Dead Cat with Alex Heath
4:07PM Aug 2, 2022
Welcome Sally Hey everybody, welcome to this week's dead cat. It's time to Tom here from insider joined by Katie Benner of New York Times and Eric newcomer of newcomer we've got this week, Alex Heath from the verge on to talk about the state of the union of social media. Heath wrote a piece the other week about how Zack is cracking down on all the lazy Fat Cat rest investors at Facebook. And that piece also came out around the same time that meta had its or I'm still not good at saying meta versus Facebook. Meta had its earnings, which were not great, you know, quarterly decline Q and Q declining revenue, not a good place to be for suppose a growth stock. And then also the bigger story was that Instagram was rebuked by its shadow Chief Product Officer Kylie Jenner, and the whole Jenner Kardashian crew also not great. And the FTC is suing them to stop its acquisition of a VR company. So Heath is going to be on to talk about all of that. And then also because Heath is on and I've just played Eric and Katie, anytime I had the opportunity to we should talk about SNAP, which had like, a near death experience, as one analyst said, but it had shit earnings, its stock is trading near all time lows. So that's a, that's a mess over there with with snap. But before aisled,
the highs and lows of SNAP, like it's hard to understand how I mean, talking about a sort of a critique of the efficient market hypothesis I don't, I'm interested to understand how it could be as wild as it's been, I don't
think snap knows what to make of not only like its stock price, but itself, like all of it just seems to be a mystery to the company. But before we do that, I want to shout out the composer of our theme music, young Chomsky, great synth music that we have opening and closing the show from young Chomsky is composer he's also a co producer on another podcast called True anon. And he very generously let us use one of his pieces for music, so I can't let it go without without mention, because it's been too long. Okay, Heath, thanks for joining.
Thanks for having me. Good to be back.
Thank you. So okay, where should we start with all of this? i Let's just go high level with the with the earnings just because we are in the midst of earnings season. And you know, Facebook has been, you know, eating shit. Over the last six months. They're down like 50% Nothing
that jolts listeners out of their seat more than let's talk about earnings. Right? Yeah.
Yeah, okay. I mean, nothing jolts listeners more than 30 50% of their it's good.
It's good. It's important that I substance eat your carrots. Let's understand the business before we just argue about what our feed should look like.
Yeah, yeah. No, tell me what I should take away from from from Zacks earnings.
What should you take away? I guess the headline was they had revenue declined year over year, for the first time ever. I thought what was really interesting about that was, though, that they said if it wouldn't have been for currency, conversions and headwinds there, which means, you know, the dollar obviously has gotten a lot stronger relative to other international currencies, they would have had a 4% revenue growth. So that like, I thought that was a pretty interesting call out, but yeah, it's, uh, it's not doing great. They're there during the, during the hard hard period right
now. And this is basically because of I mean, there's still the overhang from Apple's privacy changes that limited their targeting ability. I mean, just the general recession fears, when which which is it, it's still Apple,
it's mostly recession ad budget. Right now, I would say it's like 40%. Apple on top of that. I think it's hard to parse the two out with Facebook in particular and see exactly how bad just the the macroeconomic stuff is relative to just the Apple stuff. They're actually waiting internally for, I think, the first year of the full apple. When we're talking about Apple, we're talking about the prompt on your iPhone that says do not track me. That cost Facebook $10 billion last year, which is the same amount they spent on the metaverse and they're waiting until a year of that has been fully out in the world of that prompts being out in the world. Before they kind of do a full assessment. So they don't even really know internally how bad apple has been relative to just what everyone is experiencing.
Facebook was a trillion plus dollar company right now. It's worth 430 point 6 billion but
like so was I mean, what was zoom? I mean, there were so many companies that were just these astronomical valuations that yeah, everyone's just kind of coming back to Earth. And I think Matt is no longer it's no longer a growth stock anymore. That's really the problem right there. They're not growing, and they still make a good amount of profit. So
isn't that your expertise you were big on when Apple sort of switched from being a growth stock to a value stock?
Yeah, I mean, I think differences, the apples kind of got the market used to the idea that it wasn't going to be a growth stock. Whereas with Facebook, they continue for reasons that I'm sure Alex knows more. Visibly, the psychology of the C suite, the company itself seems to not be able to reckon with the fact that it either needs to start talking about itself, or as a stock that's not going to grow but will throw off value because it's communications company, because it's as essential as a telephone company, or whatever news story would want to tell. And for all these regulatory reasons, those stories seem somewhat unappealing, or it has to convince the market that it's going to get a next huge spurt of growth, akin to what happened in the switch to mobile, and that will be just as powerful. And I think that's why they're paying so much on the metaverse, but I don't know Alex, what do you think like why do you think the company isn't willing to start talking about itself and kind of a new a new way?
Well, I think they were until about the beginning of this year. So I've noticed Zuckerberg kind of reoriented back to the present. Whereas for like the pandemic, he only wanted to talk about the future and about the gross stuff, and the metaverse stuff, and the rebrand was done really right before the market went into freefall. Like it was really at the end of this like two year bubble we were in which is just kind of an interesting was
that their apex he was like he was able to evolve into its final form because of the
height of his powers. Exam. Yeah, I was like a Cronenberg movie kind of like
I am becoming.
And it's like with the stock price, you can track his public comments shift into like, actually talking about the current business more and talking about actual like, so he didn't, he didn't want to talk about like social media for two years like, which is the company's business like it was all Metaverse all the time.
He let's take your temperature as a proxy for Facebook, because last time we talked to you, you are extremely bullish. Yeah, about metaverse. Like, are you rein that in tactically seen a sort of shift in strategy from Facebook are you're still pretty optimistic?
I'm still bullish, flip flopping? No, no, I'm still I think that headsets like what I was saying in the last episode are about to get really good. I think the problem with Metaverse is that no one gets it and no one wants to like think it's potentially going to be something because like the it sucks right now. Like, quest is like not a great experience. It's not something you want to it takes 20 minutes. Do you think the
headsets could be good? Facebook can make a lot of money off them in the next couple of years? Yeah,
I think if the I think if the headsets in the interface and the battery and the resolution and just being able to like actually interact with people gets a lot better in these things. I do think people will use them. I think I think it will become inevitable to a degree for for certain use cases, not for everything. I love the real world. I just think
yeah, we're not gonna Metaverse fight. I just curious how much they're gonna back away.
I think this has like moved the goalposts farther out where now they're thinking he's being a little more clear, saying this isn't going to really be a thing for us until the end of the decade was just like, Okay, how long
can signals? Why would you do that? Unless like, what signals was he getting about its evolution that caused him to push it further out? I don't understand. Like, there hasn't been that much that changed between now then. And now other than its stock price and like a continuing decline? Like why would you suddenly like renewed,
not being ready, they keep thinking that Apple has been the same way Apple first thought their first headset was gonna come out like two years ago, they all these companies just have so so over optimistic about how fast the tech will progress. And Zach has been pretty clear that this is like the hardest technical problem that exists right now. It's like building a compelling, lightweight pair of Air glasses. So yeah, they're all night count.
I guess you don't want to be the guy in you know, the labs tells look like yeah, we're not even close, dude. I know, a couple of months ago, we were kind of telling you that was gonna get pretty close. Yeah, we did that we ran the numbers again, resolutions bad. It's not going to be good, man. I mean, I kind of feel for them. But again, I don't see why this was a new revelation.
