Disclaimer: I'm a former Meta employee and I still hold a bit of love and nostalgia for the company.
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.
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.
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 could be a cool future to live in?
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.
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 trying 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.
Yeah, I don't like Meta but it's great that they heavily invest their profit to xR/"metaverse". I don't know will finally "metaverse" used well , but it's exciting to see growing.
The All-In Podcast had a chart (https://youtu.be/A-bIpJdaCnM?t=2126) 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 quarter!
Just to be clear, "Apollo" here is the Apollo space program that invented and manufactured space flight and moon landing and return, over 13 years, in inflation-adjusted dollars. Through all the Meta-verse skepticism, I kept thinking that the payoff could be worth it if they capture the next big platform. But this put the scale of the investment in context, and now I doubt that even the wildest success will payoff for $250B of spending. And that's not even counting the opportunity cost of what else FB could do with that money.
This. The problem with Meta is that nobody can confront Zuck and remind him that this is really a bad idea RoI wise. Zuck is unhinged and makes the decisions as he pleases even at the company of this scale.
I can't comment on how that 4B/quarter is being spent. However the Quest 2 has been the biggest success in VR to date. Why couldn't some of those billions have been spent on getting a Quest 3 ready for sale for Fall/Xmas 2022? It would be like Apple not releasing new iPhones level of missed opportunity.
Or perhaps it's a huge selfish gamble thinking, let's get our product perfected before everyone realizes how big this is. This sounds like a small startup more worried about having their unknown product's secrets stolen rather than how to market it so enough know it exists.
The business angle also doesn't make sense to me. Maybe during severe lockdowns it might have had a chance, but now we should be betting on the tech and performance/price improving in service of games first and foremost.
I hope SteamVR wins, otherwise I don't care whether Apple or Meta's device wins. And where is MS in this, too late as usual?
There's the meta quest pro which released last week, but the tech for something in the same price range as the Quest 2 but better probably isn't a thing yet. The Quest 2 did have a $100 price increase 6 months ago.
> As a "counterpoint" to the push for the Quest Pro in the Meta offices, Carmack says he "personally still [tries] to drum up interest internally in this vision of a super cheap, super lightweight headset." His rallying cry, he says, is a target of "$250 and 250 grams" for a headset that cuts out as many extraneous features as possible while still being usable (the Quest Pro weighs 722 grams, while the Quest 2 is 503 grams). That could help bring "super light comforts" to "more people at low-end price points."
This reminds me of the Woz/Jobs divergence--Apple under Jobs did well.
Without experiencing Project Cambria/Quest Pro, I can still imagine the hard-to-believe-it's-not-real feeling of presence with the incremental improvements + real-time facial expressions. That does seem important to be able to demonstrate. I haven't as yet heard reviews that express this though.
"Is [Metaverse] going to be a leap in humanity at the scale of the Apollo program?"
That is, IMO, the key question behind this entire discussion. Zuck certainly thinks so. I'm sure a lot of people at Meta and outside think so as well. And their detractors obviously don't.
There isn't going to be any consensus on whether Meta is spending too much money or not because ultimately it is a referendum on the concept of VR/AR/Metaverse itself.
The All-In hosts gave a reasonable comment: Meta may well get a leap in humanity, but it should at least show incremental progress to the investors given such a huge quarterly investment.
In terms of pure technology there has been a crazy amount of incremental progress in the area. We have gone from the first kickstarter for Oculus (when VR was just a sci-fi dream) to the release of Quest Pro and games like Half-Life: Alyx in under a decade.
Of course shareholders really want to count actual monetary returns as progress, and it's the job of the CEO to decide whether prioritizing short term gains is actually in the best interests of the company or not.
The thing is, speaking as a total non expert here, people have been taking about VR since the 90s, and it’s always kind of sucked. It’ll get much better over the next decade, of course. But even then, how many people want to sensorially sever themselves from the outside world? Lots of people who Meta thinks might use VR for work have, you know, other human bodies to take care of.
Is that an amount to create an initial iPhone? While it was awesome, if it stayed like that, it wouldn't change the industry. It would seem fair to add up all the R&D costs that went into getting iPhone to where it is today, which will be much higher.
I'm not sure how the numbers really compare. If they are showing development costs for a product before it entered the market then it should probably be $2B for Meta, since that's what they paid for Oculus.
What has Tesla changed? All it did was show a market for non-garbage electric cars. Other more established companies are running laps around it now. How much of that $25B went to the ever-retreating promises of self-driving?
