, while Snapchat, with similar features, earned $12.98 per user. Twitter's best year saw revenue just over $5 billion. Threads, supported by Meta's ad platform, has the potential to outperform these numbers.

Opportunity 2: Utilizing the Reels Algorithm for Enhanced Experience

Meta heavily invested in developing its Reels product and algorithm, replicating the success of TikTok. To curate the best videos from across its network, Meta needed a powerful recommendation algorithm surpassing the capabilities of the Facebook news feed. This effort is now extending to Threads, where algorithms sort the feed and no "following" tab exists currently. By prioritizing personalized content through the For You feature, Meta is highlighting its belief that its algorithm is better at discovering relevant posts than users themselves. Leveraging the follow graph from Instagram adds value to Meta's algorithmic feed, especially for a Twitter-like platform that attracts new and casual users who may not be interested in building follow graphs from scratch.

Risk 1: Diversion from the TikTok Battle

In 2018, Meta shifted its focus away from public content, favoring "friends and family" posts, which inadvertently contributed to the rise of TikTok, an entertainment-centric platform. However, in 2020, Meta reintroduced public content through Reels, reestablishing its position. With the introduction of Threads, Meta is creating yet another app for public content consumption, potentially diluting the appeal of its core apps in its ongoing competition with TikTok. Instagram's head, Adam Mosseri, differentiates Threads as a conversation-centric app while considering Instagram as primarily for posting. Nevertheless, the subtle distinction may not hold much meaning. By diverting users, influencers, and even its own executives from its core apps, Meta risks constraining its most potent weapon in the battle for dominance.

In summary, Threads presents both promising opportunities and potential risks for Meta's social network. While Meta's advanced ad system and algorithmic capabilities can drive revenue growth and enhance user experience, the diversion of attention from the TikTok battle and the potential dilution of Meta's core apps pose significant challenges.