There's an element of this where, because this is Fox baby and his pet project. What I've heard is that, you know, it's like, and there's been other reporting on this, even at Apple and other companies is like the demos that get given to these executives internally are like,
there's numbers reporters. Paper.
Yeah. Or they're just like, demo we know, people. Yeah, it can be hard to have people tell you how it really is. When you become someone like Mark Zuckerberg or
but also when you start running the company in such a way that people are afraid to tell you how. I mean, that was one of the interesting things about the story that you wrote about the all hands meeting that, you know, Zuckerberg used to be far more involved in those meetings, and far more willing himself to take harder questions. And he sort of like created a world in which he's insulated himself from both hard questions and annoying questions. And so how do you tell us? How do you be honest with somebody who's created that structure around themselves?
Well, it's two sided, because I would say yes, he has insulated himself as the company gets bigger, but the questions themselves have also changed. Like the, the way that the what what is on employees mind, and that's, that's really the main reason I wrote the story is like, in the last two years, the employees have really shifted, it's all about perks and about like, Are there going to be layoffs? And are we gonna have extra vacation days, like, the stuff that gets filtered up to him and all hands is not like strategy and like big picture. They're
they're activists, but for their own quality of life. And well, I
think it just goes to show like where big tech is at, I think it's the new Wall Street. It's the new cushy place where you can go and get paid a lot to not work that much. And there's
never as good on Wall Street, right
and at least roughly pretended you came to work super
hard. Like they took away their free lunches they took
like the perks were not that good. The money was good. The money was good, but the perks were the expense account. Facebook gave you free bike parts and laundry and dry cleaning and bus.
And they took it all away. They took it all away for like the promise you could live in Chicago. You know, I still work for Facebook. So can I read a quick section from your article because it really gets to the core of it. And also that your article pissed me off. Not like the way you reported or the writing but I was a little angry about the ways Zack handled himself through throughout all of this. Alright, alright, so here's your here's two graphs. This is a question from one of the people at the all hands high. They're the first pre recorded employee question started. I'm Gary and I'm located in Chicago. His question with metadata is extra days off introduced during the pandemic continue in 2023. Zuckerberg appeared visibly frustrated. All right, he stammered. He just explained that he thought the economy was headed for one of the worst downturns that we've seen in recent history. He'd already frozen hiring in many areas. Tick tock was eating their lunch and would take over a year and a half before they had line of sight to overtaking it. So this is like what sets us up to like his, I don't know like Wolf of Wallstreet, like tirade against his employees for being lazy. Okay, before we get into my opinion here, like tell me tell me so is this the first time anyone ever asked to talk about a perk? I thought these all hands are famous for people asking about like, why did you take away the m&ms in like the lunch room that were like previously stocked? You know, to
know here's, here's what happened. So this was this was an incredibly unusual all hands like, like a Zuckerberg doesn't do them all the time anymore. So whenever he does them, it's kind of notable anymore. They're usually very scripted very, like, he just walks through, like what they announced externally, like in the previous week, and says he's excited about it. It's really like become so buttoned up. Because I mean, people like me leak it all the time. And then what happened this week was he showed up and I really don't think they knew he was going to go into the kind of rant that he went into, where he spent the first 1520 minutes basically saying like, yeah, realistically, there's a bunch of people who shouldn't be working here. And I'm
saying the thing, everybody,
yeah, the quiet part out loud, and realistically, I'm going to, and he was saying, like, Look, I'm not gonna do layoffs necessarily, I'm not gonna roll them out. But I'm just gonna make it to where you self select out. And that's okay with me.
Like, Gary, even worse, just gonna squeeze you so hard that you don't want to be
just gonna turn up the heat. It'd be a lot of dead frogs in this in this pot of water.
Yeah. So So and then I could because I saw the recording of this and like, even like the internal comms person who's like the person who transitions the meeting into the different sections, it's like visibly like you could tell they did not know he was gonna like, go into this mode, right?
But there have got into him, you've got a surprise for you. And
then they have this pre recorded thing teed up. These are highly produced like, graphics on screen like
again, how can you be honest with anybody at the executive level? And this is your like point of communication with employees anyway, continue.
Yeah. And well, I'm just saying it was it kind of threw poor Gary under the bus because, you know, it was pre recorded. He's a real he's a recruiter. So he you know, this is actually we know Gary is real. Do we know Gary is a real Gary is real. He was a meme internally there were like polls internally about like, Gary for SEO.
This is fire this guy like, you know, and like, exactly. Tim Armstrong did. Mary Poppins where they take the guys hat and they turn it inside out or whatever. They were like Shirley Jackson.
Yeah, exactly. Exactly. Now there was like just a cinder somewhere like in you know, North River Chicago where Gary used to be, because I've like tried to pull his like Darth Vader force like maneuver on him.
Yeah. And then he asked about he has this pre recorded thing about the vacation days and so I was just like flabbergasted that day this was asked but be that he his team, he probably had this queued up and didn't like adjust on the fly. He wants
that just to be clear, the employee wants to have like the extra vacation days they got because of the pandemic being terrible.
Also, they worked in Gary worked in recruiting so so it was like he's like to talk to people about rights. This is like, the practical question.
It's not just self oriented. I see. It's like, oh, yeah, it was very unfortunate
timing. And then Zack is like, you know, based on my tone, you can see how I'll probably respond to this and then he proceeds to say that metadata are canceled, right? Wow. And
boys Welcome to hell, you know, tell them is not gonna be a good place to work anymore. Like
keep in mind like just last year you know, Facebook's HR team produced a video similar to the Virgin America video about you know, like FAA is flight preparedness all about their health care plans, where they did like wraps and songs about like how their health care plan was changing. So the pendulum is fucking swung late. Well, I
just want to point out certainly of all this is that this meeting ended with a video of an executive surfing so like he goes on this and it was it was pre recorded and it was already like set up but he does this like huge you know, talk about we got to buckle up for intense times and then they they throw to this video of an executive which is Zack
how long was it like two hours long? You have to watch like, No, everyone is just strapped to their chair.
It was like a mini video. It was like just it was like an exact profile but like following her surfing is amazing.
It's so good. Gary, you don't get any more fucking time off.
Well, I'm like that. So here's my
mind's eye Kubrick is working from Hawaii to like she like the employees want like a metadata so they can leave their like one bedroom apartments in Chicago and go sit by the lake for 20 minutes but Zach it was like working from his lanai.
Oh, yeah, that's the duality of this is like the there's a shitposting group inside Facebook internally called shitposting at meta and there really, there are memes of like Zuckerberg, you know, hydro foiling with the American flag and people being like, look at this coaster. Yeah, cuz there was a note that went out that really pissed people off after that, where this executive at the company that's engineering executive, he posted it in a manager's only group and it was like, identify coasters. Put them in a list by 5pm Monday we can't have like coasters at meta very blunt very like not how you should you know communicate this in written form. And at least someone in the managers group leaked it on Oh, why I think it leaked to the internation love it
people are very unhappy at this company. The executive
later is like it was a draft I didn't mean to publish.
The term for though we didn't hadn't decided on coasters yet. Cats
mean, this becomes a meaning. And there's like, you know, because there's this new mantra inside the company called meta meta mates me it's this new language
called is what? What
motivates like primates or meta mates?
