Disclaimer: I'm a former Meta employee and I still hold a bit of love and nostalgia for the company.<p>The article is right to point out that Meta has by far the largest and most sophisticated ad targeting and tracking system in the market. The problem is that even if you don't count Apple's ATT the window of places where they can use it is getting smaller: Facebook the app is a shell of its former self, WhatsApp is un-monetiseable despite a lot of attempts to get companies to pay directly to talk to other users, and new acquisitions are impossible in this post-Obama era. Instagram is growing, but mostly in countries with relarively low ad spending levels.<p>And there comes the difference between this drop and the one in 2018: ads work when people want to spend money on products. The pressures of inflation, rising cost of living, and devaluation of almost every currency to the USD is putting a block in the one reliable source of income for the company.<p>I would bet on Meta's stock price rising if the economic and social crisis in Europe magically improves tomorrow. Otherwise, it's a matter of believing in the Metaverse and hoping the Oculus Pro becomes successful enough to at least provide another large source of revenue for the company.
I've really softened on Zuck in the last couple years. The Metaverse stuff looks stupid from the outside, but all else considered, isn't this exactly what we've been asking for out of FAANG for the last ten years? To put all of these insane resources into something that at least <i>could</i> be a cool future to live in?<p>I was the biggest skeptic on earth when they bought Oculus, and assumed it was the death of VR. But they've been steadily grinding at it, and the newly released Meta Pro is, as someone with extensive experience with all of the consumer headsets, the first product that looks like an actual generational leap above the initial headsets. They are really nailing the big problems with VR, which are control (the inside-out tracked controls with Meta Pro are an industry first), and form factor ease of use.<p>Look at what literally every other company is doing right now. Apple's keynotes consist of new emojis and better cameras. Google I/O is literally just an ad for GCP at this point. Amazon isn't even <i>trying</i> to pretend they are doing anything innovative, beyond adding to the AWS hairball. I think Zuck has about a 5% chance of success here, but the fact that he's trying something new is better than anything else in tech ATM.
The All-In Podcast had a chart (<a href="https://youtu.be/A-bIpJdaCnM?t=2126" rel="nofollow">https://youtu.be/A-bIpJdaCnM?t=2126</a>) that compared the Meta's investment on VR with the investment that changed human history in the past, all inflation adjusted. It's pretty interesting. iPhone: $3.6B, Tesla: $25B, Boeing: $32B, Apollo: $253B. And Meta's Reality Lab: $4B a <i>quarter</i>!
I always wondered if it was a mistake for Facebook to try to rapidly casualise VR after acquiring Oculus. If they spent even a small fraction of their metaverse billions developing high-end, niche products (flight/mech sims etc.) then they could cultivate a loyal base of affluent users. It probably wouldn't be profitable by itself, but it would grow their user base and act as a nice showcase of what VR is capable of. More so than the cartoon office space vibe.
Throwaway for obvious reasons.<p>I joined to work on meta ads semi-recently. My thinking was that they were under invested in techniques I knew were successful from my time at Google.<p>What I found was a lot of smart people who knew they were under invested and we're capable of closing the gap, but the infrastructure they sat upon was too hard to use to do anything different, and management that rewarded the appearance of great work more than great work. The result was a lot of config changes making noise in metrics that could be read positively, without implementing the state of the art systems that took a year before you could write a fancy success workplace post about it. That would risk poor performance reviews and the shuffling of reasources away from your team as a result.<p>And now, it's becoming apparent that the very very smart people started leaving after the stock dropped and the replacements are both more expensive and less able to get used to Facebook's infra. The result on the ground looks like a very serious engineering death spiral that management has not signaled they understand or have a grip on.
<p><pre><code> Myth 1: Users Are Deserting Facebook
..The problem with this narrative is that Meta is still adding
users: the company is up to 2.93 billion Daily Active Users
(DAUs), an increase of 50 million, and 3.71 billion Monthly
Active Users (MAUs), an increase of 60 million..
</code></pre>
I've been wondering about this for a while now: who <i>are</i> these people who are still using Facebook every day? All of my family has reduced facebook usage over the last few years because fewer and fewer people post meaningful content. And as more friends and family leave facebook entirely, I've noticed more and more family members who don't check their news feed at all -- they'll just occasionally respond to Facebook Messages.<p>Is Meta combining DAU numbers between Instagram, Facebook, and Whatsapp? Because I'm sure those Whatsapp numbers go up and up, since it's the default method of communication in a huge number of countries.<p>I know that my anecdotal experience isn't necessarily reality. But it's getting hard to ignore the fact that many friends and family have essentially abandoned Facebook and Instagram, to the point that these services aren't being used meaningfully by my friends and family any more.<p>Maybe developing countries are still growing userbases? Or maybe Meta's "DAU" definition just doesn't capture the slippage from "hooked on the news feed" to "responds to a message once per day"?