When was the last time they had a new model? I’m seeing a virtual Cambrian explosion of non-Tesla EVs in the South Bay in just the last year. Bolt and Leaf are the entry level models that make EV accessible. Tesla is still way out of reach for most people, serving a niche audience, and now merging their brand identity in many peoples minds with the toxic soup that is Twitter.
I’m all in on EV, but Tesla blew it by failing to focus on the Bolt and Leaf market. And their SWEs are now apparently spending their time solving twitters HR problems.
Not a Tesla fanboy, but it seems you're dismissing many of Tesla's accomplishments here. Unless @Kye is the username secretly used by Jeff Bezos (hi Jeff!), I'd recommend you weigh how difficult it is to build something similar to Tesla.
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.
yeah, it's a bit weird that Marques Brownlee recently gave a better presentation on Meta/Metaverse than what Zuckerberg cooked up.
But I think that's the intent. Because when you lay out Meta's strategy so naked, like Marques did, then you realize that no one is going to buy into it. You need early adopters and those are the ones that are going to sniff out that you're actually building a dystopian privacy-invading Skinner Box platform controlled 100% by Meta and they will predictably eviscerate you.
Marques brings up the part of what Meta is focusing on now, which is creating replacements for everyday functions with a VR twist. He claims some of them are actually quite good. But I think this is the way Google approached Google+. People don't want something good-as or marginally better. What Meta needs is a killer app. Something that can only be done in the Metaverse and is so compelling that people are willing to give Meta full control over their life and spend the money on the hardware. That's a tall order.
I don't think the "metaverse" needs to succeed as much as the hardware does. A set of AR glasses that aren't bulky or sci-fi enables a huge amount of brand new functionality, on maybe even more than smartphones did. In that case, if Meta has the best option on the market, it doesn't need to write the killer app, someone else can do it, just like the App Store enabled iPhone developers to do.
I'm less optimistic on the VR takeover, but I can imagine a future where VR headsets would be preferable to using laptops for daily use, and the same thing applies there.
Not sure if the technology will get there, but I can see AR being much more useful. I don’t want to cut myself off from the outside world, but I’d love to be able to put on a pair of glasses that allow me to use a giant monitor without needing an actual monitor. Or a home theater. For me, something as simple (though it’s probably technically complex) as a high resolution screen coupled with AirPods for watching movies would be a killer app. And if I could use those same glasses to work or bs on the internet (on a plane, in a cafe, on a bus), I’d be all in… and I’m willing to bet everyone else would be as well.
Good point about someone elses killer app - but if this is the case then Meta need to focus on SDK / dev evangelism - the way source engine made steam as a platform. They seem more focused on building their own application.
Yeah, the zoom replacement looks really cool. Butt...
The biggest problem I have doing zoom calls with family is an unstable internet connection at their end and I don't think the metaverse is going to be able to solve that. And besides, I'm certainly not going to pay 500$ for a headset just for Awesome VR calls, if i can just use a phone call.
The biggest potential is being able to work remotely. Just imagine all the remote work Metaverse could make possible. And 500$ headset might just be in the budget for a midsized company looking to expand it's workforce.
Ok, something I’ve thought about is the Metaverse version of video calls couuuuld require less bandwidth than video calls. Because you don’t have to send every frame — instead it’s the one time cost of a model, and then animations data + voice streaming.
And, maybe you can interpolate better since the domain space is human activity instead of an arbitrary video.
I wonder how much it would have cost to simply recreate Google Earth VR, which is still one of the most compelling VR applications, period. It was released 6 years ago.
Yep slow and steady rather than trying to make it happen now would be the real long term play.
Apple tried to make the Newton happen a decade too early. It worked in the end but they did the right thing in not trying to repeatedly double down on making it work before all the pieces of the puzzle came into play (mobile networks, better touchscreens, efficient CPUs, enough storage to hold music, etc.).
> 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.
They've actually already cultivated these affluent users almost by accident (they aren't interested in gaming, but they are interested in fitness). But these users tend to be older even if they are richer...it isn't a demographic that Facebook was going for.
The amount of people who are willing to pay $1500 for high-quality VR hardware is not a huge market, but a rabid one filled with enthusiasts and early adopters. It's likely enough to fund research into how to produce a more mass market solution.
The amount of people in the first group who are willing to pay for a device that requires you to tie every single action and usage into Meta's data-pipeline Hoover of personal information is likely near zero.
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.
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.
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.
Your behind the scenes perspective is very interesting.