Like, like meta mates like, like, you know, Butler's Google employees or Googlers? Yeah, if you work at meta, you're a meta mate. And meta, mate. This is what's really cool everyone like this was after the rebrand he did this big company value reset. I didn't write about it. And it was, it was, it was absurd, because like, you know, they had moved fast. They had all their company values. He's like, we're gonna go through and change some of these. And a new one was meta meta, Nate's me. So it's like about it's meant to be like, like, we're all in it together, I guess is the vibe of the mantra. But now people were doing coasters, coasters me coasters posting maybe I'm making like coasters like mock ups of actual coasters. Right. And that's what I was gonna say. If
I if I were selling anything, it would be coasters coast. Yeah. So yeah, there's just
there's still a very strong even with all the crackdown they've done internally on like, employee communication. I was very pleased and reporting this story to see that there's still a strong shitposting community.
I am amazed how much open dissent there is like Bloomberg never had like employees meaning about like how terrible the I mean, there's no way
it is when when Mike when Mike was mayor of New York City, though, and he was album veto. Right. A lot was going on in the
mayor and the public was an employee at Facebook.
Another stat in this story is that 42% of employees have confidence in leadership. So this was an employee survey that went out right God
No wonder you're getting people like you so much shit, they fucking eat this man. And they never they never understand that stuff. This is the best company in the world to cover. Right? And
they never understand that stuff. I mean, even like when we were talking to a meal last week, and he was talking about like, there were so many leaks happening at Uber at the time. And it's like, yeah, dude. That's what happens when people are really unhappy at your company.
This these leaks track to the stock price more than anything. I mean, we've all we've I experienced this like uncovering these companies when the stock is down. Because Pete for people who don't work in tech, which I'm sure it's like, no one listening to the show
had a job and to hang up the podcast, right, you
get you get compensated heavily based on the stock price. And you know, people are looking, they hired an entire company's worth of people like they started, they went into the pandemic with 40 ish 1000. They hired that amount in about two years. So they like more than doubled. And they were all working in this remote environment when the stock is at all time highs. And now they're seeing their compensation cut by like more than 50%. And they have no confidence or low confidence, record low confidence and leadership. So it's just a bad combination of like Zach, saying, You're all a bunch of like Grifters, and then everyone's saying, Hey, we don't really like you either.
So it's really interesting that you say this, because like, this is a little bit of a reap what you sow situation to, like, I remember in 2010 Basically, all of corporate America tried to recreate the this sort of like tech perk tech lifestyle phenomenon, because it's having so much trouble recruiting people out of college, because they were like, well, let me give unless we give people literally free shit like, hand over fist and give them free food and free espresso bars and all this complete bullshit, we will never hire anybody out of a top 50 school again, and the tech industry to accompany but especially at Facebook, they just talked about how great this was in terms of, you know, getting the best workout of people, they were never willing to concede that it was just going to create an incredibly entitled workforce. And so it's kind of, there's something very poetic about saying that incredibly title entitled workforce come and bite Facebook in the ass. Like, you're just like, you know what you made this monster, right? If you want us to work for something other than free shit, good luck, you created the culture of working for free.
And let's also talk about what's going on here, which was that during the pandemic, the momentum swung sharply towards employees. Because there was, you know, difficulty in hiring and recruiting and attrition and all the issues that these companies were facing, suddenly, they had a huge amount of leverage, because you could work for a huge number of companies, wherever you were living, you know, companies, wherever you living in the country, and this couldn't stand this, you know, this aggression could not stand when it came to, you know, the executives. And so I think they see the recession as the ability to do like a little bit of a reset on their part and say, you know, that meta mates are sorry, you know, the metadata things that we rolled out and your ability to live in fucking Chicago, Gary, that whole thing? Yeah, we're not doing that anymore. And the reason is that it's your fault. And this is what pissed me off about about Zach's thing, but you kind of jumped to it is that the employees are unhappy, too. And how much is suck himself, taking responsibility for the fact that he only has 41% approval ratings within his 42? I'm sorry.
Yeah, it's important to be exact here, Tom, know
that 1% is not a coaster? Sure.
It's a good question. I don't know the answer. I don't know what's inside his mind. I think he does think that hired, they over hired and they hired a lot of he needs missionaries right now. And they hired a lot of non missionaries. And I think that's how he sees it. And, you know, when you used to be able to just go to Google, or vice versa, for an extra 20 30% Pay bump, like, with no effort, which was the reality of life for these tech workers for the last few years, especially. It was you had to hire like you had to lower your bar a little bit. Because like, people had a lot of options. And now people don't have as many options. Google's not hiring, you know, their competitors aren't hiring either. So the it's, you're right, the pendulum is swinging back to the management and not the employees. And I think that's what this meeting really represented. And Zach is unique and that he's the you know, God King of Facebook, and can say whatever he wants and say, the quiet part out loud. And it's not really like, I think a lot of these CEOs are probably thinking similar thoughts, but they, for whatever reasons, you know, there may be like negotiating their next comp package with their board or whatever they feel like they can't, you know, tussle, the, you know, tussle things up too much. But Zuckerberg doesn't really care. I mean, he can, he can do whatever he wants with the company. So I think he was just ready to just say the quiet part out loud.
But he's also not an inspirational guy. I mean, I think he's also kind of uniquely weak in this period, because he's not the guy that can go out there and give like the Don Draper speech, and everybody rallied to work on weekends and shit, right? He's the awkward person who, I don't know what his face looked like when he was angry, but I'm sure you know, it wasn't read, very read. Maybe when he got read, Mark.
Everybody else has been wrong. I mean, that's the thing. Yeah. Always had. He didn't get the apple privacy. Right, though. Me I was an idiot when we did this. I mean, it's sort of transitioning into our next topic. I mean, like nobody thought, like, users didn't like feed. You know, it's sort of like and that's cool. There's,
I can't think of one I can think of not one CEO who's always been right. Yeah. And you could argue their problems consistently. always
problems they're in right now is because they didn't get a couple key things right, which Tommy mentioned, they didn't see the Apple changes, hurting them as badly as they did. They had plenty of opportunity to see that they were kind of like in denial for a while. And they also didn't see the Tick Tock threat right till it was arguably too late. So yeah, he does see around corners and certain key moments, but I think they're in the position they're in right now. Because for whatever reason, maybe because he's
back from Hawaii. This is the new rallying cry. He's asleep at the wheel back to California,
I think it's No, I think it's a matter of focus. He's definitely not asleep at the wheel. Like he's been super dialed in, based on everything I hear to like a kind of like stressful degree for people who are working on projects he's interested in. But the problem is, is like the projects he's been interested in are not making the company money, and they're not. They're not going to save it from the current environment that they're in. It's all like very future leaning stuff, which
is why I find it really frustrating for him to be chastising coaster. FatCat employees for not pulling their weight when you know, he missed the apple privacy changes. He didn't anticipate Tiktok the Instagram thing was a fiasco. We'll get to one second. And he's trying to get people inspired about this completely vague Metaverse thing that it's not clear anyone really wants. So I just I find it. It's a little rich. For me. It's luck. It's a little rich for me. So I'm taking your buyout offer. I'm not saying
I'm gone. I'm gone. You could you could see me walking along Michigan Avenue right now me and
Gary. Just hand in hand.
