> because otherwise their moat (engagement, which is what advertisers pay for) will collapse by the time COVID is done.

What makes you say this? I don’t quite follow.

I read that small businesses' ad spending account for over 90% of Facebook revenue.

If there is one thing you don't want to be right now, it is a small business owner fighting to bring employees back to work in an unsafe environment while operating at reduced capacity. What's the incentive for the employee to return to work? Jim Cramer said it well on CNBC when he asked how he can compete with the federal government to bring people back to work:

https://youtu.be/qG_Nq7kIojI?t=367

This is Jim Cramer we are talking about. He can probably even afford to overpay (and outbid the federal government) for a while to bring back his restaurant staff. Regular small businesses don't enjoy such advantages.

When these small businesses start rolling over one by one, there will just be a lot fewer small businesses left. And those who do survive will probably shrink their ad budgets.

I once heard a funny comment: Google shows you ads for stuff you know you want to buy. Facebook shows you ads for stuff you didn't know you want to buy (search intent of course). I would say search intent will drive ad spend for the foreseeable future. Plus, if it is a secular bear market for small businesses, ad rates on Google would also come down for those small businesses which do make it out alive at the end of COVID.

That all makes sense, I guess I don’t follow how the recession of the advertising market would reduce engagement on FB. Sure, FB would probably see a revenue decline, but the users would still engage whether or not there would be ads on the site.

And while I agree that ad budgets are probably about get slashed across the board, I see more companies shifting from older, more expensive ad spending strategies towards online and Facebook. They’re in the most competitive position in the aggregate advertising market, way cheaper and more effective than traditional advertising channels.

I question whether advertisers really care about public ethical issues, and won't just quietly restore Ad spending when covid is over.

Virtue signaling is cheap.

Is there any evidence that they've specifically cut more from Facebook than from other social media platforms?

If marketing departments do the work to direct their efforts and funds to other advertising channels, they may keep using them even after the virtue signaling -- or earnest signaling -- expires.

Continuity in marketing metrics can also be important.

I don't think they have any moat at all. People always claim that Facebook's hold over the population is absolute and that the gravity and sheer volume of users will make it impossible for upstarts to make a dent.

And yet every new highschool cohort has a new social media app.

These are simple CRUD apps and anyone can make them. The tech is only getting more accessible. Look at the ages of people launching these things. Young people get young people.

Facebook is for grandmas yelling at liberals. TikTok is exiting and fresh. In four years, it'll be something new.

Of the many failed attempts to make social media apps, the ones I'm most aware of seem to have all failed due to mismanagement (vine, voat, yikyak).

Look at the proliferation of dating apps. Not even Tinder is the end-all be-all. There are new entries in that field all the time, and it's hyper adjacent to social media.

I don't think either industry is a good place to build a moat. You have to keep buying the upstarts to win.