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Parmy Olson

Facebook and Google’s Ad Addiction Can’t Last Forever

Facebook’s first-ever drop in users is an ominous sign for a business that relies almost entirely on ads. Google should watch out too. 

Changing landscape.

Changing landscape.

Photographer:  Andrew Harrer/Bloomberg

Alphabet Inc. and Meta Platforms Inc., the world’s biggest digital advertising platforms, once again raked in astonishing amounts of money in 2021. “So what else is new?” you’re probably wondering. Almost every year for the past decade, the companies also known as Google and Facebook set profit records.

But this week marked a troubling difference. Facebook’s announcement that user numbers had dropped for the first time laid bare a long-neglected vulnerability: Digital advertising accounts for 98% of Meta’s revenue, and it also accounts for 81% of Alphabet’s. Of the world’s five biggest tech companies, including Amazon Inc., Apple Inc. and Microsoft Corp., Facebook and Google are the least diversified.