Talking about metadata, the metadata with your Okay, talk, let's talk about Instagram. Because that was a really funny story. Why don't you actually lay out what happened? Because I was actually out all of last week. So it really was just the bits and few times that I sadly turned on Twitter. So Instagram,
yeah, tell it Yeah, Instagram has been testing this redesign that looks and works like Tic toc. And people were starting to get the getting the AB group you know, for the tests they were planning to originally make it available for everyone in October it's full screen, right? Isn't that I'm full screen swipeable video, you know, and just a huge departure the whole app, not just real correct. And people obviously didn't like it. And the other reason beyond the interface is that part of this redesign is a lot of what Facebook calls unconnected content which is just content that's not from people you follow. So a lot of that is getting put in which is also tick tock right. That's tick tock, tick tock for you page is like you know, hardly what you follow, if at all, Kylie Jenner who you know, leveled snap with a tweet. Back in the day, Tom and I remember this well, when she hated the snap redesign. She wiped like over a billion off their market cap. She came out and said
it was great thing analysts having to put out notes following the Kelly Jenner announcement.
Yeah, she was like, bring back the old Instagram, you know, it became this like meme, there was a there was a like a petition, you know, all they reminded me of the snap redesign blowback,
which didn't didn't she say something about it being for family or something which
she just like, I want to see photos from my friends, which is
like Kylie Tao is she's, I think
she's the second most followed Instagram account, she has like over 300 million followers.
Like so dumb
brands are our friends, Eric, you as a millennial should notice.
I mean, if you're a celebrity, I understand you built a lot of time and money into getting a huge follower base of people to see your stuff. And all of a sudden, the company is deciding that they want to show people other things. And that's going to hurt your reach. So I can see why celebrities would be mad about this. But she was mad. And then what was happening simultaneously is internally this test was just performing horribly, it was just tanking engagement metrics, ad revenue. And so they paused it and Adam mosseri The head of Instagram did an interview with Casey Newton on his wonderful newsletter platformer and was like we are you know, the tests have not been good and we are going to reevaluate this and what's not changing is the unconnected content part so you're still going to be seeing a lot more posts from people you don't follow in Instagram and Facebook. But the the redesign that makes it look and work like tick tock with swipeable video that's that's been put on ice. So as a major l major
Zuckerberg posted a photo of himself with weekend on the lake. I just think it's odd on Instagram that Zack is posting a photo Isn't he supposed to be posting videos right now?
Oh, my God, what a fucking coaster. Yeah.
Message, man. Everybody's moving the video. I mean, I don't I say a couple things on this. Go. Please. You know, stories have shifted everyone to stories away from sort of the permanent photos and I get that Facebook is a company that rides different trends and they see people having sort of better internet connections and better phones with the capacity to record video and so they're like, Okay, we need to have video everywhere but as a consumer, part of what I like about the history of Instagram is just that the feed of photos is very like clean and high. And and part of the reason people are posting less is because they're so thoughtful about the quality of photos that they put in the feed versus the stories, right stories are first sort of quickfire and feed is for highly curated content. And so then that's what you're incentivizing people to create. And then they're mixing that feed with absolute garbage. And to me, that's sort of the issue here. It's like, yes, people are engaging with the core of Instagram less. But that's because they want it to be really premium. And you're taking this premium app and just like filling it with a bunch of random shit. Do you think that's a fair articulation? Well, what's sort of going on here,
I think you're getting at it, I think what's really happening here is that the grand experiment of organizing human communication at scale around the feed has not worked. It hasn't worked on Facebook, and it hasn't worked on Instagram. And what they've observed is that posting into feed, whether it's Instagram, or Facebook has just been on the decline for a long time. So what they have is an inventory problem. So when when your follower list is no longer posting in the feed, which matters because feed is how they make the most money, so they need to feed to have good content in it. Well, guess what, when your friends are no longer posting in there, they need to show you something, so they're going to try to figure it out. The problem is, is that they're way behind on AI that makes that something interesting. Whereas tick tock has shown them that like,
oh, yeah, this Oh, good at it.
It is yeah. And then, because Facebook invented the idea of ranking based on you know, your follower list. This was the original newsfeed inside the Twitter and everyone else's sends copied. Tik Tok took that idea a step further and said, We don't even need to know like who your followers.
Amazing. I feel like you aren't on it. Do not understand how good it is. It's serving you. So
Facebook is internally meta is reorganizing around this new AI push, and it's next to the metaverse this the most, you know, the highest like priority. Most money being spent is on how to build AI that no longer relies on who you follow. But this
is an extremely naive thing to say. And I know sort of the answer. But as a user, why can't you build a new tic tock Facebook? Why do you need to cannibalize the app we like if it slows down?
Don't worry. Do you remember lasso Eric? Do you know it doesn't work?
That's the answer your paper or paper? They're
basically going to murder the thing we like when also they can't acquire
a new app either. Exactly. They just tried that and it didn't work wasn't even an app.
Yeah, they can't acquire. And they need to put it where the user activity is, you know, this is if they're good. The problem is is like people are leaving the app, they're not engaging the most with it because of tick tock, and they need to bring Instagram. The problem with all this is like they've lost the identity of what these apps were right? Instagram is about entertainment, that when they tout the video, I find it so fascinating when they're bragging about like video metrics on Facebook and Instagram, like over 50%, or something of time spent in Facebook is just watching video, which is just not what Facebook was originally about. If Facebook was an active participatory thing, and Instagram was also that I mean, there was definitely an element of like passive Leanback. With Instagram, obviously, there always has been, but they've lost the participant. Yeah, the participatory element of this. And it's because all this behavior is shifting into private groups, chats, DMS, more content is shared into DMS and is shared in the stories more content is started shared into stories that are shared in the feed. So it's kind of like Final Exam hierarchy. There is Yeah, so everything is funneling. Yeah. So everything is funneling down into DMS. And it's because I think they've, they've created an environment in the feed that is just not conducive to like human communication, which was their grand experiment for the last 12 years. And it worked briefly for a moment in time. And then I don't know I'm fat. Do you guys know? Have you guys heard of this idea called context collapse? This does ring a bell for anyone. Yeah, I mean, it's just, it's this idea in social networks, where you let the graph which is your follower list, just expand and expand and expand and you lose a sense of who you're talking to anymore, because the purpose of the app has just become too vague. There's too many people on it. These apps tend to decay when they lose their original like framework of what they're what they are for people. And so be real, I think is taking off right now. Because be real has identified that the close friend graph, which is what Facebook used to be in its earliest days, what Instagram was also in its earliest days, no one's doing that anymore. Everyone has let their lists expand and expand and expand and people don't know who to talk to anymore. They don't feel comfortable posting because if you have hundreds and hundreds of followers, you're not going to post your what you would post on be real. And you're also not going to do the highly curated thing, maybe even anymore. And this is so ironic, because if you guys remember the last major ranking change that Facebook did was called meaningful social interactions. This is actually a thing that Francis Haugen called out in the in the auto leaks documents. It was a big deal in 2018. And what they were trying to do is there was a bunch of passive, shallow engagement happening because they were optimizing for time spent. So people were just watching dumb videos, that's what was getting up voted the most in the feed. They were like, We're gonna reoriented around to things that your followers comment on. So what did they do? They created this like flame war environment, right? Where the, you know, I've talked to people, the company who admit that this ranking change caused a lot of unintended consequences where they were actually trying to solve for an integrity problem, which is that like, The engagement was super shallow, people weren't having meaningful experiences in the feed. And in doing so they actually just hyper charged the emotions of everyone, because they're optimizing for comments and reshares from from your friends. And guess what, what gets and we see this in Twitter and retweets, what gets the most engagement, it's stuff that's either going to piss you off, or, you know, like, that kind of stuff. And so now they're just like, Screw it. Fuck it, like the feed is now just going to be like videos. Yeah,
