Meta, as the parent company of Facebook, as well as Instagram, WhatsApp and Oculus, is among the most powerful tech companies the world has ever seen.

As a tech company born from a dorm room by founder Mark Zuckerberg, it has managed to overcome lots of problems. issues, public relation nightmares and obstacles, including series of data leak, scrutiny and government pressure.

Through its varieties of products, powerful algorithms and immense reach, the company is regarded as an entity that cannot be budged.

But regardless, in the world that is always changing, even a giant can stumble and fall.

This time, Meta is facing the fact it wished never happened.

And that is reporting its first-ever revenue loss, and profit that shrunk for the third straight quarter.

According to Meta's second quarter 2022 results, its overall revenue slipped 1% from 2021 to $28.8 billion in the three months ending in June.

This is a bigger drop than what the people at Wall Street were expecting.

Profit was down 36% to $6.7 billion.

"We seem to have entered an economic downturn that will have a broad impact on the digital advertising business," said Meta CEO Mark Zuckerberg told investors on a conference call. "I'd say that the situation seems worse than it did a quarter ago."

To counter the fall, Zuckerberg said that Meta would have to decrease its spending, and slow its pace in hiring new recruits.

"This is a period that demands more intensity, and I expect us to get more done with fewer resources," he said.

Following the news, Meta shares plunged.

The company blamed its third-quarter forecast as a result of "weak advertising demand" driven by macroeconomic uncertainty.

Social media companies are also still dealing with the impact of Apple's privacy changes, which have made it difficult to target ads to iOS users based on their online activity.

Meta also said the other reason that made its revenue decline, which is the strengthening of the U.S. dollar, without which it would have reported a 3% increase.

Regardless, this first-ever decline is a sign of a protracted slowdown in the digital ad market.

As businesses refrain from spending more money on advertising amid soaring inflation, interest rate hikes and other economic woes.

At the same time, despite operating in a level beyond all of its competitors, Meta's adversaries are growing fast, whereas its properties tend to remain stagnant.

The thing that worries investors the most, is Tiktok.

TikTok is one of the world’s fastest-growing social media platforms. According to Sensor Tower, TikTok was the top app by worldwide downloads in the first quarter of 2022. The app previously had surpassed 3.5 billion all-time downloads in the first quarter of 2021, becoming just the fifth app (and the only one not owned by Meta) to achieve this milestone.

Since the start of 2022, TikTok has been downloaded more than 175 million times.

No app has had more downloads than TikTok since the beginning of 2018. Even the ubiquitous WhatsApp had lesser downloads.

Because of this, as the company faces increasing competition from TikTok and a shrinking pool of advertising dollars, Meta is trying to pull off an ambitious pivot, by revamping both Facebook and Instagram to look and work more like TikTok.

By mimicking the Chinese-owned social platform, Meta hopes that it can gain more users from younger generations, who are mostly active by posting short-form videos.

If Meta can appeal those younger audience, Meta's properties can have more content to be shown on other users, increasing the chances of having more advertisements being shown.

But Meta is fighting an uphill battle here.

Zuckerberg said that Meta's efforts were boosting engagement, by using Reels, the company's TikTok-like short video format, and investment in AI to better recommend content across its array of apps.

According to the company, about 15% of posts that show up in users' Facebook and Instagram feeds are from accounts they don't follow. What's more, users who are indeed spending more time on Reels, doesn't make Meta earn as much as it does when showing ads on other formats.

In addition, Facebook and Instagram that try to mimic TikTok was criticized by many.

Some of the most notable people who complained, include high-profile users. like Kim Kardashian, Kylie Jenner and Chrissy Teige.

Instagram head Adam Mosseri addressed the criticism and acknowledged that some of the app's changes are "not yet good."

But he cannot deny that the only way to go, is where it is heading.

In the time when the development of its Horizon Worlds is still commencing and has many issues, Meta has no other way besides tweaking what it has, save money for spend on the metaverse, and hope for the best.

"I need to be honest. I do believe that more and more of Instagram is going to become video over time," he said.

Read: Instagram Starts Turning 'Shorter' Videos Into Reels: A Fight Against TikTok