Interesting article. People really want Meta to fail because the "metaverse" is one of the dumbest pivots of an established company of all time. Since the pivot and rename happened a year ago, the metaverse has probably bombed -- and I say probably only because <i>nobody can define exactly what it is, still</i>, beyond people having VR meetings with odd pseudo-Mii avatars -- and the investors convinced that Zuckerberg was having a Jobs-esque visionary moment have realized, "Wait, maybe the critics were right and this is bullshit."<p>But as the article points out.. maybe none of this matters. Advertising spend is still going up, the recession may or may not be turning a corner, and there's enough cash buffer to walk things back and refocus on Meta's core advertising business and products that support that.
> Reels usage is still growing<p>But of course, as Meta put gun to the head of everyone - you WILL make Reels, or else - and now all the people I follow, increasingly make Reels. I hate Reels.
Meta definitely isn't dying, it's sliding into old age and slow growth. It's Walmart with Amazon (TikTok) on the scene. Walmart didn't disappear due to Amazon; Amazon's growth didn't actually erode Walmart backwards in any meaningful way; Amazon's growth likely came in part at the expense of Walmart.<p>TikTok is a large niche social network, as are all major social networks in the West except for Facebook. That's why it'll find a lower plateau than FB core in terms of users, as with Pinterest, Snap, Twitter, Instagram, Reddit, WhatsApp (if one even cares to consider WhatsApp & Co. social networks, either way).<p>Walmart hasn't been a great investment during the Amazon era. 20 years ago WMT was ~$55 / share. Inflation adjusted that's around $90 per the BLS (likely there has been more inflation than that). Today WMT is $142. So 20 years to add 57%. And sure, they pay a dividend, that merely makes the return a bit less mediocre - the S&P 500 is up 336% in that time for example.<p>Meta, as with many (previously) overvalued tech stocks from this era, is in for a long stagnation vs the recent highs. It'll remind you of Microsoft ~2001-2015. Future returns were massively pulled forward. The pandemic remoting hyper activity era also pulled returns massively forward in other areas, which will be paid for via many years of stagnation in areas like advertising, ecommerce and remote tech (eg Zoom is an excellent example of said future returns being pulled forward; growth in remoting that might have taken a decade gradually, was zoomed forward courtesy of the pandemic; now the hangover).
A good article.<p>> This level of investment simply isn’t viable for a company like Snap or Twitter or any of the other also-rans in digital advertising (even beyond the fact that Snap relies on cloud providers instead of its own data centers)<p>Let's change the industry to autos: "Funbag Autos has a massive investment in aluminum companies. This level of investment simply isn’t viable for a company like Tesla ... (even beyond the fact that Tesla relies on outside aluminum companies instead of its own"<p>In other words: "vertical integration is good." It can also weigh you down and keep you from advancing your technology.<p>As for Metaverse: he admits it's a loser, but maybe not that terrible in the grand scheme of things.
Article seems to argue against something that not many people are arguing, which is that Meta is at risk of imminent death. It's a giant, if it dies it will be a very slow, boring and drawn out affair.<p>Without a doubt they are still a money printing machine with billions of users but the real debate is whether they at all still innovate and the Metaverse discussion which Ben barely spends a paragraph on should be at the center of it given that they've even staked their name on it.<p>Anything people like about FB is companies they bought or features they copied. WhatsApp, Instagram, etc. The blue app is the Java of social media, everyone uses it but nobody likes it. Meta has a governance model that should be very dynamic, Zuckerberg is literally dictator for life. But the thing they've only ever been successful at is making money, which if anything is owed to people like Sandberg, who now seem to be leaving.<p>A company that is run essentially by one person has the business model of something that's run by a committee, and the one creative decision he makes in decades seems like a total flop. That should at least be slightly alarming.
> The long-term solution to ATT, though, is to build probabilistic models that not only figure out who should be targeted (which, to be fair, Meta was already using machine learning for), but also understanding which ads converted and which didn’t.<p>If Apple sees Meta as a threat now that Meta are getting into devices, all they have to do is add a rule that probalistic models of conversions beyond a certain scale of computation aren't allowed, and that anyone operating over $X amount of revenue on their platform is subject to invasive audit to make sure they aren't doing it. They can figure out a way to say it is for privacy but that they themselves can do it, or they can make it so users can opt in to probalistic models with different defaults and wording on the dialog for third parties vs for Apple like they do now for tracking (Apple calls others' tracking in the prompt 'tracking your activity', for their own they call it 'ad personalization').