I think what's so ironic and hilarious about this argument is that it is being you know, the argument against Instagrams redesign is being made by the person who is responsible for content collapse, because Kylie Jenner and that whole group of influencers, turn the app from something that could have been these are my vacation photos, you know, some kind of iteration of the thing that be real is going after into we are all celebrity AB hawkers that are trying to make a business of ourselves because our lives are so interesting,
but we should, it's not their fault. This is the company I just did an episode, a podcast episode about the history of Instagram and kind of how they would celebrities onto the platform
that they had teams of executives, specifically just went and train celebrities, yes, and attracted them. We interviewed
the executive who ran this program. It was a concerted, like intentional effort to get celebrities posting on the platform. It wasn't how the app just organically happened. They literally had to go convince Bieber and the supermodels to like post. And it was it was super intense trials. So I think it's the fault is none of users it's the company is the one who decides how these networks works and how they want the context to continue in the network. And if they want to expand it, or if they want to shorten it. And that's that's been the problem is that like Facebook, and its quest for engagement and revenue has just widened and widened and widened the aperture of what Instagram is to where it's now this weird shopping mall meets like video meets DMS meets stories. And now no one knows what it's for anymore. No, that's super interesting
because now like I feel like the mood on my Tik Tok is very much like, celebrities aren't like you and me like it's almost because the people can get famous on Tik Tok aren't these like big celebrities, but just interesting creatives, like majors, right? I saw one sort of charting out, you know, like the Elon, you know, that Elon selfie that was at one point sort of the epitome of like culture and it helped but that was sort of and now Tik Tok is like so hostile to that, you know, I mean, yeah, counter argument to that is like the the depth trial or whatever, but
until they get famous, right, and then they can build a business off of Well, I
don't know that that's even happened to that extent, Tom. Like, that's the funny thing. Like, it was at Charlie Amelio. She got her reality show. So you would think she would have then made the leap into like, bigger celebrity, but the reality show was basically about how much he hated beings. I mean, like, because very few human beings are emotionally and mentally equipped for the pressures that people staring at them all the time. It's totally fucked up. Like you can't leave the house. So I'm hoping maybe there's just he's I asked you this question, because it's my wishful thinking. Or they're also, it feels like the especially because of the pandemic, their cultural headwinds to working against what social media has always been this like, highly curated, look at people's lives, like, and I wonder how much of the departure is in addition to context collapse, people just thinking? Is it really worth my while to pretend like my life is great right now?
I would say that tick tock is less fake than Instagram was, oh, I guess that's what I mean about Instagram. Yeah, yeah. And that's what Instagram is trying to get to. And it's kind of, there's an optimist angle to it that I've heard where, you know, maybe humans are the problem here. And when you're braking based on how humans like interact and what they kind of like, ops towards which is usually like, you know, bad in my opinion, like in terms of like, how social media has been organized, like people just it can make people horrible to each other. Maybe if you're optimizing for just this, like aI driven approach where it's just content that this AI thinks like could be interesting for people maybe it will actually incentivize like a healthier posting.
I do think it would be good for America to obviously have a tick tock competitor. I mean, that would be the strongest defensive Facebook. Oh, you're gonna get a masters route
here on plateau media, you're gonna go the nationalist route here on
China's getting detailed psychological profiles on all of us. What are they
gonna do with that information
like that we are already doing with tour. So let's go here.
And even even forgetting the nationalist thing, even forgetting the nationalist thing, it would be good for there to be competition. I think tick tock is going to be huge. Like, it's only beginning. I mean, it's huge already, but it's just the beginning. I know. But like, I feel like TV is not run by tick tock yet, you know, it's still getting there.
Until there is evidence that there has been a coordinated intentional AI like aI induced like campaign from China to like influence what Tiktok recommends to people. I don't buy this argument that Tiktok is like a national
author anything to do with that information. You know, below it looks like Olivia Rodrigo is kind of meaningful to a lot of people in America these days
this time. People don't even say like suicide on tick tock, there are lots of speech controls on tick tock,
I think that the bigger thing with tick tock is that we actually don't know what other people see. So their audience outside of the United States, we're seeing very pro Russia videos on Tiktok. At the very same time that in America, we're seeing very pro Ukraine messaging on tick tock at the start of the war against, you know, Ukraine. So like, I think that is, the bigger thing is that we have less visibility into who sees what and obviously what happens on tick tock is extremely influential when it comes to public opinion. And so I think that that's why it's not, it's less like a Chinese communist, large mind control game, and just that another government may have the ability to really influence public opinion in countries outside of their own. So
in a country where the government is willing to influence their companies very directly,
even in our country, where I don't think we have to worry about, you know, the CCP, like influencing General Motors, but I think that we saw with the Johnny Depp and Amber Heard trial, that an algorithm was able to very much influence how people thought of those two human beings outside of the merits of the legal case, and then had real implications for, for example, you know, domestic abuse survivors all over who dare talk about what happened to them with little, you know, with little consideration of how much a single company was able to influence public opinion. And I think that's like the bigger issue, you know, if that will be really what happening with no insider controls,
but this is the same argument of any algorithm.
And that would be a problem at the company where I can, too, right, it's just that regulators would have more ability to dig in and ask questions, like have an oversight hearing, for example,
Bob? Well, yeah, I mean, don't forget, like Taylor Rennes had that story about how like Jen Psaki or whoever were like, meeting with Tiktok influencers so they could get people hyped about the American assistants in the
very same time that like, you know, intelligence community, people were like, Wait, going, tick tock. It was really, it was really
weird. Yeah, Katie, you're speaking to this unease that I think is only going to become like a more pronounced thing we're talking about in the next couple of years. Because like every app, Facebook, Instagram, Twitter is leaning into recommendations, every app is going into recommendations and feed, like, heavy. And so we were already concerned about I mean, are you guys just kind of I'm kind of shocked that Facebook, given all the scrutiny it's already had. It's just like, Fuck it, like, we're going to just dictate everything. Our tech is going to just dictate everything you see, it's not even because their fallback for years was well, at the end of the day, you pick who you follow. And yeah, we may like do recommendations, like on the edges. But this was there, I would hear time and time again and blame it on his like,
I mean, they're doing that they're still saying that people are engaging with video more. Well, that argument
is not going to hold water when like over half of your feed is like aI recommendation based recommendations. And so yeah, like we're already talking about like, man could the CCP influenced tic toc to be like, turn the dial up on this or whatever? I don't think that has happened yet. But it very well, like support
Ukraine versus support Russia. Yeah. And
we already have that unease we already like we are in our bones, we think these systems can be manipulated and controlled this way. And like it's just a concern people have this is like this is going to be Facebook, like in a year like this is going to be the exact same thing. So I don't think they fully have grappled with the scrutiny that they're about to walk into. And I hope what it does is actually clarifies the role that regulation could play on this because I think for a while we've been dancing around what is really the crux of like the power these companies have which is recommendations, and now that they're really leaning into recommendations as like their business strategy. I hope that maybe we get a little more sense of like where the power actually sits with these companies and I think that's kind of the core of it.
When we want to talk about SNAP because it's Tom's favorite company ever and I wondering like when you look at all these companies earnings Facebook snap happen, you see, you know, usage dropped. But do you see any signs that people are just kind of turning away from social media altogether?
