WEBVTT - Meta Disappoints and US Chips Bill Passes the Senate 0:00:02.200 --> 0:00:05.520 From the heart of where innovation, money and power colli 0:00:06.320 --> 0:00:10.840 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:27.000 Emily j F'm Emily changing San Francisco and this is 0:00:27.040 --> 0:00:29.720 Bloomberg Technology. Coming up in the next hour. Met Up 0:00:29.760 --> 0:00:33.479 falls after reporting its first ever decline in quarterly sales 0:00:33.840 --> 0:00:36.520 added to the list of social platforms. Warding and add 0:00:36.640 --> 0:00:40.040 pullback will hurt the bottom line and the division that's building. 0:00:40.040 --> 0:00:44.120 The metaverse Reality Labs lost two point eight billion dollars 0:00:44.400 --> 0:00:47.640 in the quarter. We will discuss class The Senate passes 0:00:47.640 --> 0:00:51.640 ability to reinvigorate the U S ship industry, but PC 0:00:51.800 --> 0:00:54.840 sales are slowing. US consumers get out of this pandemic mindset. 0:00:55.080 --> 0:00:58.200 How will this change how Silicon Valley does business abroad? 0:00:58.640 --> 0:01:02.680 Will discuss and more bad news for coin based Kathy Woods. 0:01:02.800 --> 0:01:05.520 Arc just sold seventy five million dollars in shares after 0:01:05.560 --> 0:01:09.720 the SEC announced an investigation into trading activity. So why 0:01:09.760 --> 0:01:14.199 are shares up double digits? We will explain. Let's stick 0:01:14.240 --> 0:01:16.959 with Metta now and bring in Deborah Ojo Williamson, principal 0:01:17.000 --> 0:01:19.840 analysts at Insider Intelligence, as well as our own bloo 0:01:19.920 --> 0:01:23.360 Room News Executive editor Tom Giles. Let's let's let's break 0:01:23.360 --> 0:01:26.800 down these meta results, Tom. You know, they don't look good. 0:01:27.000 --> 0:01:30.319 Engagement was, you know, came in slightly better than estimates 0:01:30.319 --> 0:01:33.920 when you look at daily active users, but revenue dropped. Uh, 0:01:33.959 --> 0:01:36.800 you know, ad revenue UM coming in light and the 0:01:36.840 --> 0:01:40.240 first quarterly sales decline. Ever. Yeah, well thanks for having me. 0:01:40.840 --> 0:01:43.360 The thing that people are really focused on the outlook 0:01:43.360 --> 0:01:46.360 for the third quarter, and it's not good. It's going 0:01:46.400 --> 0:01:51.160 to come in well below analysts estimates UM. The miss 0:01:51.240 --> 0:01:54.080 on the revenue side. Some of the active users they 0:01:54.160 --> 0:01:56.240 gained on the daily but not on the monthly. So 0:01:56.560 --> 0:01:58.800 it's a very mixed picture there. The shares are down, 0:01:58.840 --> 0:02:01.560 they're not falling out of bed. People aren't looking this 0:02:01.680 --> 0:02:04.000 and looking at this and running around like their hair 0:02:04.080 --> 0:02:07.680 is on fire. Still, it's not a great look. You 0:02:07.760 --> 0:02:11.040 have remember that that Mark Zuckerberg has made this big 0:02:11.080 --> 0:02:13.480 pivot toward the metaverse, and he's talked about we're gonna 0:02:13.480 --> 0:02:15.799 lose money on that, We're gonna spend ten billion dollars 0:02:15.880 --> 0:02:17.720 on it, We're not going to make a profit for many, 0:02:17.720 --> 0:02:20.079 many years. Right around the same time we get the 0:02:20.120 --> 0:02:22.799 war in Ukraine, we get this this sense of a 0:02:22.919 --> 0:02:26.040 slowdown in the US economy and the global economy and 0:02:26.160 --> 0:02:29.359 advertisers really pulling back. We saw it yesterday from Alphabet, 0:02:29.520 --> 0:02:31.720 and we're seeing it again today. And David Winner, the 0:02:31.760 --> 0:02:35.400 CFO for just a few more weeks, came out and said, 0:02:36.040 --> 0:02:38.919 we really see advertisers facing headwinds and there's a lot 0:02:38.919 --> 0:02:42.760 of economic uncertainty and they're pulling back. Same messages we 0:02:42.840 --> 0:02:47.160 got from Ruth Poor at CFO of Alphabet yesterday. All Right, Uh, Deborah, 0:02:47.360 --> 0:02:50.359 let's talk a little bit more about this. Obviously, we look, 0:02:50.440 --> 0:02:55.959 we're we're looking at chairs. They're uh. Zuckerberg saying Metas 0:02:55.960 --> 0:03:00.239 products are continuing to grow in a