A Meta Analysis on Meta
depression2022.substack.comMeta also let Facebook rot. Didn't come up with anything competitive against TikTok. Couldn't monetize Whatsapp and turn it into a superapp like WeChat. There are just failures on every front.
Interestingly, Musk wants to turn Twitter into WeChat for the West. It'll be interesting to see if he can pull it off and eat Facebook's lunch while they're distracted.
> First, I would not have let the Apple relationship slide so far down.
I don't like Meta, but this is an unfair assessment. Meta saw Google's deal and likely tried to pay these fees. They've been trying desperately for years - they knew this was possible and saw the writing on the well.
They tried launching their own phone product and learned firsthand how difficult to impossible it was to compete in that space. And unlike with Microsoft, this was an existential issue for Meta. That's largely what Metaverse itself is.
Apple has 100% of the leverage and is building their own ad product, so they likely turned Meta down with zero recourse.
Apple has too much power.
With one flip of a switch, Apple wiped out hundreds of billions of dollars. The entire business of a company. This is monopoly.
Apple captured half of American computing and taxes everything that can possibly be done. Subscriptions, social networking, dating, movies, you name it.
At no point in American history has a company had this much power.
Meta is trying to build the next platform so that they can be the ones to control it. These sorts of total platform monopolization plays are bad for technology, smaller businesses (even 10B market cap ones), and innovation. The DOJ needs to step in and do its job.
> With one flip of a switch, Apple wiped out hundreds of billions of dollars. The entire business of a company. This is monopoly.
This is a ridiculous way to characterize a business presenting its customers an option to not be tracked by other businesses.
I hope you realize that Apple is creating its own ad exchange business. Their messaging of caring about user privacy is a sham though I have to admit, masterfully executed.
If you read the leaked email of wanting to take a cut from FB business should tell you that their first and foremost intention is to take a cut from the ads and their latest jab at Meta was for the cut in boosting post ads. This is monopoly 101.
If Apple didn't have an App Store and behave monopolistically, it wouldn't be ridiculous.
Apple lets your competitors purchase ads in the name of your trademark.
Apple makes you jump through hoops to develop, doesn't let you deploy at will, forces your technology choices, and can unilaterally destroy your business.
Apple purposefully cripples web to force app development.
Apple forces you to model your customer relationship in their system, which they can sever. Thinking forward, they'll probably start to charge access to this too.
Apple has 50% of American consumer computing. As Microsoft and Facebook and many others have shown, this market is now impossible to enter.
All companies need access to computing. They've captured something as essential as air and hobbled it all up.
Apple takes 30%.
Apple isn't using these proceeds to advance mobile computing, and small companies need these margins to fund their own teams and developments. This singular dynamic is an unnatural weight and strain on the free market and how technology is supposed to develop. It's a calcified ISP move.
It’s bizarre to me that Apple has had no antitrust allegations yet. The way they manage iOS and the App Store is like a much worse version of Microsoft in the 90s.
https://appleinsider.com/articles/20/08/15/apples-antitrust-... Those are up to 2020. Last year there was a spotify complaint, and this year the DOJ said they're looking into the 30% cut the app store takes.
> With one flip of a switch, Apple wiped out hundreds of billions of dollars. The entire business of a company. This is monopoly.
You can easily re-frame this as: with the flip of a switch Apple single handedly stopped anti-consumer practices by some of the most manipulative and nefarious companies in the world, like Facebook.
Companies don’t have some inherent right to exist. Facebook turned off their game integrations and killed thousands of companies overnight. And that doesn’t make either a monopoly. None of your statements add up to the other.
> At no point in American history has a company had this much power.
This is funny. Google has more power by a large margin (influencing opinion, killing off entire industries on a nearly yearly basis), and has engaged in much more nefarious anti-competitive behavior.
It is good Apple (and Google since last I heard they put similar functionality in place or would be soon) are doing this. That doesn't remove the concern that one or two companies deciding to do something can be so damaging to another megacorp who isn't competing in the same space really. Both can be true, speaking as someone who doesn't care for FB or Apple (or Google really either but to have a smartphone you basically have to pick one of the two).