No, actually, what was interesting is that Facebook users grew a little bit after they declined for the first time, a couple quarters. And that's being attested to time spent on video, actually. So I think the dumb videos are working from an engagement perspective, in the short term, but I don't know if it will in the long term. The thing is with like, even snap, it's still growing like the user base is snap as a business as one thing, like the user base is still growing, they have more users than Twitter. Yeah, and like they're, these companies are growing their users. It's mostly like outside of the US and Western Europe. But it's more of a business story than it is like a user growth story.
Yeah. And so snap is also an interesting case here, going back to like, earlier in our conversation, we're talking about like this hierarchy of DMS, to posts to stories or whatever, I mean, snap is an excellent DM tool, right? That's, that's its main usage for a lot of people is that it's a very, very good messaging app. That's not a very good business.
And it's also it's also a company that has done I think, a good job relative to everyone else with the problem of context collapse. Because if we remember what the redesign did was separate media from friends. And that was intentional, because snaps been, I think, fairly intentional and trying to keep your your friends on SNAP, as your actual friends not have a bunch of like, people you don't know, or like, you know, people from high school that you don't keep in touch with any more they actually try to encourage you to like keep that graph clean. And so I think that's why they've they've kind of had consistent growth. Honestly, it's that's a that's a differentiated approach, honestly, in the market these days. But yeah, the business is not there, it's still remains to be seen whether they're the next Twitter and that they languish forever trying to figure out how to have a scaled ad business, or they are something different. They haven't proven that they can be beyond the next Twitter from a business perspective. And I think we saw that last quarter in a pretty big way.
Yeah, I mean, I think it was last time that you were on that I brought this up, and maybe sounded dumb to a lot of people, but I still don't understand what its business is like what its ads offering is. And that's also it's
a it's a smaller, less scaled, less advanced version of Facebook's ad business. It's a Yeah, rack
snap, just for context is worth $16 billion. That's worth less than it was as a private company, I believe. Right?
Yeah. Yeah, I think it's last round before it went public was a routine. 15 Yeah. It's not the lowest it's ever been as a public company. I think it was like dipping below, like, five a share? Yeah. A few years. But
yeah, back in 2019. Yeah.
It's not it's a company that's public that still acts like a startup, you know, in the terms of like, how it just lurches from, you know, strategy to strategy and like, lets the business just tank for a couple quarters. And I think they just they're not running the business while yet I think that's the biggest problem. And they're spending way too much on stock based compensation. You know, if Facebook was IPO in 2012, right, and then rode this, they rode, you know, the bull market. Really well. Snap was kind of coming in later into the bull market, but like, like even more euphoria, where it was like, Evan has if Mark Zuckerberg has just over 50% voting control, Evan has 99% If you know, Facebook spent this much on stock comp, like snap stock comp is through the roof, like what they spend on stock comp. And guess what, like the market used to be okay with that as long as you were growing and snap has been growing and other markets completely changed. It's like no, we need to see like bottom line results. And guess what snaps never turned a profit. And it's that's that's a huge like issue going into this next phase of the economy. And the reason Facebook I think is set up fairly well relative to them is they do still print money.
What's so inexcusable about SNAP and I guess Twitter and Pinterest is that ads are a great fucking business. These are a high margin business and if you can't structure your company, and and you know, sell yourself to Wall Street and the way to build yourself a sustainable profitable company that's totally on you. And I think that the company's you know, in Mark Zuckerberg has spent a lot of time talking about his leadership. We see like a similar kind of problem happening with Evan. Right now. I did not listen in on earnings. I don't cover this company anymore.
He wasn't on there. He wasn't on earnings at all. He didn't answer one question.
He was so that's the thing, right? He apparently was on earnings. But as analysts were asking questions, he never took an answer. He just kicked it over, like silently to, you know, their chief financial officer and their head of business. And it got to a point where I saw rich Greenfield tweeting at me and he'd be like, Evan, how are you not taking an answer right now? Your company's stock is cratering right now you guys are down at 2% in the last six months, I was just looking. And he didn't say that. But like, that is the that's the context here. And Evans response was like, Yeah, I'm here, but um, you know, I thought my deputies were doing a good job.
Your point about Evan Tom. Like, he's younger than Mark Zuckerberg. He's made Bill billions of dollars, there's a lot of people at snap who have made hundreds of millions of dollars and the company has never made a cent and profit. And so it's kind of Uber in that way where like, you need the incentives of the top to align with the needs of the business. And I'm just not sure that Evan necessarily feels he feels the pressure and that his employees want to leave when the stock is low. And he can't like hire and retain people. But we're also going into this like recession where it's going to be people aren't going to want to jump jobs really anyway, because everyone, you know, all the stocks are down. So I don't know, it's, I think I haven't gotten a lot of credit for, you know, snaps early years where they really pioneered stories and all these social formats, and they're still growing, but like, yeah, the business is just his Metaverse is these AR lenses that will become shopping ways we shop and advertising in and of itself. That's why snap is like doing this developer platform where they're putting their camera and all these other apps is like, eventually the airlines is in those apps will be snap ads and like they'll have their inventory everywhere. The problem is, is like that's just not scaling as quickly as they thought. And it's hard to get advertisers to like wrap their minds around that. And advertising is a scale game. And it just, you know, you've got Amazon, Google and Mata and you know if they can reach the entire world for you, why would you necessarily like invest a lot in another platform. This is why Pinterest and Twitter and snap and all these companies can't figure it out. You know, they can't figure out scaled add place.
And the worst that snap does the less flexibility or freedom he will have to pursue his interests that are the reasons he's excited about running this company, which is building AR glasses, releasing selfie drones, all this shit that is part of I mean, look, if snap can't turn a profit and their stock price continues to languish, they're gonna have to cut that whole team at some point, right? There will be there will be no snap like you cannot defend a Wall Street, they're going to be spending however many 10s of millions of dollars a year it takes to keep this thing up that churns out a new pair of glasses every couple of years for no profit in you know, in perpetuity. And so yeah, there is a reality to the business.
We cannot Zuckerberg but he did, he did build the second largest ad business in the world that throws off billions of years, you know, billions a year in profit and can actually that he can that he can use to actually like he can, he can fund some stuff, right? Like he has a little bit of a leash to do that. Whereas like, You're right snap, they don't their leashes tightened completely. And I don't know, I just I'm waiting to see like the next act from snap as a product. Like I think idealistically like be real. That would have been like a snap thing, right? Because that that to me feels like a kind of like stories like conceit in terms of like getting back to office and authenticity. And to see another company do that. And for SNAP to not be doing that is a little worrisome for me, because I'm like, I thought that's what you guys were about, as you were identifying those needs that people have,
do you think that snap could acquire them? Would that make sense? Maybe Maybe because I don't think that snap is going to be barred by regulators from making acquisitions. In fact, I think regulators know, like, it'd be a good idea for them to love it.
I think their investors would frown on another like stock heavy deal right now when their stock conference like through the roof and they need to like cut a pin snap
right now. Say, Okay, Eric, you want to like could they inhale all my Instagram photos? And let me just keep building my Instagram. Like if I want to get
a snap? No, no, but it's because there's no way for that to work.
Somebody wants to build an Instagram rival, can they suck up with an API or they can't? I feel like that's where regulators most need to step in. Like, I feel like you want you want
interoperability? No, just the reason we countered Analytica
data portability, I just want easy, which is the
reason we had Cambridge Analytica, I find this so fascinating.