challenging macro environ men, 0:03:00.440 --> 0:03:04.520 challenging macroeconomic environment. Those are the words he's using. The 0:03:04.520 --> 0:03:08.560 company also saying they've reduced hiring an overall expense growth 0:03:08.639 --> 0:03:13.520 plans this year. What are your headline takeaways, Debra? Yeah, 0:03:13.600 --> 0:03:18.000 So I remember years past when Mark Zuckerberg would start 0:03:18.040 --> 0:03:22.359 out his quarterly earnings recap with phrases like it was 0:03:22.400 --> 0:03:25.560 another good quarter or it was another great quarter. Um, 0:03:25.639 --> 0:03:28.360 we are not seeing that anymore, and not for the 0:03:28.400 --> 0:03:32.160 foreseeable future. When it comes to Meta. Uh, this year 0:03:32.200 --> 0:03:35.960 over year quarterly drop in revenue. Well, I think it 0:03:36.080 --> 0:03:39.960 was pretty much baked into expectations by this point um 0:03:39.960 --> 0:03:44.560 among investors. Uh, it's really showing just how quickly Meta's 0:03:44.680 --> 0:03:49.440 business has deteriorated in this uncertain economy that's affecting all 0:03:49.480 --> 0:03:52.680 of the digital ad supported businesses. You mentioned Google, you 0:03:52.760 --> 0:03:55.880 mentioned Staff and Twitter. Uh, you know, we're all seeing 0:03:55.960 --> 0:04:00.760 them having difficulty in this economic environment. One thing that 0:04:00.800 --> 0:04:04.040 stood out for me with regards to Meta was the 0:04:04.120 --> 0:04:08.360 drop in ad prices. So we saw a fourteen percent 0:04:08.680 --> 0:04:12.480 drop in add prices in Q two That came after 0:04:12.760 --> 0:04:17.400 a QU one drop of of eight percent. So you 0:04:17.400 --> 0:04:20.279 know that really I think factors into what we're seeing 0:04:20.279 --> 0:04:23.680 going on with Meta's platforms. Now where the the ads, 0:04:23.680 --> 0:04:25.680 I mean, I guess to the advertisers, that's good news. 0:04:25.760 --> 0:04:29.080 The ads are getting cheaper but for them, but it 0:04:29.160 --> 0:04:32.560 doesn't add up to very much revenue. And as Tom 0:04:32.600 --> 0:04:34.760 pointed out, you know, we're looking at Q three in 0:04:34.880 --> 0:04:38.880 Q four now and we are not expecting anywhere near 0:04:38.920 --> 0:04:41.880 the performance that our forecasts had led us to to 0:04:42.560 --> 0:04:46.400 uh to predict, at least even as as recently as 0:04:46.440 --> 0:04:49.520 just a couple of months ago. Now, Dave Oyner, the 0:04:49.640 --> 0:04:53.239 current CFO, moving on to become Chief Strategy Officers, Susan 0:04:53.320 --> 0:04:57.640 Lee VP of Finance becoming CFO, the first female CFO 0:04:57.760 --> 0:05:00.200 at Meta I believe, ever, and this is get to 0:05:00.279 --> 0:05:04.760 be Cheryl Sandberg's last earnings call. Does Facebook have the 0:05:04.760 --> 0:05:10.600 bench Tom too, you know, continue to grow this company? Well, 0:05:10.680 --> 0:05:12.800 you've got You've still got other leaders there. You've got 0:05:12.839 --> 0:05:14.920 Chris Cox, You've got bos you know, You've got a 0:05:14.920 --> 0:05:18.880 lot of people who are who who are around Zuckerberg. 0:05:18.920 --> 0:05:21.840 But remember he's the guy making decision at the end 0:05:21.880 --> 0:05:24.160 of the day, and if people start to lose patience 0:05:24.200 --> 0:05:27.159 with him, there's nothing that the investors can do. Given 0:05:27.279 --> 0:05:31.160 his ownership, given his control of the stock in the company, 0:05:31.360 --> 0:05:34.480 he really does need to bring smart people around him, 0:05:34.640 --> 0:05:37.560 especially when you see when you see Cheryl leaving. This 0:05:37.600 --> 0:05:41.239 is the woman who has built that advertising business into 0:05:41.440 --> 0:05:44.440 this this monster. Not doing so great right now, but 0:05:44.680 --> 0:05:47.039 she's got quite a legacy and big, big shoes to 0:05:47.080 --> 0:05:50.520 fill and this company is making an enormous pivot. And 0:05:50.920 --> 0:05:55.560 Reality Labs lost Deborah two point eight billion dollars in 0:05:55.600 --> 0:05:57.960 the quarter. This is a bet on a metaverse in 0:05:57.960 --> 0:06:01.440 a future that some people don't really believe is even possible. 