Meta faces ‘marketing myopia’ concerns amid AI, metaverse losses

Image credit: Search Engine Journal

Meta Platforms Inc. faces accusations of strategic missteps and declining user engagement, prompting comparisons to Theodore Levitt’s 1960 concept of ‘marketing myopia’ amid underperforming AI investments.

The company’s first-quarter 2026 results showed a slight quarter-over-quarter decline in daily active users and significant losses from its Reality Labs division, according to an analysis.

Julia Angwin, in a guest essay for The New York Times, highlighted Meta‘s daily active user decrease from 3.58 billion to 3.56 billion in the first quarter of 2026. Angwin argued that Meta, much like past corporate giants such as AOL and Yahoo, is failing to adapt to evolving market needs by defining its business too narrowly.

The concept of ‘marketing myopia,’ introduced by Harvard Business School professor Theodore Levitt in the Harvard Business Review, posits that companies often fail by focusing on products rather than customer needs. Critics suggest Meta’s extensive investments in the metaverse and generative AI reflect this narrow focus.

Meta’s Reality Labs division has accumulated approximately $80 billion in operating losses from its metaverse initiatives. Furthermore, its generative AI investments, exceeding $100 billion, are reportedly underperforming compared to competitors, according to market observers.

Despite a record first-quarter 2026 revenue of $56.3 billion, a 33 percent year-over-year increase, Meta’s total costs surged by 35 percent to $33.44 billion. The company’s outlook for continued high AI spending has raised concerns among investors, The Wall Street Journal reported.

Similarweb data for March 2026 indicated Facebook received 11.9 billion monthly visits and Instagram 7.1 billion. These figures significantly trail Google, which recorded 86.9 billion visits, and YouTube with 29.3 billion visits, according to Similarweb.

Meta.ai, the company’s generative AI offering, did not appear among the top 100 most-visited websites. In contrast, AI platforms such as ChatGPT, Gemini, and Claude.ai demonstrated strong growth in AI category traffic, Similarweb data showed.

While quarter-over-quarter daily active users declined, Meta’s year-over-year daily active user base still grew by 4 percent. The 33 percent revenue growth also counters a narrative of terminal decline, but the rapid increase in spending is viewed as unsustainable by analysts.

In the first quarter of 2026, Meta reported a 19 percent year-over-year increase in ad impressions and a 12 percent rise in average ad prices. Revenue per user also jumped 27 percent, suggesting a strategy of intensifying monetization amidst user base concerns, the company stated.

Asa Fitch, a Meta spokesperson, said in a statement that the company remains committed to its long-term vision for AI and the metaverse, while continuing to deliver strong results in its core advertising business.

Source: Search Engine Journal