From a small business customer perspective:
I have a small local business that I run on the side. It's a franchise type of business like what you would see in your local strip mall. We used to get our best leads from Facebook ads. More than 90% of the clicks were mobile. A high percentage of the clicks would set a tour and a decent percentage of those sign up their kid(s) for the program we offer. We went from about 20 good leads per month to 0-1 for the same ad spend. Yes, it really was that extreme. I don't know who facebook is showing our ads to, but they do not want our product.
I just got around to canceling with the agency that handles our ad spend today. The N of this story is 1, but if other businesses are experiencing anything close to the same, fb's revenue decline is just beginning.
> management that rewarded the appearance of great work more than great work. T
Two reasons: 1. The management can't really differentiate appearance from substance. 2. The management is not incentivized to reward great work. Either way, it shows the failure of Meta's culture.
> but the infrastructure they sat upon was too hard to use to do anything different
Ironically, so many Meta engineers had such superficial understanding of their platforms and infrastructure that they couldn't even pass the most basic interview discussions on systems design. Seems another sign that Meta grossly over hired or had a culture that focused only on some so-called impact.
> 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.
Meta has recently switched to a performance review cycle of 1 year (from 6 months). It sounds like one of the reasons this was done was to help make such work more possible.
I think the actual issue is the underlying culture. Google worked fine with multiple review cycles and you could get a good rating working on something hard that only shipped when it was ready.
However it is an optimistic sign in that leadership must get that part of the problem (long term vision is penalized) and is taking steps to address it. Maybe I judged them too harshly above; I don't know what I would do in their position to turn the ship around.
Embedding-similarity based retrieval for one. Probably shouldn't get into the details here but Google has made incredible advances in the retrieval step of your typical retrieval / ranking pipeline and for a variety of reasons meta has not implemented them in production, despite having open sourced tools in this area. There are a few other advances like this Google has been using for long enough to publish on, meta engineers have working prototypes, but nothing is in production and everything breaks all the time.
Oh, I have a similar story from a local country-leading job portal. I tried to persuade them to invest in embedding-based search instead of the category (which is often wrong and ambiguous by both advertisers and searchers) + keywords, but '2 people for 1 quarter to demonstrate a prototype able to be tested in production' seemed too risky for the management, despite having really cool results from the offline prototype :/.
The risk of missed opportunity is harder to visualize and thus rarely considered.
Channel your saltiness into uncovering illegal/fraudulent stuff happening within ads and become a whistleblower. Based on anecdotes (some within these comments!) stuff is clearly sideways with how ads are being delivered and attributed.
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..
I've been wondering about this for a while now: who are 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.
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.
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.
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"?
> Who are these people who are still using Facebook every day?
Me. Most everyone I know. Move from the tech bubble to the suburban parent bubble and I think you'll that nothing is replacing FB anytime soon. The school pages are there, the kid's clubs and activities and team pages are all there. The neighborhood pages are all there, NextDoor exists of course but it tends to be poor imitation of the FB group.
I know what stereotypes exist but I also don't see toxic Karens, nasty open bigoty and racism, or lying political propaganda. Maybe it's just not a SoCal thing? Or maybe I am a toxic racist Karen and I'm blind to it? Today is full of cute Halloween photos, reports on last weekend's high school sports team's results ( our marching band won the regionals!), and not much else. If there's a vicious underbelly than I am blind to it.
You get out of FB what you put in. The ads I see are all geeky T-shirts and practical cross body bags ( I haven't found a good one yet )
I find reddit horribly toxic and depressing and am surprised it doesn't get more attention. The front page tells us only that we are doomed, our country is doomed, our planet is doomed, and reminds us of how much smarter we are than everyone else. I really wish I had the self control to stay away from it.
Stereotype alert: I do know some parents who've dropped FB but it is always the dads. It's often easier for them as they rarely have to keep track of what day is wacky hair day.
Rural countryside in the Midwest here. Our dog decided to escape and go on an adventure a few weeks back. The person who found him went to the local Facebook group for lost dogs and after not seeing him there for a few hours finally called animal control (where we, as not really Facebook users, had reported him missing).
It's pretty wild what an alternate reality Facebook creates when you don't use it but others do.
I used to use Facebook, but the rampant ads and dark patterns drove me away. I can't stand FB pushing video content in my feed. Some ads are fine (sidebar-only preferably), I understand that you have to pay the bills somehow... but I really don't like "recommended" posts in my feed. The lack of autonomy drove me away.
