Speaker 1: Welcome to Text Stuff, a production from I Heart Radio.
Speaker 1: Hey there, and welcome to tech Stuff. I'm your host
Speaker 1: Jonathan Strickland, Diamond executive producer with I Heart Radio. How
Speaker 1: the tech are you? We are continuing our look back
Speaker 1: over some of the biggest text stories of twenty twenty two.
Speaker 1: On Monday, we talked about how governments and regulators around
Speaker 1: the world are starting to push back on big tech.
Speaker 1: Yesterday we talked about the crypto winter and how that
Speaker 1: has affected everything from n f t S to HAVE
Speaker 1: three hype. And today we're primarily almost exclusively going to
Speaker 1: talk about Meta's very bad two. But let's start off
Speaker 1: by talking about where Meta was coming into two, which
Speaker 1: means we got to talk a little bit about now.
Speaker 1: It was in the springtime of one when Apple would
Speaker 1: deliver what would ultimately become a massive blow to Facebook,
Speaker 1: which is what META was called back then, and this
Speaker 1: was in the form of Apple's App Tracking Transparency or
Speaker 1: a t T policy. So before this feature was implemented,
Speaker 1: app developers could potentially gather data about an iOS users
Speaker 1: activity on their phone, all by tracking Apple's I d F,
Speaker 1: a identifier that's an identification that's unique to each iOS user,
Speaker 1: then you could track what they were doing, how they
Speaker 1: were behaving on the phone, and use that information right
Speaker 1: But once the A T T feature went live, iOS
Speaker 1: device owners would get a prompt when they were launching
Speaker 1: an app that was wanting to track their activity, and
Speaker 1: they would be given the option to allow that app
Speaker 1: track them or to opt out. Once folks had the
Speaker 1: option to opt out, a lot of them began to
Speaker 1: take it. By the way, Apple does not necessarily have
Speaker 1: to worry about adhering to this the same way that
Speaker 1: other developers do on iOS devices, which has led a
Speaker 1: lot of companies, including Meta, to accuse Apple of specifically
Speaker 1: launching this feature in order to hurt other companies while
Speaker 1: not suffering itself, But that's a matter for another episode. Anyway,
Speaker 1: Apple's move was a big blow to Facebook because ultimately Facebook,
Speaker 1: the company, relies upon advertising revenue as the prime source
Speaker 1: of revenue for its business, and advertisers would pay top
Speaker 1: dollar to access Facebook's incredibly thorough databases on user activities
Speaker 1: and behaviors and profiles and and such, so that user
Speaker 1: information would provide a chance to target those users for
Speaker 1: ads with incredible precision. But once Apple starts giving iOS
Speaker 1: users a chance to opt out of tracking. That cuts
Speaker 1: off the flow of some of that precious data to Facebook,
Speaker 1: and that would go on to play a big part
Speaker 1: in Meta's financial performance in tw two. Now, I don't
Speaker 1: know about you, but to me, it feels like it
Speaker 1: was an eternity ago when Facebook officially changed its name
Speaker 1: to Meta. But that was actually on October, so a
Speaker 1: little more than a year ago as I record this episode.
Speaker 1: Facebook made that move at a pretty tumultuous time. This
Speaker 1: would be after Francis Hogan, a former Facebook employee, had
Speaker 1: come forward with tons of documents from Facebook. These documents
Speaker 1: showed how internally the company was struggling with problems like
Speaker 1: content moderation and managing misinformation and things like like political manipulation,
Speaker 1: stuff like that. So these documents painted a pretty ugly
Speaker 1: and cynical picture of the company from within, and the
Speaker 1: timing of Facebook's name change left some folks wondering if
Speaker 1: maybe Mark Zuckerberg was trying, at least in part, to
Speaker 1: shrug off some of the dirt being heaped his way
Speaker 1: in the wake of these these revelations. Now, the official
Speaker 1: reasons for the name change, we're really number one to
Speaker 1: distinguish the overall company from one of its products. So,
Speaker 1: in other words, the difference between Facebook the company and
Speaker 1: Facebook the platform. So this way you now have meta
Speaker 1: the company and Facebook the platform, because that's just one
Speaker 1: of the company's products. Right. Two, it was a way
Speaker 1: to indicate the company's new focus towards this idea of
Speaker 1: the metaverse and that being the future of being online
Speaker 1: now towards the end of this metaverse concept was really
Speaker 1: at the height of the hype cycle, despite the fact
Speaker 1: that no one could really define what the metaverse was
Speaker 1: because it has not yet been built. So the general
Speaker 1: feeling was that the metaverse is going to be some
Speaker 1: sort of persistent online construct that people will be able
Speaker 1: to explore. Uh, they'll probably be using virtual reality and
Speaker 1: or augmented reality gear to access it, and that's kind
Speaker 1: of the high level concept. But when it comes down
Speaker 1: to details, everything gets really fuzzy because we're just not
Speaker 1: there yet. In fact, we're not even close, and Mark
Speaker 1: Zuckerberg has said as much repeatedly. It's going to take
Speaker 1: years to get to a destination that will match up
Speaker 1: to the metaverse concept. We've got a lot of like
Speaker 1: metaverse adjacent stuff. People have argued that Fortnite or roadblocks
Speaker 1: represent a kind of proto metaverse, and in a very
Speaker 1: limited way, I suppose that's true, but it's nowhere close
Speaker 1: to the scale of what people are talking about when
Speaker 1: they're really talking about the metaverse. So anyway, this is
Speaker 1: kind of where Meta slash Facebook was when it was
Speaker 1: heading into two. As the company started the year, its
Speaker 1: stock price was around the three dollars a share mark.