> That doesn't remove the concern that one or two companies deciding to do something can be so damaging to another megacorp who isn't competing in the same space really.
Why is this a problem? If a business does something that obviated another business, that is the obviated business’s problem.
Websites and computers displaced travel agents, streaming displaced cable/satellite tv middlemen, etc. If a business suffers because they are providing less utility to customers than another business, that is a sign of a functioning market.
They should be damaging each other more if anything, I see 0 problem with that. Apple launching a search engine would be the best possible thing for the world any of these companies could do, given how terrible Google has become.
And Google is by far the worst of the bunch, closest to 1984 mixed with some of the worst of old Microsoft and a splattering of pure degradation of societal fabric though incessant advertising. They have no taste, no ideals, they have suffocated all competition in the most important industry we have (information gathering) systematically and then turned the entire thing into pay to play.
> Meta needs to generate $200B+ of profits on metaverse during 2030-2039 to make it worth it
Is it too late for Meta to admit the Metaverse has been a mistake and shift their efforts to something else? And what would that something else be?
I don't think it's a mistake. They are just too early.
Look at how Microsoft correctly identified tablet and smartphone as part of the future, as early as 20 years ago when they had special Windows XP tablet and custom Windows CE environment.
People often talk about the first mover advantage, but it can also be a curse: that's why Google ate Microsoft lunch, and why Facebook ate Myspace lunch, and why Microsoft ate IBM lunch etc.
If Microsoft hadn't thrown the tower with Windows Phones, the present could have been very different!
Now they are playing catchup, and I think that's what FB (now Meta) wants to avoid.
Some companies manage to pivot (ex: Netflix did) but most can't: for example, Palm who couldn't leave PalmOS behind. Nokia also fumbled, even with the help of Microsoft, because they couldn't bear sacrificing their Symbian cash cow.
Same for Microsoft actually: Windows 8 was too little too late, and the switch from CE to Windows Mobile 6 then 7 then 10 did spread too thin the developer attention: having to use a different language + UI each time required too much effort for too little gains.
Windows 10 managed to correct the course, and Windows 11 is surprisingly good, but it may be too late and playing catchup with Android is not a nice position.
Just like a baseball bat swinging at a pitch, too early is just as much a mistake as too late. Microsoft is indeed a good reference point here.
> They are just too early
I think this is part of the dilemma though. Apple has been rumoured to be on the verge of releasing their AR solution for several years now. It looks even more likely next year. If they do, Meta will be behind. So in one sense you can say they are too early, in another you can say they are already too late. So if you're both too early and too late, maybe you are actually at least trying at the peak of your opportunity to execute. It may come off or it may not, but the odds are not going to be better a year from now if Apple releases and captures the whole premium tier for itself.
Windows CE released in 1996.
Apple Newton (hardware & OS) released in 1993 and discontinued in 1998.
Palm Pilot introduced in 1997.
I’m not sure it was a mistake though. You have to ask yourself what marks goals are here. To me, being cash flow positive is pretty far down the list. Meta could have results like the one last week for a decade and mark would still be a billionaire. He’d still be the ceo of his company. Pleasing Wall Street is not a priority for him. To me the main goals here are first creating a hardware platform meta controls in order to ensure his company can’t be destroyed by other companies taxing him like apple did, and second I do think that mark is legitimately committed to connecting people whatever that means to him. Reality labs still seems like a good way to accomplish these goals even if it isn’t financially worth it.
This isn't an especially useful frame. Lots of things make sense if you put yourself in Zuckerberg's shoes and assume he minmaxes for whatever random thing has captured his attention.
The real question is, what should Meta shareholders do in response to this stuff? What would happened with respect to the shareholders if Zuckerberg took his foot off the gas pedal with the "Metaverse" stuff?