> Today is full of cute Halloween photos, reports on last weekend's high school sports team's results ( our marching band won the regionals!), and not much else. If there's a vicious underbelly than I am blind to it.
You mention that you notice the ads for geeky t-shirts and cross body bags (what are those?), but what about the recommended content? Do Stories and Reels not get in your way? Don't you miss content from school pagse, kids clubs, activities, and team pages because the algorithm decides that it would rather show you yet-another-meme-post?
I'm glad that Facebook seems to work for you. But it really sucks for those of us who don't agree with Facebook's business practices, because you contribute to a network effect that actively excludes non-users. I don't like Facebook's dark patterns, their advertising, or their "recommended" posts. So I choose not to use it. It's absolute bollocks that I can't easily look at community event pages as a non-user, and it only makes me happier that I've opted out of such a toxic, exclusive community.
> Do Stories and Reels not get in your way? Don't you miss content from school pagse, kids clubs, activities, and team pages because the algorithm decides that it would rather show you yet-another-meme-post?
Oh Christ yes, but if I stayed away from everything where dark algorithms decide what BS to show me I'd end up a digital hermit ( except for HN of course )
Still on my list of 'sites with infuriating un-asked-for content", I don't think FB makes my top 5. Amazon is first, of course, with its "sponsored" products. youtube, reddit, apple TV on content I have _paid_ for. FB pales in comparison
Do you use adblock of any kind? It's interesting to me that the very services you call out -- youtube and reddit specifically -- are services I frequently use because the dark patterns and ads don't effect me much due to ad blocking.
Meanwhile Facebook is essentially immune to content blocking, which made it a very obvious problem for me even years ago.
I have turned into a bit of a digital hermit, though.
I've made a pretty concerted effort to avoid clicking on them. I might click on one once every two months. Over time this seems to have resulted in modest levels of presentation.
OTOH -- this July my feed showed me an old friend's daughter had posted "Miss you mom" on friend's wall, and I thought "that's odd, they don't live far away." So I clicked on friend's profile to see that her funeral was the week before and then saw five months of posts documenting her discovery of an aggressive cancer that had killed her. Nowhere in there had FB shown me any of them.
That's an algorithm failure if there ever was one, though of course there's no way to communicate that to FB and likely no internal incentives to care, so there's really nothing to do but remember that unless you're the customer, the feed will only be about where you'd like to direct your attention to the minimum degree they have to engage you in order to keep selling their privilege to direct your attention.
I’m glad you pointed out that Reddit gets a free pass. Aside from the fact that r/TheDonald flourished there, r/all regularly shows videos of people dying and men smacking women (r/pussypassdenied). There’s also a weird, self-congratulatory sense of community that leads to mob politics and pile ons in a way distinct from Facebook and Twitter. I think it means something that people identify as redditors, and not, say, as tweeters.
It's trivial that nice communities exist on Facebook. Positive, engaged people build good communities, regardless of platform or technology.
The same distributions of haves and have-nots exist on any platform. Reddit/Facebook/Instagram/TikTok/everything else are composed of an ever changing and uncountable number of communities, a few of which are bound to be good because of the continuous efforts of their members, and everything else is varying degrees of toxicity, narcissism, hatred, and every other negative trait you can think of.
If someone stereotypes you as a "toxic racist Karen" because you mainly use Facebook, it seems to follow the same reasoning behind why you might perceive Reddit as "horribly toxic and depressing." You get out of X what you put in.
I agree, reddit is my most destructive addiction. I like some communities but I always end up on the front page doom-scrolling. I'm just surprised it always get a pass when it comes to the negative impacts of social media.
I think we have to adjust our understanding of what 'using' Facebook means.
Despite its flaws FB has done a good job of layering useful products on top of the social network despite the original purpose of Facebook seemingly losing popularity. In my circles, the typical news feed and posting updates part of Facebook is pretty much dead, and I never use those features personally anymore. BUT Marketplace, Messenger, and niche groups are all very valuable. It's changed from 'something cool' to a utility.
Also, given these DAUs are measured in billions and there are users all over the globe, chances are usage in different parts of the world and for different ages and demographics looks incredibly different.
Interesting point. I also found this passage intriguing:
The problem with this line of reasoning is that Meta’s
capital expenditures are directly focused on both of
the two main reasons for alarm: TikTok and ATT. That
is because the answer to both challenges is more AI,
and building up AI capacity requires a lot of capital
investment.