0:06:01.560 --> 0:06:04.040 What do you make of that? Are these investments, these 0:06:04.080 --> 0:06:08.279 losses worth it? Yeah, that is really the big question. 0:06:08.440 --> 0:06:10.880 And getting back to the the idea of Mark Zuckerberg 0:06:10.960 --> 0:06:13.440 being in charge, I mean this is his call. I 0:06:13.520 --> 0:06:15.479 mean he has changed the name of the company, he 0:06:15.520 --> 0:06:18.680 has decided to pivot the company towards the metaverse. Uh, 0:06:18.800 --> 0:06:23.040 he is building this company towards that future ambition which 0:06:23.320 --> 0:06:27.880 we don't see any hardly any revenue potential from four years. 0:06:28.240 --> 0:06:31.520 And at the same time, the core business is suffering. 0:06:31.760 --> 0:06:33.800 And so I will be the first to admit that 0:06:33.880 --> 0:06:37.200 I am a metaverse skeptic. I have been for quite 0:06:37.200 --> 0:06:39.680 a long time, since the days of virtual reality of 0:06:40.040 --> 0:06:43.000 Second Life. I think there's a lot for meta to 0:06:43.040 --> 0:06:46.000 prove here with regards to the metaverse, about the potential 0:06:46.080 --> 0:06:49.760 for marketers, for advertisers, even for consumers to engage in 0:06:49.800 --> 0:06:52.800 the in it. And we just saw earlier today that 0:06:53.240 --> 0:06:57.279 the FDC is now starting to investigate an acquisition that 0:06:57.360 --> 0:07:01.839 Facebook made in the metaverse realm. So Facebook and metas 0:07:01.920 --> 0:07:05.000 having it just so many challenges in front of it, uh, 0:07:05.640 --> 0:07:08.279 on so many fronts that you know, this is really 0:07:08.360 --> 0:07:11.480 the quarter where I've really become more concerned about the 0:07:11.520 --> 0:07:13.760 company than I think I've ever been before in all 0:07:13.800 --> 0:07:17.360 the years that I've covered it. Interesting, as you mentioned, 0:07:17.400 --> 0:07:19.840 the FTC is trying to block Meta from buying a 0:07:19.920 --> 0:07:23.560 VR company called Within Unlimited, and Tom, it's interesting that 0:07:23.560 --> 0:07:26.280 there are already antitrust issues in a metaverse that doesn't 0:07:26.280 --> 0:07:30.040 exist yet, and that Mark Zuckerberg seems to be pursuing 0:07:30.080 --> 0:07:34.040 the straight same strategy, which is by not build exactly. 0:07:34.160 --> 0:07:37.320 And the FTC has to be really careful here. Remember, 0:07:37.360 --> 0:07:39.840 they have come under a lot of fire in recent 0:07:39.960 --> 0:07:43.880 years for not calling out Facebook when it bought when 0:07:43.920 --> 0:07:47.480 it bought out its potential competitors. It bought Instagram for 0:07:47.520 --> 0:07:50.000 a billion dollars and that's become this huge business for them. 0:07:50.120 --> 0:07:53.559 It bought it when Instagram was tiny and nobody batted 0:07:53.640 --> 0:07:57.040 an eye What'sapp. It paid a lot more money for again, 0:07:57.400 --> 0:08:01.120 a potential competitor. And so the FTC has been criticized 0:08:01.160 --> 0:08:04.400 for not calling out Facebook and not saying, hey, we 0:08:04.480 --> 0:08:06.840 need to take a really close look at these acquisitions 0:08:06.840 --> 0:08:10.000 because you're taking out somebody who down the road could 0:08:10.040 --> 0:08:12.960 be your competitors. You've got to bet they're looking really 0:08:13.000 --> 0:08:15.680 closely at this deal, even though it's small. Well, either way, 0:08:15.880 --> 0:08:20.080 big changes in store for Meta. This big executive leadership 0:08:20.160 --> 0:08:23.440 change is going to be happening in November um and 0:08:23.480 --> 0:08:26.120 we will of course be watching Bloomberg's Tom Giles thank 0:08:26.200 --> 0:08:29.880 you as well as Debra Ajo Williamson insider intelligence. Always 0:08:29.880 --> 0:08:33.960 great to have you as well. Meantime, Apple just poached 0:08:34.000 --> 0:08:36.760 a twenty year veteran of Lamborghini to work on its 0:08:36.760 --> 0:08:39.800 electric car. Luigi terra Barelli will join the project, which 0:08:39.800 --> 0:08:41.800 has been under wrapped for years. The Apple car is 0:08:41.840 --> 0:08:45.320 being designed by hundreds of former engineers from Tesla, Ford, 0:08:45.640 --> 0:08:49.280 Rivian and other automakers. Apple plans to launch a car 0:08:51.600 --> 0:08:53.480 coming up. The Senate passes a bill to make the 0:08:53.600 --> 0:08:56.960 US less reliant on chips from abroad. How this could 0:08:57.080 --> 0:09:02.520 dramatically reshape Silicon Valley's relationship with China. That's next, Mrs Bloomberg. 