> The real question is, what should Meta shareholders do in response to this stuff? What would happened with respect to the shareholders if Zuckerberg took his foot off the gas pedal with the "Metaverse" stuff?
Meta shareholders signed up for the double class share agreement which enables Zuck to do whatever he wants.
And besides it's is kind of right, given the past execution ever since 2004 he kinda earned the right to bet the company on something new. Billions of people use the different flavors of Meta , and they do sohundreds if not thoudands of times per day. Nobody else can claim to having provided quality of life to so many people.
They gave up one means they had to influence Meta's behavior: they can't vote him out. But shareholders almost never vote anybody out regardless of how the share class structure is set up. So the real question is: will they continue to hold Meta's stock?
> The real question is, what should Meta shareholders do in response to this stuff?
Isn’t the better question “what should Meta employees do?”
Shareholders have zero power given the corporate structure. Employees can leave to greener pastures and leave Zuckerberg to wallow with the B-players that are only in it for the paycheck. How many A-players want to tilt at windmills with him?
Wouldn't the people only in it for a paycheck leave (because the stock becomes less valuable), leaving only the mission-oriented true believers?
It's an incredibly useful frame if the question is "Should Meta admit the metaverse is a mistake?"
I mean they only really have two choices. Stick with meta and hope mark gets distracted from the reality labs stuff or sell. Most seem to have chosen to sell.
Right. Over the coming years, the number of people who choose to sell, buy, or hold will determine the outcome of the Metaverse experiment. So that's the right frame here, not whether Zuckerberg can continue pursuing it --- if only because the Zuckerberg question is much less interesting to think about.
But I’m saying that’s not true. My thesis is that meta’s share price has next to 0 effect on how much mark chooses to shove into reality labs.
We're talking past each other. I agree with you. But the ultimate benchmark will be the stock performance, not Zuckerberg's willpower.
As a publicly traded company, there’s a fiduciary responsibility to shareholders.
Which is why mark leaves the credible deniability of saying he believes reality labs is an investment that will pay off for shareholders. My reading of corporate fiduciary responsibility cases is that believing your actions are in the shareholders best interest is all that is required and proving that mark doesn’t seems impossible.
It’s not too late. The money they spent is a sunk cost. If all they did was say, “We are going to milk advertising and give our cash to shareholders” they would do just fine.
Or they could focus on creating the next social network.
But… Maybe just maybe they pull this off. I just have a great idea on Mark’s product intuition, since so much of Meta’s growth has been data analysis driven.
> But… Maybe just maybe they pull this off
It would be bad if they pull it off. I dread the day draconian call center employers make their workers put on headsets and track their eye movements for 8 hours a day, all while charging them for a virtual cubicle with a view. Look at the marketing materials for their latest headset, that's the way it's going.
Granted in more bullish on VR than most, but I'm skeptical of the scenario you're dreading- outside of the world "virtual" I think that entire situation is possible today, but it hasn't happened yet. Call center employees are already required to wear headsets, and if you're sitting in front of a laptop there's nothing technical preventing your employer from implementing an eye-tracking computer vision powered panopticon.
All I'm saying is that it's not a coincidence that Adobe Acrobat and Dropbox are the top-billed apps for Meta Quest Pro
I'll provide an opinion I think is likely untrue, but interesting to consider here. I think there is a small but possible chance that these moves from Zuck coupled with the rebrand are possibly attempts to intentionally scare of investors and evade some of the regulatory scrutiny Facebook attracts.
In my opinion Zuck has been acting weird since the Apple's privacy change announcement. I'm not a long-term shareholder of META/FB, but I have followed the companies IR material for some time and I've never seen Zuck act like this before. On the last few earnings calls it's hard at times not to wonder if he's trying to make investors nervous...
For example, telling investors that they didn't see the Tiktok threat coming. Or that Apple's privacy change is a serious threat to their business. Or just recently that he "thinks" (very unconvincingly) that their huge Metaverse investments will pay off.
