After a decade of unprecedented growth, Meta has finally hit a wall, Axios' Sara Fischer reports.

Driving the news: The tech giant told investors Wednesday that it's planning to cut costs, slow investments and reduce head count as it braces for what CEO Mark Zuckerberg called a "downturn" that has already begun to wreak havoc on its business.

• While Meta is still massive — it now reaches more than 3.65 billion people monthly around the globe across all of its apps — its user growth and revenue growth have slowed significantly in the past few quarters.
• The company on Wednesday posted its first year-over-year quarterly revenue decline since it went public in 2012. That came months after it reported Facebook's first ever year-over-year user drop.

Why it matters: Meta became one of the biggest companies in the world by selling ads against an unprecedented trove of social networking data.

• Now, amid privacy changes and increased competition, the company says its strategy needs to change even as its resources become more limited.
• "We're in a new era where we have to do the same form of targeting, that same form of measurement using less data," outgoing chief operating officer Sheryl Sandberg told investors. "I think we're in the pretty early days of doing that."

Details: Zuckerberg told investors that the company will need to "steadily reduce headcount growth over the next year" and that many teams "will shrink so we can shift energy to other areas inside the company."

• "This is a period that demands more intensity," he said. "I expect us to get more done with fewer resources."
• Last week, Meta announced sweeping changes to Facebook that will provide a more TikTok-like experience as it transitions from connecting friends to helping them discover new content that they can share privately. It is also testing new features on Instagram that offer a similar experience.

Yes, but: That transition won't come without pain points.

• A slew of Instagram's biggest stars publicly denounced the new Instagram tests, arguing the app was pushing creators to post more videos than photos.
• The new formats the company is transitioning to are less lucrative, at least in the short term.

What's next: Meta will face more revenue challenges as the year progresses.

• The company offered sobering third quarter revenue guidance, and said it believes the weak advertising demand it experienced in the second quarter will persist.

Facebook parent Meta plans to partner with an outside group to survey the race of Instagram customers in hopes of better understanding who is using its services, officials tell me.

Why it matters: The company says it wants to make sure that its products and AI systems operate fairly across racial lines, but feels it can't do that without better knowing its customers. By working with a third party, it aims to both protect privacy and ensure customers are more comfortable sharing their information.

How it works: Over the next few months, U.S. Instagram users may see a single-question prompt asking them about their race or ethnicity.

• Meta partnered with outside firms to develop the methodology, collect the information and process it such that the company gets only aggregated information.

What they're saying: "For a long time, we’ve been working to better understand and improve the experiences that people from marginalized communities are having on our apps," Roy Austin Jr., VP of civil rights at Meta, said in a statement to Axios.

• "But since it’s always difficult to address something without measuring it first, we’ve partnered with leading researchers, civil rights and academic experts and universities that serve these communities to do exactly that."

The big picture: Facebook has been criticized for a wide range of issues related to race, including a lack of representation of people of color within its ranks, as well as various forms of bias within its products.

• The company committed in 2018 to conduct a civil rights audit. The study, released in 2020, found it repeatedly failed to address hatred, bigotry and manipulation on its platform, saying its efforts in the area were too reactive and piecemeal.
• It also announced a settlement last month with the U.S. Department of Housing and Urban Development that will see Facebook change the way it delivers ads related to housing, as well as credit and employment.
• Making sure services, and the systems that serve up content and advertising, are fair and equitable is all the more important as Meta increasingly relies on machine learning and AI algorithms to decide who sees what.

Between the lines: While Facebook could just ask users directly about their race, the company has a problematic track record, including allegations of digital redlining and other racial inequities.

The Federal Trade Commission is suing Meta in an attempt to prevent the company from buying Within Unlimited, a virtual reality fitness company.

Driving the news: The FTC says Meta should not be allowed to acquire Within and its associated fitness app, Supernatural, because Meta is "already a key player at each level of the virtual reality sector," per a release.

Why it matters: The FTC under Lina Khan has made reeling in the power of tech giants a top priority, and a victory for the agency in this suit would cast a shadow over Meta's plan to pivot from social networking to metaverse-building.

Details: The FTC announced Wednesday it had voted 3-2 to file the complaint in California federal court seeking a temporary restraining order and preliminary injunction to halt the transaction, which Meta announced in October 2021 without terms disclosed.

• The complaint alleges CEO Mark Zuckerberg aimed to monopolize VR when it acquired Oculus VR, a headset maker, in 2014, followed by the purchase of seven VR development studios.

What they're saying: "Instead of competing on the merits, Meta is trying to buy its way to the top,” said FTC Bureau of Competition deputy director John Newman in a release.

The other side: "The idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible," a Meta spokesperson said.

Between the lines: The FTC is still engaged in a lawsuit against Meta over its 2013 acquisitions of WhatsApp and Instagram, both of which were approved by the agency at the time, arguing Meta sought to neutralize rivals by purchasing them.

On tap

• Apple, Amazon, Intel and Roku are all slated to report earnings today.
• Also, it's National Water Park Day, and the family and I have spent all week at a water park. Yesterday was National Chicken Fingers Day and we ate chicken fingers. So we are really celebrating things properly.

Errata

• An item in Monday's Login misidentified independent reporter Alex Kantrowitz as an Axios staffer.

Trading Places

• Oh, remember Meta? Well, they also announced yesterday that CFO David Wehner will shift to chief strategy officer, a new role. Meanwhile, VP of finance Susan Li will be the Facebook parent company's new CFO.
• Apple has brought on Luigi Taraborrelli, a 20-year Lamborghini veteran, to help lead the design of Apple’s self-driving electric vehicle, per Bloomberg,
• Opendoor has hired Sydney Schaub as its new chief legal officer.

ICYMI

• After months of uncertainty, the Senate voted 64-33 Wednesday to approve a $280 billion package meant to spur U.S. chip manufacturing, a major victory for the Biden administration and chipmakers. (Axios)
• Google has again delayed a plan to phase out third-party cookies within its Chrome browser, now pushing the change out until at least late 2024. (The Verge)

I am fascinated by this photograph of the Golden Gate Bridge under construction in 1937.