0:09:14.120 --> 0:09:16.400 Qualcom earnings are the latest signal that there is a 0:09:16.559 --> 0:09:19.240 change in consumer habits. The biggest maker of chips for 0:09:19.280 --> 0:09:23.599 smartphones reporting and earnings miss reiterating a lackluster forecast for 0:09:23.640 --> 0:09:26.480 the rest of the year. Meantime, this Senate has approved 0:09:26.480 --> 0:09:30.000 a fifty two billion dollar bill to boost chip manufacturing 0:09:30.040 --> 0:09:33.559 in the United States, which relies heavily on parts from overseas. 0:09:33.559 --> 0:09:36.240 But the semi conductor industry is in for a rough 0:09:36.280 --> 0:09:39.880 patch these next few years. The research firm Gartner slashed 0:09:39.880 --> 0:09:44.880 its two global semiconductor sales growth forecast from to seven percent. 0:09:45.000 --> 0:09:47.599 That is a huge drop from the tent jump in 0:09:47.679 --> 0:09:52.080 chip sales we saw. Meantime, the Pentagon is making contingency 0:09:52.120 --> 0:09:56.760 plans if how speaker Nancy Pelosi makes that trip to Taiwan, 0:09:57.120 --> 0:10:00.360 though they say they don't think China would attack her lane. 0:10:01.320 --> 0:10:04.160 They say the speaker is entering a hotspot. China, of course, 0:10:04.160 --> 0:10:06.800 considers Taiwan part of its own territory and long source 0:10:06.840 --> 0:10:11.040 of controversy now for decades. Bloomberg's Peter Elstrom are managing 0:10:11.160 --> 0:10:14.719 editor out in Tokyo. Joins us now to discuss who 0:10:14.760 --> 0:10:16.719 just happened to be here in town. There's a lot 0:10:16.760 --> 0:10:19.640 going on here. What do you make of this Pelosi 0:10:19.720 --> 0:10:23.160 visit to Taiwan in the middle of all of these 0:10:23.200 --> 0:10:26.640 others very controversial at this point. I mean, clearly she 0:10:26.840 --> 0:10:30.160 has ended up in a very tight spot where their 0:10:30.320 --> 0:10:34.360 tensions on both sides. If she decides to proceed with 0:10:34.440 --> 0:10:37.080 the visit that's going to cause problems with China. But 0:10:37.160 --> 0:10:39.320 at this point it's very hard for her to also 0:10:39.440 --> 0:10:42.080 back down and pull out of a visit that she 0:10:42.200 --> 0:10:45.959 has been thinking about because it looks like they're stepping 0:10:46.000 --> 0:10:49.400 back or retreating from this issue with China. Clearly, she 0:10:49.520 --> 0:10:52.040 is going to put pressure on Biden during their phone 0:10:52.080 --> 0:10:54.720 call to try to get him to apply pressure to 0:10:54.880 --> 0:10:58.240 Nancy Pelosi uh sidestepping the fact that actually doesn't have 0:10:58.320 --> 0:11:01.559 control over her action. She gets to make this decision herself. Anytime, 0:11:01.559 --> 0:11:03.520 you have this Chips Act, which seems to be heading 0:11:03.559 --> 0:11:07.520 to Biden's desk unlike other pieces of legislation, and this 0:11:07.600 --> 0:11:11.720 is going to potentially massively reshape the relationship between China 0:11:11.760 --> 0:11:14.400 and the rest of the tech world. Right that's the 0:11:14.440 --> 0:11:16.800 hope of the US. I guess the question is are 0:11:16.840 --> 0:11:19.080 we there yet? It's taken three years to get to 0:11:19.120 --> 0:11:21.440 this point where the Senate has now passed the legislation, 0:11:21.600 --> 0:11:23.280 but the House still has to sign off on this 0:11:23.840 --> 0:11:26.560 legislation too, and then they have to reconcile the two bills. 