One of the main problems Meta has today is that despite their relatively weak moat compared to other big tech companies is that they're treated with far more scrutiny from regulators. And on the flip side you have for dominant companies like Apple which are literally destroying the ad business model that many tech companies rely on while demanding a 30% tax from developers and attracting relatively little regulatory attention while doing so.
One of the things that has made Meta such a strong player historically has been their ability to make very smart accusations, but this is no longer possible because regulators see them as such a dominant player. In some ways Meta was actually strategically stronger as a smaller player.
So perhaps this is just part of the strategy. Historically if you want Western governments to give you a bit of a hand then being out competed by companies in hostile countries isn't a bad move. Similarly if you want to stop companies like Apple from targeting you then making it look like they're doing an unreasonable amount of damage to your business, probably isn't a bad move either.
And Zuck is an interesting position given the share structure of the company. Where other companies would have to bend to investors, Zuck can force down the stock price and ignore investor demands. Again, I'm not saying I think he is doing this, but it's an explanation I'm beginning to weight heavier.
I think this is a pretty interesting idea. I think it’s less about business strategy/acquisitions and more about increasing buyback power. Meta took a $10 billion loan this year in order to increase buybacks, my understanding is that that’s the first long term loan they’ve ever taken. They bought back 2% of their stock last year and I suspect the buybacks will only increase now that the stock is sub $100.
You really can't evaluate what Meta is doing unless you adopt a particular perspective on the future of computing, and I think there's a fairly stark divide between a minority of people and the rest on this: either you think VR/AR is the future of computing or you don't. You can have a big argument about that, but once you "red pill" yourself and become convinced that one way or another this tech is the future of computing, just about everything Zuckerberg is doing makes sense.
I think Zuckerberg sees it as totally inevitable that VR/MR/AR is the future of computing and he also sees from living through the iOS/Android experience that there is really only room for two players in a space like that. Given Apple will cruise into one of those, it simply comes down to, who is number two? Mark wants to be number two. Who could stop him? There isn't really anybody. In theory Google could have but they've chose to stand by the sidelines. They appear to be making the lazy assumption that, since they are smarter than everybody else in the room, if it turns out to be a mistake they can come back in and overtake - that looks delusional to me but it fits with Google's character. If you're Zuckerberg this looks like utter foolishness and the most important thing right now is to race to cement as much of an advantage before they come to their senses.
Another interesting feature of the iOS/Android comparison is that arguably Google has never really made much money from Android. It has worked for them defensively but it hasn't ever really done more than support their other businesses. Mark doesn't want to be in that position. So he's going to make an open ecosystem play but he's going to do it by owning the hardware and hence a vastly greater share of the profits.
The author asks whether Meta can earn $20B/year from the metaverse. I would say that Mark is shooting here at a 30% chance of making $200B/year. Which is to say in a completely different way, to him at least, it's a no-brainer. However he's effectively taking Meta back to being a startup. So it's right for conservative investors to leave - they never really should have been there in the first place. But it's not necessarily an indictment of his strategy if they do. It's just the wrong risk profile for such investors.
I think the idea was ok but the execution was terrible.
VR was too extreme and narrow a view. The meta verse should have been the extending the space where people and technology over lap, not trying to force everyone to move into frankly terrible VR.
Meta should have went all in on wearable and other augmented reality stuff, hook that into people's Facebook etc.
Imo, HN is probably the only social media I actually use. Sparingly as I'm more certain that much online discourse is pure fabrication.
> The meta verse should have been the extending the space where people and technology over lap
it's interesting because what you say is actually highly aligned with the vision Zuckerberg has stated. Whether he really does it or not, who knows. But, for example, Horizon Workrooms let's you participate equally in 2D or 3D, and they are already shipping unintrusive "smart glasses" as wearables [0].
> Meta should have went all in on wearable and other augmented reality stuff, hook that into people's Facebook etc.
Their new headset does grainy color AR passthrough and lots of the reports on how much they wasted on VR were actually on products like Portal and bringing AR filters onto their snapchat/tik tok clone attempts, they were in the same category on the earnings report without being broken out.