And Cambridge analytic I'm perfectly consistent on No, no, no, I'm
just saying the reason that that even existed is because of data portability shit on Cambridge Analytica as a story to be clear no as a story as what it did. It was Yeah, we should shut on it. But in terms of what happened, like the thing people were pissed about, that wasn't the Trump stuff. It was data portability, right. So the fact that the EU is like, we're going to try to mandate data portability. It didn't work out? Well, the first time, like that was Facebook's entire ethos was we're going to be the social layer of the web and let you take your friends with you and your friend data with you wherever you go. And like, we're going to be that the operating system with Facebook friend graph, but
if I want to like yeah, defect and take all my stuff, I mean, that would be cool. Then snap can say, Okay, we're going to rebuild your main photo memories app for your friends here. And you can take all those things and where would
where this where that ideal actually go is like picking your algorithm. So that's something Twitter's working on that's something that I think Facebook will do eventually where basically like you can say I want my feed to be no politics, or I want my feed to be like mostly my friends with like 20% recommendations. I think an ideal scenario is like, you're getting to like fine tune your feed
everyone. I am very skeptic everyone's just gonna pick the AI optimized feed. Yeah, it's like defaults rule that it Everybody knows that Yeah, well, the company's like, offer you the ability to make your own feeds. So you complain less probably. But I think that's a distraction.
Yeah. Yeah. It's all about making money. That's what I say. It's all about making money.
Great. I think we should have federal bill on social media that's not about antitrust, we need Congress to actually have principles about what could be done to make it so other companies could really compete with Facebook. And so users would have more
companies I think, be real. I mean, be real is a perfect example of like the fact that this is something that is relatively fragile,
I open up be real, it's all venture capitalist. It's like it's not my that's because the network is really hard to build a new network. That's because you need more friends in your address.
Yeah, I feel like you've you found exactly the amount of real that you're willing to accept. What is what is better walk through a light rail
investors, you know?
Yeah, like, I don't think two things can be true at once here. You can't say Facebook is like a monopoly and like social media is this entrenched thing where no one can compete. And you can't also say like, Facebook is like being destroyed by Tik Tok and like, right, like reorienting the entire company to try to compete with tic toc and be real is at the top of the App Store charts. And snap is still growing and discord is still growing. Like, I just I think social media is like, I don't know what I mean, you're saying you don't want the bill to be antitrust focus, right? You want it to be focused on what I mean, if it's not an interest, when
asset to your point with antitrust, like antitrust regulation is creating the conditions by which a company other than Facebook will be incredibly innovated and get to get big.
Right? Yeah, yeah. So Eric, what do you mean, in terms of like, what, what legislation do you want to see on social media?
You will be great to see Congress thing through like the oversight board type category, like what sorts of decisions shouldn't be outside of companies? And what sorts should be in them? What responsibility for transparency about their decision, you know, to give the Conservatives about if somebody is Shadow banned, or whatever, do they have a responsibility to disclose it, you could put a lot of reporting requirements on these companies and say, you have to be transparent about XY and Z, you have to implement this process for this. Obviously, any rules like that, then sort of advantage, the bigger players, you could set some sort of threshold of market cap or users or something for who asked to apply it. But I would just like a principles based approach where our society actually reckons with what it wants in social media and puts that into legislation isn't that that's what government is supposed to be. We think about our values collectively, and we articulate them
through I don't think people know what they want. I don't think people know what they want, either. I mean, I'm not social media. I think the politicians who who talk about this don't know what they want. And
the lazy way to do it like anti dress is just we hate it. Blue. Antitrust
is not No, no, no antitrust is we're going to make sure there's not a monopoly. Antitrust is we're putting Facebook in a position right now where it can't just keep on buying other companies. So other companies have the chance to rival Facebook. So then there can be market competition. That's not we hate Facebook. That is literally we want there to be
motivates them is hatred of Facebook.
No, it's literally we don't want a monopoly. I mean, I guess you could say that, I guess you could say that they hated the big railroad companies. I mean, it's just saying, we want to have competition in this area of growth. And we don't want one company to be able to buy all the smaller companies.
Are you just in competition, worried about antitrust,
Microsoft antitrust lawsuit that gave us Google? We wouldn't have had Google if there hadn't been antitrust regulation imposed on Microsoft. Like, that is the creation. That is why that is why it's done. So that competition can create new and innovative companies that have the chance to become sure large company.
I'm not saying I hate antitrust law overall. But I think antitrust is a cop out in terms of actually regulating Facebook and social media, based on
a must the thing you care about is whether or not they have a monopoly in which case it is the actual right. I mean,
tic TOCs. Huge as we've been saying, yeah, there's like there's I feel like there's the capacity to tick
tock as not an American company. No, but
I hear what Eric saying, I do think there is a difference between one of the main goals of anti trust, which is that concern with monopolies that they can do price fixing. And they could, you know, charge advertisers, you know, infinite amounts of money to reach people because they're the only outlet to reach people,
which is not the that's not the case. With Amazon,
like Google. I trust. I'm much more supportive, like Google behaves like I'm an app. Well,
they own they own the rails and like what sits on top of it, that's the Google problem. But Katie, actually, we'd love to know what you think about Lena Khan's first big move as FTC chair, trying to get meta to not buy a tiny VR company.
That's what I was referring to earlier. Yeah, that was really interesting. You know, basically, it sounds like she's saying, Well, Mark Zuckerberg, if you're telling us that this is really the future This is where all the money is going to be. And this is going to be the most important thing. Well, then I need to let lots of different companies experiment in this area before you just buy them all. Because otherwise, yeah, all that's happening is you're jumping the game you've called the end, we know how it's going to how it's gonna turn out. And you're ensuring that nobody else can reap any of the benefits.
But Apple is a major competitor in this one.
No, well, not yet. But they will be but Katie, like, what is the I would love to know, like the legal argument for we think this thing might happen, therefore, based on antitrust grounds, is what is the what is the?
I don't know that we think it will. It's the it's like, it's like you the company told you the company.
If the market is not what it is yet, but the regulation is being done, because it may be become that, like she mentioned the Clayton act in her in the in the complaint where it was like, we basically have to defend this under the Clayton act. And my understanding of that is not, I don't really see how that applies to something like a tiny VR startup in a market that is, is not monopolized, or nor does it have like significant powers. It's not like a power,
I guess the I guess I'm get my and again, keep in mind, I'm not a lawyer, but I think that the piece of the Clayton act that she'd be referring to be the predatory piece, probably not that which
is the Instagram and WhatsApp challenges. Right, right.
It's time to embrace legal realism at this point, who shares like I watched anything happened? Here's,
Eric, that's very interesting. You can't be like I want there to be. You can't say I want Congress to come up with a really rational articulation of what they want from social media and then later say, have you seen anything that's happening in our society? Why do we think this is?
I'm saying that in line with my belief that there's legal, I'm just saying, it's sad that we now live in a society where we can't use the legislature to actually formulate our views on social media, but we just whine about it all the time. And similarly, we live in a society where yeah, like, the legal system is not values based. I mean, to me, those, those things are related. I'm not saying
antitrust laws, not values. I'm saying a lot like the effect
of the Microsoft decision, Microsoft antitrust prosecution basically failed, but it succeeded by just scaring the shit out of Microsoft and allowed people to compete, and that a lot of the actual antitrust politics or just power politics. And so whenever you're arguing about how are you allowed to do that, it's like, well, if she can do it for long enough that they're not able to acquire it. That's what matters more than I leave,
is that values based? Are not values based. I'm
saying it's power power base. And is that in sort of some legal rationalist?