This makes it clear that Facebook/Meta's overlords don't think of these products as a social network; instead, they think of them as a conduit to show people ads. Ads recommended by AI.
With growing concern over censorship, political manipulation, and platform moderation, I wonder how long the "AI-recommended ad" cash cow can continue. You can only show people so many political and gambling app ads before they stop using your product or run out of time/money.
> who are these people who are still using Facebook every day?
I'm using it pretty frequently, often daily. It may not be the place where everyone is posting their frequent updates, but I still have hundreds of acquaintances who post periodic updates (or read mine), a few circles who use FB events to manage announcements/invites, and FB serves as well as it ever has as a Rolodex.
I get that people get cranky about their feeds and/or concern about psychological or social effects of social media, but FB isn't at all unique here. Any social media you aren't the customer of is going to make its money either directing/selling your attention (which means messing with the feed) or data about your attention, and so naturally most do and there's not really an alternative, there's just a perception of what's fashionable among a given circle.
Marketplace is part of it. In many regions, it's essentially replaced Craigslist for buying/selling random things like lawn equipment and children's toys.
Beyond that, I think it's pretty well documented (and also stands to reason) that the growth is mostly in communities with previously low penetration. If all of your family has reduced facebook usage over the last few years, that means you are in a community with previously high penetration. Of course you won't be able to anecdotally observe growth.
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 nobody can define exactly what it is, still, 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."
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.
> Between TikTok, Roblox, Minecraft, call of duty (and other triple A multiplayer games), we’re already there.
I'm going to need a definition for "metaverse" here because that doesn't sound like what I would imagine. You have listed a social media site and some video games. Both social media and video games have been with us for a long time, and if Facebook had just said "we want to work on social media and video games" then nobody would bat an eye.
Of course, that's not what they said. They now call the company "Meta" and toss the "metaverse" label around. This implies that they at least view it as something different in some substantive way.
I guess, either way, it's a failure. If it's just a trick to seem innovative by slapping a new label on old things, then that's a failure, because people now seem to expect them to do something more. If they view it as something novel that's going to "eat the world," that's also a failure (at least so far), since it clearly hasn't.
Fortnite, Roblox and Minecraft are arguably "metaverses" by any reasonable standard of the word. They started as video games but have evolved into mediums where people can interact with each other and spend time consuming other content. Especially so in the case of Fortnite with all their concerts and things happening in game, literally the only difference is that one is in VR and the other is in your screen.
It appears you’re redefining the word “metaverse” to mean social media. That’s not the same metaverse that everyone else is talking about, which involves putting on VR goggles and zoning out from the real world.
VR and social media are absolutely not the same thing. One takes over your sensory inputs and 100% of your attention. The other you can do on your phone at the same time as other things.
I always thought a metaverse was defined as a virtual 3D world that is composed or federated across multiple apps or servers from different sources (that's what the "meta" part signifies, right?), so the OS-like and/or protocol-like things that structure the composition or federation are the core of a metaverse. So under this definition it doesn't depend on AR or VR, it can just be rendered to 2D displays like regular video games.
I'd agree that this idea seems rather vague but it's becoming increasingly common for social interactions to happen "over-the-wire", e.g. TikTok / Whatsapp / World of Warcraft. I believe that mentions of the "metaverse" are pointing to this trend.
I think the fact that it's so vague ultimately serves Meta when it allows their company initiatives to lack a certain definition (keeping shareholder trust that much higher despite the CEO whom they cannot rein in).
As far as I can tell, the metaverse is a medium. Much like web forums, social networks, different genres of video games (FPS, RTS, block-builders, etc), television, radio, and books.
In the social network space, Facebook created a monopoly by buying up their competition until they became inescapable in most countries via the network effect. As a result, Facebook effectively holds a monopoly on social media to this day. They squat on that monopoly and extract value through ads, keeping anyone else from meaningfully competing, like some kind of medieval bridge troll.
In the metaverse space, Facebook wants to create the first viable product so they can extend their trolling and rent seeking to that medium as well. If they can absorb competitors, I think they have a chance. If the US government meaningfully enforces anti-trust law, I don't see any way that such a soulless, awful company that routinely churns out unpleasant products can possibly attract enough users to establish and maintain a monopoly. It seems that Zuck is betting that they can build the tech first, patent the shit out of it, and the users will have no choice but to play in his walled metaverse garden. I suspect folks will opt out before they do that.
The confusion and disconnect comes from the fact that the Metaverse, by definition, cannot ever exist. Zuckerberg is chasing a fantasy.