0:11:26.760 --> 0:11:28.920 It is fifty two billion dollars. As you say, that's 0:11:28.960 --> 0:11:32.400 about thirty nine billion dollars in financial assistance, along with 0:11:32.440 --> 0:11:35.200 another thirteen billion dollars for training and research and that 0:11:35.280 --> 0:11:37.480 sort of thing. Just to put that in context. Fifty 0:11:37.520 --> 0:11:39.760 two billion dollars, of course, sounds like a lot of money, 0:11:40.080 --> 0:11:42.720 but tis m seats. How want Semi Conductor is going 0:11:42.760 --> 0:11:47.240 to spend forty four billion dollars on capex just this year, 0:11:47.640 --> 0:11:50.480 and the Chips Act is fifty fifty two billion dollars 0:11:50.480 --> 0:11:53.199 over five years. So it's modest in the grand scheme 0:11:53.200 --> 0:11:57.920 of things. It also signals that the US is uncomfortable 0:11:58.320 --> 0:12:01.440 doing this kind of industrial policy. It historically has not 0:12:01.559 --> 0:12:03.719 done it. But this crisis that we've seen in the 0:12:03.760 --> 0:12:06.880 chips industry with shortages, chronic shortages that have knocked out 0:12:07.120 --> 0:12:10.560 auto production in particular, has forced them to rethink how 0:12:10.600 --> 0:12:12.880 they're going to do this, and instead of focusing on 0:12:12.920 --> 0:12:15.840 the efficiency of the of the chip industry, they need 0:12:15.880 --> 0:12:20.480 to focus on resiliency. To meantime, you've got another potentially 0:12:20.480 --> 0:12:24.160 big shift happening in the chip industry itself, Qualcom coming 0:12:24.160 --> 0:12:27.280 out missing estimates. We're hearing from the CEO of Qualcom 0:12:27.360 --> 0:12:30.120 right now, Christiano Aman, on their earnings call, saying the 0:12:30.160 --> 0:12:35.920 phone market is smaller than forecast this year. Um. You know, 0:12:36.000 --> 0:12:40.480 obviously we've talked so much about the lack of chip supply. 0:12:40.640 --> 0:12:43.200 Are we now going to see a glut of chip supply? 0:12:44.160 --> 0:12:46.920 These cycles do happen in the chip industry all the time, 0:12:47.080 --> 0:12:49.400 right That is the big question in the chip industry 0:12:49.520 --> 0:12:51.760 right now, that we do go through these cycles, and 0:12:51.800 --> 0:12:54.640 we've had shortages for so many years. Wait times are 0:12:54.640 --> 0:12:58.040 still very very long. The signals seemed to be that 0:12:58.400 --> 0:13:01.079 we need more production of chip, but Qualcom is an 0:13:01.080 --> 0:13:04.120 early sign that they are seeing a slowdown. Part of that, 0:13:04.120 --> 0:13:06.240 there's a caveat to that, and that's that they really 0:13:06.280 --> 0:13:08.400 focus on the smartphone market right now. And you have 0:13:08.559 --> 0:13:12.800 seen smartphone demands softening as consumers are hit with inflation 0:13:12.840 --> 0:13:15.720 and some rising prices in other areas too. So that 0:13:15.800 --> 0:13:18.840 may be a Qualcom specific issue, and you may still 0:13:18.920 --> 0:13:20.640 have some of these chip shortages and the rest of 0:13:20.640 --> 0:13:23.440 the supply chain. So what are you watching? Obviously, the 0:13:23.480 --> 0:13:26.800 supply chain issues continue to evolve, and we've got a 0:13:26.800 --> 0:13:30.160 big one. We've got Apple coming up tomorrow where we'll 0:13:30.200 --> 0:13:34.080 get more insight into the supply chain. Well. Um, the 0:13:34.120 --> 0:13:37.200 industry is very closely watching weight times around the chip 0:13:37.240 --> 0:13:40.800 industry and exactly where those white weak times are. So 0:13:41.080 --> 0:13:43.679 we've seen a little bit of a loosening in terms 0:13:43.679 --> 0:13:46.600 of the ability to ship these chips. That's helped some 0:13:46.640 --> 0:13:50.280 of the automakers. They're beginning to see some signs of improvement. 0:13:50.360 --> 0:13:53.559 Tesla has talked about some improvements in the supply chain also, 0:13:53.640 --> 0:13:56.160 but it's not resolved at this point. And to be clear, 0:13:56.240 --> 0:13:58.840 this Chips Act is not going to address any of 0:13:58.880 --> 0:14:01.320 this because these chip plants will take years to build, 0:14:01.360 --> 0:14:03.480 at least two or three years before you can get 0:14:03.480 --> 0:14:06.440 any of this production online. So that's a long term solution. 0:14:06.600 --> 0:14:09.000 It's not going to address the short term problem, all right. 