“The long-term solution to ATT, though, is to build probabilistic models that not only figure out who should be targeted, but also understanding which ads converted and which didn’t.”<p>What does this even mean? Is it really possible to build models where the conversion label itself is not deterministic due to ATT and has to be predicted by another probabilistic model?
I am pretty sure that Kodak or Nokia had pretty healthy results when the wind turned for them.<p>Those kinds of ships are so big that it is very easy for managers, investors and employees to convince themselves that everything is _fine_.<p>The biggest problem, for Meta, in my opinion, is not the brand, not the business model and not the competition. The problem is much worse because it is internal and probably too late to fix.<p>Their engineering culture as a whole is a one trick pony.
I think Facebook by itself could survive well but the problem is one of perception that the platform Facebook is tied to the whole VR/metaverse nonsense which is probably scaring some investors as one reliable product being forced to carry the weight of an unreliable/unproven one is a recipe for trouble. It probably won't sink either Facebook or its company but it will make both of them less well off. Zuckerberg should've taken the hint when he first acquired Occulus and kept them at arm's length at minimum as to allow for the company to grow its portfolio rather than being just stuck with Facebook, Instagram, or Occulus VR as their shoe-in to long term profitability alone. Zuckerberg should've taken the Alphabet approach which would've allowed him more freedom to toy with the whole metaverse thing without having to perform for shareholders on that front.
I quiet quite Facebook about a year ago. This wasn't intentional or purposeful, the platform was just no longer serving content that I found interesting.<p>My browers is still logged in though and I see ads by Facebook while browsing other sites. Am I still considered a DAU? If so, is Facebook the new DoubleClick?
Maybe I’m being a bit too cynical, but why would someone take time to write this article if they think Meta is doing great?<p>My guess is that they are stuck with a lot of shares and want the price to go up to get rid of them.<p>If I thought Meta is doing great, I wouldn’t try to convince others that, I would take the opportunity to buy and horde as many stocks as possible.
Interesting. So, why is the stock down to 42% of what it was the last time he said it had a bright future? Stock price isn't everything, to be sure, but: what metric, set of metrics, or other piece of information would Thompson use to evaluate whether Meta's next 5 years is going to be better than its last 5 years?
Markets can stay irrational longer than you can stay solvent.<p>But the real story is simply Human Nature at work. Everyone ( or at least a sufficient amount of people with Power ) hates Facebook. And they need a good story to shit on it.
Meta made so many mistakes, the metaverse being one. Facebook's layout sucks, imho. The old one was better. There is a long history of VR being a commercial failure. This is something that could have been avoided. With PE ratio of just 9, it' very cheap though.
The article talks about the long term focus but I always felt there's a better way to achieve a long-term foothold in VR.<p>The key is to build up a set of patents so that you can enter the market when the tech is there. This takes some investment but not nearly as much as trying to force the metaverse to happen now.<p>So I disagree with idea that the leadership has a long term focus. They are trying to make the metaverse happen before it's ready. This is very shortsighted. They could scale back and maintain a holding pattern for far less cost.
All that matters is that Facebook continues to be generally disliked by anyone who would run the next Instagram/WhatsApp/Oculus.
But as recent events such as Figma show anything it probably just means another 0 so they have to spend 10,20,30 billion instead of the 1 or 3 they used to.
There was a time when CGI was state of the art.<p>Seeing VR and AR as any kind of substitute for analog interactions shows the culture/lifestyle divide in plain english.<p>I enjoy entertainment, but the 21st century has so many options that do not require any flavor of fiction.<p>I agree with the authors capitalistic view that if facebook disappeared, there would be another to replace it (if there was a market there).<p>With the ratio of illiteracy, i can't say that much of social media was anything except a time suck of filtering inferior and/or obsolete gibberish.<p>I worked on my golf swing instead. And by chance, it has stayed 100% analog, without adding any technology to it.<p>I'm a technology native too and was introduced to golf about 8 years after technology.
Surprised at this post. Arguing against that meta is dying is a straw man. It’s not a myth that the growth thesis from here is weak and there’s a massive headwind on cash flow from all the money being thrown at the metaverse projects with no foreseeable revenue upside.