I wrote in more detail about it here [1], but the basic gist is:
1. A real "Metaverse" that isn't just another video game would require every tech company to agree on a single standard for a MMO world, and
2. There are zero financial reasons why any other company would agree to a) wait for a standard to be agreed upon and b) cede the majority of their profits to the owner of this singular Metaverse.
Therefore, a real Metaverse can never happen. Which makes it even sillier that Mark Zuckerberg continues to go all-in on this vision.
Doesn't that same logic apply to the web and html? Are you saying that an open standard like the web couldn't arise in the current political/economic climate?
I think it would be very unlikely for the web and html to arise in the current political climate, yes. It only came to be in the first place because of a massive amount of government investment that was an artifact of the space race in the late 1960s and early 70s. For a time, all the major tech companies were trying to build their own walled garden alternatives to the Internet (Microsoft with MSN, Apple with eWorld, AOL, Prodigy, Compuserve, etc.) and they only failed because the Internet grew faster than any one of them could.
tldr: all the $$ still comes from commoditizing community building by subjecting them to ads and counting conversion.
Conversion is always a tricky beast to count, even in our intense tracking of individuals and attempt/successes at tracking users across time, applications, sessions and devices and I'm just honestly not sure how much more humans can handle being advertised to or even spend as things get tighter and tighter. At some point cool new [insert object here] doesn't matter when you are calculating the gas needed to warm your home and thinking about using your hot bathwater to do so.
Good question. My guess is because those things are all 3D virtual worlds (to some extent) and/or a platform that is focused on social connection. Obviously they all need some connective tissue and evolution before they are a legit meta verse.
They are digital spaces that people now live a significant portion of their life in. (its what they do when they aren't working, or even when they are supposed to be working, most of their social interactions come from it, its a significant part of their identity)
This is exactly what I mean when I say "nobody can define exactly what [the metaverse] is." The metaverse is simultaneously VR-based business collaboration software, but also decade-old sandbox video games. Web3 and NFTs often pop up in explanations, too.
Zuckerberg fancies Meta is "IOI" from Ready Player One. Let's leave alone the fact that the state of the art is simply not capable with our technology.
What is the Minecraft/Roblox economy as opposed to the rest of the economy? Like .05%? Growth given the lack of actual capabilities is likely flatline.
Metaverse was obviously a BS pivot. Question is what Zuckerberg is covering up before they pivot back.
The defining quality of a hypothetical Metaverse is its immersiveness. The existence of multiplayer games, social media apps and the internet in general does not by itself qualify until it moves beyond flat screens and mouse clicks and successfully incorporates AR/VR/mixed reality and a slew of other emerging tech in the area.
I think the best case scenario here is something like the iPhone, yes the Androids did come, but they took a long time to catch up (some would say they still haven't), and owning the platform is very lucrative.
It's about being the first one to reach mass market, and holding onto that position as long as possible.
>People really want Meta to fail because the "metaverse" is one of the dumbest pivots of an established company of all time
I believe people want Meta to fail because the spent the better part of last 5 years completely eviscerating their reputation and goodwill. While Facebook, at its prepandemic peak was hemorrhaging young users and becoming known as the platform for misinformation and arguments due to the chase for engagements at all costs, Zuckerberg was bust cosplaying as presidential candidate. People want Facebook to fail and I think that's a consequence of how terrible their reputation has become.
Exactly. I also want Meta to fail because the company has proven itself to be immoral and a poor steward of meaningful social contact over the internet, but my biggest beef is with the rotting Facebook platform that has turned into something awful over the past 10 years.
That being said, I want Meta's involvement in a "metaverse" to fail too, because I can't imagine living in a world where Zuck sinks his dark pattern and advertising fangs into an even more immersive version of today's manipulative social media. They've done enough damage as is.
I don't think it's a question of can Meta walk things back but whether Zuckerberg has the humility to do so. It certainly doesn't seem like Zuckerberg possesses that ability so it's more likely they'll just double down on "the metaverse".
But, yeah, he's too desperate to be/have the next great (hardware) platform. He wants the "metaverse" to be what Apple and Google have with their hardware and app stores. There's no way he walks it back.
I don’t think they actually have to walk anything back. Facebook seems like it’s going to still be successful even if the metaverse loses money forever.