0:14:09.200 --> 0:14:20.800 Peter Elstrom in time from Chokya, Thank you Now to 0:14:20.920 --> 0:14:24.560 Going viral. Meta platforms is facing some backlash after some 0:14:24.600 --> 0:14:28.600 of the most influential figures on their platforms, The Kardashians 0:14:28.600 --> 0:14:32.720 are speaking out. Kylie Jenner and Kim Kardashian specifically speaking 0:14:32.720 --> 0:14:35.800 out against recent changes to Facebook and Instagram that make 0:14:35.880 --> 0:14:39.720 both platforms look and feel more like TikTok. The pair 0:14:39.760 --> 0:14:43.800 have a combined six hundred eighties six million followers on 0:14:43.840 --> 0:14:47.800 Instagram alone. Instagram CEO Adam Missary even posting a video 0:14:47.920 --> 0:14:52.080 explaining the moves, which some belief puts Meta's interests before 0:14:52.200 --> 0:14:55.360 their users. Bloomberg Sarah Fryer had a back and forth 0:14:55.480 --> 0:14:58.320 with Massari on Twitter. She joins us now, and of course, 0:14:58.320 --> 0:15:01.080 she wrote a book about Instagram. Am, what do you? 0:15:01.120 --> 0:15:03.000 First of all, let's let's let's talk about what Kim 0:15:03.000 --> 0:15:06.600 and Kylie have said. Don't make Instagram look like TikTok, right, 0:15:06.920 --> 0:15:08.640 don't make it a little like TikTok. Make it so 0:15:08.680 --> 0:15:12.120 I can see post from my friends again. Please, And 0:15:12.120 --> 0:15:16.480 then Kim Kardashian added pretty please, So so listen. I 0:15:16.520 --> 0:15:19.000 think the Kardashians also have another interest here, which is 0:15:19.040 --> 0:15:21.480 that they have built their fame, They've built their businesses 0:15:22.680 --> 0:15:27.520 via Instagram, via building that relationship with followers that makes 0:15:27.520 --> 0:15:30.640 people want to buy their project products, by into their 0:15:30.680 --> 0:15:34.080 projects and and really focus on everything that's happening in 0:15:34.120 --> 0:15:37.240 their lives. It's part of reality TV, and they really 0:15:37.320 --> 0:15:40.480 lean into that. And the changes that are happening on 0:15:40.560 --> 0:15:44.600 Instagram right now and Facebook as well, are d prioritizing 0:15:44.840 --> 0:15:50.480 those follower friend relationships in favor of injecting your feed 0:15:50.480 --> 0:15:54.760 with content from people you may not follow like TikTok, 0:15:54.840 --> 0:15:58.160 trying to have this discovery of new things to keep 0:15:58.200 --> 0:16:01.920 you entertained, to retain young users, and to fend off 0:16:01.920 --> 0:16:05.440 this competition from the fastest growing up out there. Now, 0:16:05.600 --> 0:16:08.400 you had to back and forth with our Adamissary on Twitter, 0:16:08.720 --> 0:16:12.480 and you talked about how look Kim and Kylie are 0:16:12.480 --> 0:16:15.480 saying they want this. Instagram is saying they're making changes 0:16:15.480 --> 0:16:18.800 based on what users seem to want, not just what 0:16:18.840 --> 0:16:21.480 they say. They want to talk to us about your 0:16:21.520 --> 0:16:26.680 back and forth. So I pointed out that adamissaries explanation 0:16:26.720 --> 0:16:29.440 this video that you talked about was getting a lot 0:16:29.520 --> 0:16:31.800 of backlash, and and he said, you know, I get 0:16:31.840 --> 0:16:34.000 a lot of backlash all the time. People. People are 0:16:34.040 --> 0:16:37.840 pretty pretty vocal when it comes to hating on what 0:16:37.880 --> 0:16:41.960 I have to say and listen, I said, like executives 0:16:41.960 --> 0:16:43.680 and social platforms, I have to figure out if they 0:16:43.680 --> 0:16:47.280 want to listen to the loudest voices what their users 0:16:47.280 --> 0:16:48.920 are saying, or if they want to listen to the 0:16:49.000 --> 0:16:52.120 data in the Facebook has always been airing on the 0:16:52.160 --> 0:16:54.320 side of listening to the data. Now I got a 0:16:54.320 --> 0:16:57.440 lot of pushback for my comment because people were saying, well, 0:16:57.600 --> 0:17:00.880 how is this data making sense if it's a Facebook 0:17:00.920 --> 0:17:03.480 and Instagram are showing to us. Of course we're using 0:17:03.520 --> 0:17:06.920 reels more because that's all we get to see. Show 0:17:07.000 --> 0:17:09.160 us content from our friends, and we'll look at that too. 0:17:09.440 --> 0:17:11.919 So so the design of a platform really has a 0:17:11.920 --> 0:17:16.000 lot of impact on what users choose to do, because 0:17:16.119 --> 0:17:19.040 these platforms are getting more and more passive, less and 0:17:19.119 --> 0:17:21.960 less about what we choose. And you know, I wonder 0:17:22.000 --> 0:17:24.240 if it makes sense, doesn't make sense to keep them 0:17:24.240 --> 0:17:28.320 more differentiated. Is that a competitive advantage or does Instagram 0:17:28.359 --> 0:17:30.800 just followed tik talk and say, well they're onto something. 