Speaker 1: Well, Meta Platforms CEO Mark Zuckerberg, as we've been reporting,
Speaker 1: says that the company will cut more than eleven thousand
Speaker 1: jobs and that represents about of metas workforce, joining us
Speaker 1: to discuss his mandate seeing Bloomberg Intelligence senior tech industry
Speaker 1: analyst mandive. We've discussed some of the other ways that
Speaker 1: Meta is trying to cut costs as well. We never
Speaker 1: like to hear about job cuts, but is it actually
Speaker 1: going to be enough to turn things around for Meta?
Speaker 1: I mean, let's put it into context. So Meta actually
Speaker 1: grew their employee base from twenty five thousand to almost
Speaker 1: eighty five thousand in a span of four years. And
Speaker 1: this kind of growth you could argue, you know, during
Speaker 1: the pandemic, the company was growing, uh, you know, and
Speaker 1: they were growing employee based in line with that. That
Speaker 1: is what led to this situation. So what they're doing
Speaker 1: now is going back to their levels. And I think
Speaker 1: in terms of the offset, they're spending about you know,
Speaker 1: fifteen billion dollars in operational costs on the reality labs,
Speaker 1: the Meta worst segment that they thankful growth you know,
Speaker 1: for the next few years, but essentially, you know, the
Speaker 1: core business is still generating free cash for margins. So really,
Speaker 1: if they peer back the reality labs, then this will
Speaker 1: look a lot better. But otherwise I think we're just
Speaker 1: going back to where they were back in in terms
Speaker 1: of the employee account. Can I push back a little
Speaker 1: bit on that because we know that the digital ad
Speaker 1: market is contracting right now, and I know that Meta
Speaker 1: on that front has to be facing somewhat of a headwind.
Speaker 1: Fair statement, absolutely, and it reflects in the ad pricing.
Speaker 1: So They're pricing has been declined double digits this year,
Speaker 1: but that is something that's affecting everyone Alphabet and you know,
Speaker 1: all the other players in the industry, so that cyclical,
Speaker 1: that component will come back. Yes, they have pressure from TikTok,
Speaker 1: that is the other headmen that they face and which
Speaker 1: is somewhat affecting Meta more than the other players. But
Speaker 1: I think even that will improve over time. Maybe there
Speaker 1: is a band on TikTok that could be good news
Speaker 1: for Meta. You're right as well in some of the
Speaker 1: Bloomberg intelligence pieces that we're looking through that you have
Speaker 1: seen engagement on the core Facebook app peaking, And I
Speaker 1: think that we could all argue that when we look
Speaker 1: at our own interaction with that app, So tell us
Speaker 1: where the bigger growth is then coming through. I mean,
Speaker 1: we chink about reality labs, but is it is it
Speaker 1: the likes of reals? Is it Instagram? Where do we
Speaker 1: see some more kind of a guest movement formata? Yes,
Speaker 1: so on a standalone basis, Instagram is still doing very
Speaker 1: well from an engagement perspective. And the ad pricing compression
Speaker 1: is not affecting Instagram as much as it's affecting the
Speaker 1: core blue app, So clearly Instagram is still working. WhatsApp
Speaker 1: has actually been a bright spots so Matter recently disclosed
Speaker 1: in their earnings that click to message ads is almost
Speaker 1: a nine billion dollar run rate business. And again, this
Speaker 1: company is over a hundred and twenty billion dollars revenue
Speaker 1: run rates, so pretty sizable given you know, the WhatsApp
Speaker 1: was always something that didn't monetize very well, so that
Speaker 1: seems to be improving. So definitely some bright spots to
Speaker 1: call out. But when you look at a company with
Speaker 1: over a hundred billion dollar revenue run rate, you need
Speaker 1: something big to drive that next leg of world. Now
Speaker 1: the company fields its matter worse, but so far there
Speaker 1: hasn't been any commercial success or you know, Uh, it's
Speaker 1: kind of a jump in installed base of r headsets
Speaker 1: and and that's why I think it's too premature to go,
Speaker 1: you know, that big in terms of committing fifteen billion
Speaker 1: dollars in APEX and another ten billion dollars in CAPEX
Speaker 1: spending on something that we don't know it's commercially viable.
Speaker 1: So you mentioned TikTok, they're obviously the social media landscape
Speaker 1: has changed pretty dramatically, and we see what's going on
Speaker 1: with Twitter right now and the challenges facing the new leader,
Speaker 1: Elon Musk. I know, Mandeep, it's a bit of apples
Speaker 1: and oranges. But can you see anyway that Meta or
Speaker 1: any one of its platforms, whether it's Facebook or Instagram,
Speaker 1: any one of those platforms can benefit from a lot
Speaker 1: of what we're seeing at Twitter. They could, But again
Speaker 1: the question is what will move the needle in the
Speaker 1: case of Meta. So even if let's say, you know,
Speaker 1: a billion dollars of ad revenue get split across all
Speaker 1: these competing platforms, whether it's Meta or Snapchat or Pinterest,
Speaker 1: it's not going to move the needle for Meta. It
Speaker 1: could move the needle for Snapchat or Pinterest because they're
Speaker 1: much smaller in size, but for Meta, given their size,
Speaker 1: like the Apple at pricing, headwind is about a ten
Speaker 1: billion dollar drag on their top line this year. So,
Speaker 1: just to give you a sense of the magnitude of
Speaker 1: what Apple has done, because of all the privacy changes
Speaker 1: and the lower ad advocacy that Meta has, they're losing
Speaker 1: almost ten billion dollars. Now something has to offset that. First,
Speaker 1: I don't think it's going to be Twitter's revenue. We
Speaker 1: talked about the fact that losing your job but never
Speaker 1: never something we want to hear of metas workforce that
Speaker 1: is facing that that more than eleven jobs. Who do
Speaker 1: you think might be looking to pick those jobs up?
Speaker 1: Because a smart company is going to look for talent
Speaker 1: when others are saying, look, we can't kind of deal
Speaker 1: with that right now and potentially move their business forward. Yeah,
Speaker 1: So look, I mean there are companies that are looking
Speaker 1: to expand into ads, and what Apple has done is
Speaker 1: really created a level playing field for anyone to benefit from,
Speaker 1: you know, first party data. So even retailers are looking
Speaker 1: to offer their own app platform. A company like Roadblocks
Speaker 1: that reported results today, much smaller in size, but they
Speaker 1: talked about expanding their head count and roadblocks is also
Speaker 1: a metaverse played to an extent because they have you know,
Speaker 1: three D games, even though you don't play it using
Speaker 1: the VR headsets, it's all three D content. So look,
Speaker 1: there will be a company that will uh you know,
Speaker 1: emerge out of this downturn and and really take share.
Speaker 1: And uh, I think the smaller ones I have a
Speaker 1: better shot at it, all right, Man, Deep, always a pleasure,
Speaker 1: Thank you so much, Bloomberg's men, Deep saying from a
Speaker 1: Bloomberg Intelligence he is our senior tech industry analyst.