The only real question that meta has is Mark. As far as I can tell there is no reason for mark to ever listen to investors and scrap his passion projects in order to increase profitability. Sure he'll crank up the ads to keep them happy, but in the end he has unlimited money and can't be fired, and that's not changing even if meta literally loses money for the next decade. It seems that with the metaverse he's embraced that which is why he effectively told wall st. to fuck off on the earnings call last week.
Meta literally facilitated genocide in Myanmar as well as sex slavery by failing to properly screen ads and in some cases didn't even have anybody who could read the language they were in.
Also psychologically experimenting on their users intentionally making them unhappy [1], knowingly facilitating terrorism [2] and enabling race based advertising which blocked black people accessing housing [3].
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.
Yeah but they’re not really for you. They’re for making it easy for Tiktok creators to cross-post their content.
IG, FB, and YT all realized that if they force creators to choose between making Tiktoks and posts/videos they’re going to make Tiktoks. The cost of making entirely separate content has to be worth the extra audience and you can change the calculus by making the cost really low.
The super annoying thing about reels is how they don’t just play fully in the feed the way Tik Tok does. You see a weird 2 second loop and on that have to choose whether to engage. And FB has a horrible history with video, filling the feed with videos 10x too long that had no point and not letting users track forward.
I cannot hate FB more than I do. If it wasn’t for Marketplace, my account would have been deactivated years ago. And even Marketplace is obnoxious in a myriad of ways.
Marketplace always switches back to non local pickup when you search for something new. So annoying. We get you make no money from p2p local selling but they should just accept that and not make the users experience worse.
The crazy thing is they fill the feed with ads in between the p2p stuff so they should be making money, and those ads would be much more relevant since they know a user’s search terms (so higher rates per ad), but then they just make the user experience of searching suck.
I’d say the entire Facebook UX sucks. If I didn’t know better I’d think it was a startup with inexperienced designers. Shocking how complicated and lazy it feels.
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.
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).
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.
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).
> 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)
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"
In other words: "vertical integration is good." It can also weigh you down and keep you from advancing your technology.
As for Metaverse: he admits it's a loser, but maybe not that terrible in the grand scheme of things.
> It's not a "counterexample" because I didn't give an example.
A counterexample is not a counter to an example. It is an example that counters a point, which you did give.
(That said, Apple is still not really a counterexample because clearly vertical integration can weigh you down even if others have pulled it off successfully)
Apple started acquiring companies with chip design expertise while Jobs was the CTO. The first processor that had some custom design by Apple was the A4 which was used in the 2010 first generation iPad and iPhone 4.
I can’t believe that Apple wasn’t working on the first 64 bit in house ARM chip by the time SJ resigned in 2011 that was introduced with the 5s in 2013.
Apple has clearly had difficulties scaling its company to maintain this sort of integration though. They're not bad enough to materially harm it, but you can see the seams. Nothing hides problems like success so I suspect, if Apple does start to founder in the next decade, we'll look back and blame the nest of internal dependencies they have leading them to fall behind peers using off-the-shelf parts.
Maybe now you can't easily access a ginormous cloud of AI-optimized processors (I don't actually know this is true, by the way. Anyone?).
A few years from now, maybe some large player will offer that, and Facebook / Google will be stuck with these big investments while their little competitors just pay for what they use.
I'm not taking a position one way or the other; just saying that it's always a hard call.
The major cloud providers already offer instances with GPUs. Google is one of the three.
And before anyone says that AWS was an offshoot of Amazon Retails excess capacity, this is an urban myth. AWS was always a separate product with separate servers just for selling to customers.
I see just the opposite. The Mac was the last outlier in Apple’s integration. From the software side, Swift UI is bringing all of their software development together.
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.
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.
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.
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.
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.”
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?
My understanding of how FB advertising worked as the following:
1. You purchase ads on FB
2. You tell FB how much a conversion is worth to you (let's call that $W)
3. You link your site to FB (via a pixel etc) so that they can automatically measure conversions. They say this is for you so that you can see which ads are actually working.
4. In reality, FB now knows what a conversion is worth to you so they can keep upping the price per ad till it gets as close to $X as you can take before you stop advertising.
If ATT is in play now, FB doesn't know the conversion rate and then can't tell how much to "squeeze" you by raising the price.
That would therefore incentivize them to figure out other ways to figure out that rate otherwise how can they maximize advertising revenue if they can't squeeze you?
Honestly, I'm not sure how to say this politely, but your argument does not map to my understanding of how FB ads worked (I was there from 2013-18, predominantly working on ads).
Steps 1-3 are correct, step 4 is not.