0:17:30.840 --> 0:17:33.800 You know. Another thing that Adam Sarry told me, which 0:17:33.840 --> 0:17:36.080 confirmed one of my big suspicions, is that a lot 0:17:36.119 --> 0:17:39.760 of the friends and family conversation is moving into the 0:17:39.840 --> 0:17:44.040 other parts of their app Instagram stories, Instagram direct messaging, 0:17:44.400 --> 0:17:46.359 and he said, yeah, that's that's really where we're seeing it. 0:17:46.720 --> 0:17:49.000 And so from my perspective, I feel like the reason 0:17:49.040 --> 0:17:53.320 that they need to stuff the main Instagram feed with 0:17:53.320 --> 0:17:57.680 with reels their TikTok copycat is because people aren't posting anymore. 0:17:57.880 --> 0:18:01.359 When's the last time you posted on your main Instagram feed? 0:18:01.720 --> 0:18:04.600 It feels really formal like a big lift now and 0:18:04.920 --> 0:18:07.560 people are posting more and more in stories because it 0:18:07.680 --> 0:18:10.640 just feels less like part of their permanent record, less 0:18:10.680 --> 0:18:12.600 like it has to be a huge life event. And 0:18:12.600 --> 0:18:15.320 the same thing we saw happen on Facebook maybe five 0:18:15.359 --> 0:18:19.040 years before UM, where people are now posting on Facebook 0:18:19.080 --> 0:18:21.240 mostly if they have something really big to say, like 0:18:21.320 --> 0:18:23.920 a new job or a wedding or a baby, as 0:18:23.920 --> 0:18:26.680 opposed to just the mundane life updates that used to 0:18:26.720 --> 0:18:29.360 seem worthy of such a platform. As we grow our 0:18:29.400 --> 0:18:35.320 basis of of followers and following, it just seems less worthy. 0:18:35.359 --> 0:18:38.000 That audience seems less worthy of our mundane life updates. 0:18:38.080 --> 0:18:42.400 Who's winning, well, TikTok's definitely winning right now. I think 0:18:42.480 --> 0:18:46.160 that's that's very clear. In Facebook's earning today, Meta's earnings today, 0:18:46.400 --> 0:18:50.159 we see a slowdown in advertiser spending. But you have 0:18:50.280 --> 0:18:52.360 to think, you know, that's not just about the economic 0:18:52.440 --> 0:18:56.000 factors that they're citing. That's about this big change, the 0:18:56.080 --> 0:18:59.280 sea change happening at the apps that is causing people 0:18:59.280 --> 0:19:03.119 to use them, to rely or maybe abandoned them UM 0:19:03.119 --> 0:19:05.320 And they have to do everything they can to make 0:19:05.359 --> 0:19:08.080 this that work in order to fund the Metaverse Vision. 0:19:08.080 --> 0:19:11.720 Down the line are resident Instagram expert Serafi Er. Thank 0:19:11.800 --> 0:19:23.640 you so much for your analysis. Welcome back to Boomore Technology. 0:19:23.640 --> 0:19:25.960 I'm Emily Changing in San Francisco. Welcome back. We're going 0:19:26.000 --> 0:19:28.280 to talk about earnings now, a lot to unpack. I 0:19:28.280 --> 0:19:32.160 want to dig into Spotify, which somehow avoided and add 0:19:32.200 --> 0:19:35.199 slow down in the second quarter, escaping the fate of 0:19:35.240 --> 0:19:37.720 other text docks like Snap. I want to bring in 0:19:37.720 --> 0:19:42.280 Bloomberg's Ashley Carmen, who covers Spotify for us for more. So, 0:19:43.040 --> 0:19:47.119 why did Spotify somehow pull out of this? You know, 0:19:47.600 --> 0:19:50.480 they didn't actually give us a full reason as to 0:19:50.560 --> 0:19:54.080 how they avoided this. They did say though, that you know, 0:19:54.119 --> 0:19:56.040 maybe it was just this quarter. It does sound like 0:19:56.080 --> 0:19:58.040 they're looking over their shoulder a bit more. I spope 0:19:58.040 --> 0:20:01.120 that there's CEO Paul Glogal earlier to day. He said, 0:20:01.240 --> 0:20:04.840 you know, Q three, they expect the slowdown, although still growth, 0:20:05.160 --> 0:20:07.200 but they are looking over their shoulder. You know, could 0:20:07.320 --> 