Couldn't you say that every
law is that without that would be sort of like legal?
Couldn't you say that, like, anti discrimination laws, anti hate crimes law, that the, you know, the Matthew Shepard jamesburg Anti hate crimes law is simply that screaming that shit out of people's they don't punch people? I mean, I'm not really sure. I mean, what do you think a lot does. But
the Lena Khan idea is to expand anti trust views, as much as you can get away with like, I just think that's a fair. Well,
let's be like, let's be clear. She herself, Lena Khan, herself said and one of her first interviews that I'm going to intentionally make, do cases where I know that our odds of winning are incredibly slim to none, but I'm doing them to send a message.
Right power. That's right.
And I've heard people say the same thing. They're like, even if the Justice Department could never win a case against Trump, they should indict him to send a message.
It is exactly the contrast and think how Merrick Garland seems to be behaving. And Lina,
do you think that there are garlic? Do you think that the Justice Department should indict Donald Trump, even if they think that they could lose before a jury of his peers? Even if they think that it's the right thing to do and that he did something wrong? Do you think that department should indict Donald Trump if they think they could lose in a court of law? I'm guessing the answers, I'm guessing the answer is nothing you
can lose. It depends on percentages and what the case is. But I do think like, certainly you want to think it's more likely than not you could convince somebody right? I do think that's,
well, some people some people say that even if they had airtight evidence, very good evidence, and they could indict Donald Trump, that they would ultimately lose because the case would get appealed. And it would never pass the appeals bench in DC or certainly not. So at that point, should they indict him? If the chances are slim to none, they'll ultimately prevail.
I think with antitrust specifically, right now, when we're talking about, you know, citing the Clayton Act, in order to explain the act of 21st century companies. There has been I know this is a very, you know, debated topic in DC or among like antitrust lawyers. It is very difficult to find the exact perfect legal precedent in which you can explain the actions of a lot of these tech companies and how that falls into the typical umbrella of antitrust, which is that this is causing consumers harm, because they can be price gouged. Right. That is the core Lena Khan's whole paper on Amazon. Son, right and right. And so I think I actually have less issue with her taking a novel legal approach to, you know, filing cases against Facebook because it doesn't necessarily fit within, you know, historical precedents. But saying, look, let's try this out. Let's, let's see, we can get these arguments out there in the public and debated in a way that maybe the suit doesn't work. But it at least pushes things and the conversation, the legal conversation in a way that we can have an intelligent modernization of antitrust law, that we all, I think, would agree that there is some issue with multi hung $100 billion trillion dollar companies having untrammeled power over the way they run their business and other small businesses that you know, the current system hasn't fixed. And so
yeah, Tom, I'm coming around to this actually, in that I think she will have an easier time defining market power monopoly power with VR than she will with social media. Because Oculus is by far, the VR industry, like it is pretty much just Oculus. So if you want to have like a narrow market definition to try to argue monopoly power, she should be doing it in VR and not social media. And that's why I think the FTC has already had trouble with its big complaint, the suit about Instagram and WhatsApp and market definitions. They didn't even include Tik Tok in their market definitions for the Instagram WhatsApp challenge, which is insane to me. But yeah, I think the VR side, you could argue they're, they're a monopoly. And so maybe they should, you know, if you could go back to like early App Store and make sure that Apple couldn't just leverage the App Store to become what it has, which they most certainly did. There's no question, then yeah, maybe you should do that. And if Mark Zuckerberg does think this is the next major computing platform, I just have a problem with like, the like, we think this might be a things therefore, we're going to do this now. Yeah. You gotta like come up with the fact that this is a monopoly. Mark. Yeah. Yeah. It could it could happen. I mean, I think it's hilarious that this like government complaint is like talking about beat Sabre, and how are you trying to like define beat Sabre as a competitor to supernatural, they're just totally not. And it's just really funny to see them try to stretch this, like,
interesting, too, like antitrust is in some ways unique. But at the end of the day, especially around policy, these things do get changed, like our government positions, and the way that laws operate. And the way that things are regulated through laws are through laws, and courts often shift and change because people are willing to bring novel cases, right and stretch the law or try to move the law. So we don't just see an antitrust, we see it with abortion, for example, we've seen it in a lot of ways. So I don't think it's unique. I don't think that what Lena Khan wants to do is necessarily incredibly unique. I mean, it'd be cuz she did come out and say it, it upset a lot of people. But I think that we see it happening in all sorts of ways around other things, you know, people saying, like, we're gonna start bringing novel cases and states across the country, because we want to bring a challenge to Roe versus Wade and get it to the Supreme Court. So finally, someone can finally help us figure out in this context, the 21st century, what we really think this practice, we're going to bring a bunch of novel cases, so we can get them finally to another litigate, you know, to another judiciary, but build this case, again, the Supreme Court, so we can finally figure out what's what schools should do around their admissions policies and race around voting rights around, you know, election issues, like it is not that unusual to say, it doesn't matter if we're going to win or lose, we want to bring the case to test it, to see what happens and to see where we get, like, lots and lots and lots of times this happened.
I just wish like on other issues, the Democratic Party would lay out like what it wants, like what the end state is, like, we think app stores should have. Like, like, if they have legislation,
Republicans are really good at they're like, We want to get rid of affirmative action. With the goal.
These are the cases we're gonna lose exactly 25 bucks, and they did lose for 25 years. But they're gonna win now. Like, lay
out what you want and legislation. And then if you feel like okay, we can't pass this bill. But this is what we have all come together and said, We want us antitrust to get it. I'm like, okay, at least it's aligned with principles you've articulated. But I think the inability to articulate in legislation, what they want, reflects just how dumb and simplistic the thinking about social media is. And then anti trust has been wielded.
It's not that it's dial. It's political. They don't want to say what is the real motivation of this, which is that like, it's hatred of Facebook, like it's, you cannot tell me that out of all the monopoly, and I trust concerns Apple just kneecapped the digital ads online ecosystem unilaterally right prompt more than any regulator has ever been able to like change how digital ads work Apple just did it with a prompt I know Facebook worked on it antitrust lawsuit they were about to file other companies have looked at it this has pissed a lot of companies off it's it's destroying small businesses like I'm working on a story about this. It's actually fascinating how like, DTC brands, can't advertise effectively anymore. Like it's their costs have gone so far through the roof because of Apple. So we're talking about pricing power, platform power. There's Google, there's Apple, there's legitimate, like monopolies that exist in the world today. I would love for our government to be focusing on those. And not necessarily, I do think it's important to look to the future. But I think we have a lot to deal with in the present. And I think the fact that Lena Khan's first big case was about a VR app. That is a meta thing says a lot about just where the government how the government feels about Facebook. Yeah.
What the startup industry one, I'm
sure that the regulator's personally hated Andrew Carnegie Rockefeller, like, you're right. There's all the I mean, these these things are often about power. And so is there, you know, animus against some of these companies or people as the regulators are dealing with them. I'm sure if you've read like a really great history of, you know, US Steel, you would totally see a hatred of Carnegie motivating a lot, I'm sure.
Anyway, thanks, Keith. This was great. Thanks so much for joining. We'll see everybody, everybody back here next time. Thanks so much. Silicon Valley Goodbye, goodbye. Goodbye. Goodbye. Goodbye. Goodbye. Goodbye.