What actually happened is that you'd say I want to spend $10 on FB ads. There's a system called pacing that reduces your bid most of the time so that you don't run out of budget before the end of the day.
Separate to this, FB estimated how likely a user was to click/convert on your ad, and multiplied your bid by this probability (times 1000). This number was used to rank your ad against other ads/content.
So, what would actually happen is that you'd see amazing performance on that $10 budget, and you'd be like FB rocks spend all the money. Unfortunately, because of the way the above worked, when you 10xed the budget it would all far apart.
If FB had actually wanted to maximise short term revenue they might have behaved like you said, but the reason they've made so much money over the years is that they were always much more focused on the longer-term revenue.
If you think about it as a diminishing returns curve, it becomes something that can be understood and explored. Of course, the sales people will try to get you to expand quickly and your most efficient spend will come first - after your inflection point, your incremental return will decrease.
However, fighting that pull is the optimization opportunities enabled only at scale. If I run 1 ad, I know how that performs. If I run 1000 ads, I know which ad performs best.
There is value in pulling that subset out of the extra bullshit. I'd love a twitter alternative that I could use for publicly broadcasting short messages.
Especially if it didn't require people be logged in to scroll down.
I am pretty sure that Kodak or Nokia had pretty healthy results when the wind turned for them.
Those kinds of ships are so big that it is very easy for managers, investors and employees to convince themselves that everything is _fine_.
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.
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.
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?
"Daily Active Users (DAUs). We define a daily active user as a registered and logged-in Facebook user who visited Facebook through our website or a mobile device, or used our Messenger application (and is also a registered Facebook user), on a given day. We view DAUs, and DAUs as a percentage of MAUs, as measures of user engagement on Facebook."
I've basically stopped using Facebook as a social network anymore, almost none of my friends post to it and much of what I see is shilling. But it's also functionally replaced CraigsList for me to sell things or give them away as well as as a news bulletin board for various communities I'm in (community garden, my gym, my local neighborhood news).
So in a way, I don't use Facebook in the way I've always used it but I've had to confront that I'm still checking it every couple of days.
It’s kinda what business analysts do.. white about the future of businesses. Ben writes about tech companies every day (4 a week?) and one article a week is free to non-subscribers. He’s smart enough to know which ones to give away. My guess is that it’s probs good for business to give away the flashy ones that get people talking.
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.
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.
Is it? It's entirely possible to both use something due to (perceived) necessity while still hating it.
In certain contexts that distinction may not matter - a user is a user, right, who cares how much they hate you? But if a large enough percentage of your users hate your service, it should at least in theory reduce whatever moat you've built that keeps them captive.
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.
There was also a long history of PDAs being commercial failures.
I'm not saying that Facebook will succeed there. But in the past VR was a failure because tech was just not ready. Is it ready now? Maybe. Will it fail? Maybe. But past failures will have nothing to do with future ones.
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.
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.
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.
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.
He doesn’t defend the metaverse spending. He argues it’s not that much comparably but a) that’s kinda subjective. Is 10 out of 40 billion a lot? and b) that’s no defense really.
They might have overbet on VR, but they remember acutely that they "lost mobile" which was basically an existential threat for them. Through major* effort they clawed their way back to the top on mobile. I guess Z thinks that VR is the next phase and that they aren't going to make the same mistake again. He's certainly been interested since buying Oculus.
Even if they don't sell a lot of headsets, they will probably have more experience than anyone else on what works and doesn't, and how that relates to the experiences they need to create. Of course this depends on VR actually mattering, which I doubt. Perhaps some of that will apply to AR, though when that goes mainstream is another big question.
* Normally the adjective "heroic" would be appropriate to describe the level of effort, but somehow I can't use that word when talking about a company, much less one like FB.
>The problem with this line of reasoning is that Meta’s capital expenditures are directly focused on both of the two main reasons for alarm: TikTok and ATT. That is because the answer to both challenges is more AI, and building up AI capacity requires a lot of capital investment.
>In the long run, though, this investment should pay off. First, there are the benefits to better targeting and better recommendations I just described, which should restart revenue growth. Second, once these AI data centers are built out the cost to maintain and upgrade them should be significantly less than the initial cost of building them the first time. Third, this massive investment is one no other company can make, except for Google (and, not coincidentally, Google’s capital expenditures are set to rise as well).
RL spending (that 10B you're mentioning) includes this capital expenditure. Obviously the percentage of that 10B going to deployment is unknown, but given that it's the most expensive part (according to the author), I assume it's the majority.
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.
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.
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.