0:20:09.119 it could crater? Could not? You know? It sounds like 0:20:09.160 --> 0:20:10.920 they're kind of riding the way a little bit here. 0:20:11.200 --> 0:20:12.960 But I guess I should also note that we're talking 0:20:13.040 --> 0:20:16.000 about a lot less revenue here. I mean hundreds of 0:20:16.040 --> 0:20:18.960 millions of dollars versus billions as far as the tech 0:20:18.960 --> 0:20:22.600 stocks go. So you know, I think it's a bit 0:20:22.600 --> 0:20:24.879 of a different scale as well, and a lot a 0:20:24.880 --> 0:20:28.320 lot less to wrinkle. I'm curious how what's happening me 0:20:28.600 --> 0:20:31.679 with Spotify. You know, perhaps on a smaller scale though, 0:20:32.240 --> 0:20:36.359 is some sort of um, you know, signal about what 0:20:36.560 --> 0:20:38.600 is happening on a larger scale as well. You know, 0:20:38.640 --> 0:20:42.680 you see a platform that's adding users, but gross margin declining? 0:20:43.280 --> 0:20:47.280 Is that a concern? So last quarter for Q one earnings, 0:20:47.280 --> 0:20:49.480 gross margin was all anybody could talk about. When it 0:20:49.520 --> 0:20:53.080 came to Spotify earnings, the stock crater, investors, it was 0:20:53.080 --> 0:20:56.480 at the lowest levels it's ever been. Investors were concerned 0:20:56.520 --> 0:20:59.160 about the margins because they, you know, Spotify has been 0:20:59.160 --> 0:21:01.960 making all of these podcast investments, so the investors want 0:21:01.960 --> 0:21:04.359 to say, hey, one of those gross margins going to 0:21:04.400 --> 0:21:06.760 go up um. And then this quarter we really weren't 0:21:06.760 --> 0:21:10.520 expecting them to improve drastically, but the gross margin actually dropped, 0:21:10.680 --> 0:21:13.760 and Spotify said that's because they are ceasing production of 0:21:13.760 --> 0:21:17.400 their car thing, which is basically a Bluetooth Spotify remote 0:21:17.480 --> 0:21:19.600 for the car, and so that actually caused their gross 0:21:19.680 --> 0:21:22.080 margin to go down. But that said, the stock is 0:21:22.160 --> 0:21:25.360 up today. It doesn't seem like that spooked investors. Spotify 0:21:25.440 --> 0:21:27.479 had an investor day in June where they said they 0:21:27.480 --> 0:21:29.679 expect their margins to not drag so much from the 0:21:29.680 --> 0:21:33.639 podcast investments going into three, so we'll see if that 0:21:33.760 --> 0:21:36.680 long term vision holds true. Meantime, you of course still 0:21:36.800 --> 0:21:39.520 have some artists who just won't put their music on Spotify. 0:21:39.600 --> 0:21:44.560 Now you're seeing some podcasts leaving Spotify. What's happening there? Yeah, 0:21:44.640 --> 0:21:47.440 So earlier today I published a story about a show 0:21:47.480 --> 0:21:50.080 called The Pitch, which was kind of this original Gimlet 0:21:50.119 --> 0:21:53.280 Media show, which Spotify acquired that company in twenty nineteen, 0:21:53.680 --> 0:21:56.080 and how the host of that show actually just bought 0:21:56.080 --> 0:21:58.600 it back from Spotify and is going to launch it independently. 0:21:58.880 --> 0:22:02.080 And it's just an interesting move given that we saw 0:22:02.359 --> 0:22:06.280 reply All kind of another Gimlet original show before the acquisition. 0:22:06.600 --> 0:22:09.920 It ended its production in June. Another show that was 0:22:09.960 --> 0:22:12.000 made by Gimlet called The Get Up, which was kind 0:22:12.040 --> 0:22:15.800 of Spotify's attempt at a morning radio show format, that 0:22:15.960 --> 0:22:18.960 also ended. So I'm not entirely clear what's going on 0:22:19.000 --> 0:22:20.800 there to be Frank I think, you know, it's just 0:22:20.840 --> 0:22:23.760 interesting to see all three of these shows. Clearly some 0:22:23.840 --> 0:22:26.600 things that put They've had some leadership shakeups and promotions, 0:22:26.960 --> 0:22:29.280 so you know, something is clearly going on with their 0:22:29.280 --> 0:22:32.200 content strategy. It's just unclear what. Now. I'm gonna keep 0:22:32.200 --> 0:22:33.879 talking about earnings. I want to bring in Mitchell Green, 0:22:33.920 --> 0:22:37.400 founding partner of lead Edge Capital, his take on Meta's 0:22:37.480 --> 0:22:41.879