Speaker 1: But in February of two, we heard about how the
Speaker 1: final quarter of one had treated Meta and the news
Speaker 1: wasn't good. So this was regarding Meta's financial performance at
Speaker 1: the end of one, but we didn't learn about it
Speaker 1: until February two. So, for one thing, the effects of
Speaker 1: Apple's app tracking transparency policy we're starting to become evident.
Speaker 1: Everyone knew that was going to have an effect, but
Speaker 1: now we were starting to see. And the company referenced
Speaker 1: the policy a few times while delivering the earnings results
Speaker 1: to investors, saying, you know, part of this is because
Speaker 1: Apple has fired shots at us. Now. In that same call,
Speaker 1: Cheryl Sandberg, who at the time was Meta's Chief operating
Speaker 1: officer or CEO, acknowledged that the company was going to
Speaker 1: need to make some significant changes to its targeted advertising strategy,
Speaker 1: perhaps shifting two approaches that emphasize aggregate and anonymized data.
Speaker 1: As competitors and regulators alike, we're pushing back against the
Speaker 1: you know, more established method of just scooping up all
Speaker 1: the information you can about every specific person you can.
Speaker 1: So Litling Meta was acknowledging this is an unsustainable approach
Speaker 1: because there's growing resistance around the world and competitors are
Speaker 1: actively taking advantage by throwing monkey wrenches into the works,
Speaker 1: like Apple was. So they're saying, well, we need to
Speaker 1: change our strategy because one, this is not really palatable
Speaker 1: that we're getting into more and more hot water from
Speaker 1: the way we're collecting people's data, and too, companies we
Speaker 1: depend upon to supply us information have gotten wise and
Speaker 1: they're cutting off those avenues. So that's kind of what
Speaker 1: she was indicating. Then there was the matter of Meta's
Speaker 1: commitment to developing the metaverse. Zuckerberg had tried to get
Speaker 1: ahead of this. Towards the end of one he indicated
Speaker 1: that building this vision of the future of the online
Speaker 1: world is going to require massive investments, and that this
Speaker 1: investment was going to eat into profits as a result.
Speaker 1: But I think investors were still taken aback when they
Speaker 1: saw a decline in profits in the Q four results,
Speaker 1: because here's the thing. Investors really like seeing certain numbers
Speaker 1: go up and not go down. So it's not enough
Speaker 1: for your company to make a profit. That's not good enough.
Speaker 1: You've got to make more profit than you did the
Speaker 1: last time you made a profit. Otherwise you're a loser.
Speaker 1: And as I get older, yes, I get more and
Speaker 1: more bitter about our peculiar approach to capitalism. Or maybe
Speaker 1: maybe it's not our peculiar approach. Maybe this is just
Speaker 1: where capitalism ultimately leads. But anyway, I think you know this.
Speaker 1: This belief that it's not enough to profit, you have
Speaker 1: to profit more than you did before is inherently destructive
Speaker 1: over time. Anyway, enough of my soap boxing. The decline
Speaker 1: and profitability sent a couple of messages to investors, and
Speaker 1: one was that meta for at least the near future,
Speaker 1: is itself going to be an investment mode in order
Speaker 1: to make this vision of the metaverse become a reality.
Speaker 1: This is a future that a ton of companies were
Speaker 1: already starting to gloam onto, despite the fact that there's
Speaker 1: not much there there and my own company does this
Speaker 1: at least to an extent, and I do understand it,
Speaker 1: even if I don't fully like get on board with it.
Speaker 1: I understand it if the metaverse ends up being the
Speaker 1: future of the Internet, which is a big if, but
Speaker 1: if it does, then you want to be in on
Speaker 1: the ground floor. Because back when smartphones took off and
Speaker 1: people began to access the Internet more and more using
Speaker 1: smartphones than they were on laptops and desktops, that really
Speaker 1: shook things up because suddenly all these companies realized they
Speaker 1: needed to cater more toward smartphone users than desktop users.
Speaker 1: And this is where we started to see an explosion
Speaker 1: and app development, because everybody had to have their own app,
Speaker 1: even if it didn't make sense. Everyone had to to
Speaker 1: uh to create websites that were mobile friendly because otherwise
Speaker 1: it was a pain in the butt to navigate these
Speaker 1: websites on your smartphone. So a lot of web based
Speaker 1: companies had not anticipated this change, and it meant that
Speaker 1: they were left playing catch up when it happened. So
Speaker 1: I do understand the desire to not let that happen
Speaker 1: again and instead to be a leader in the metaverse
Speaker 1: space rather than too you know, hold back and then
Speaker 1: find out that you're left behind. You have to try
Speaker 1: and regain relevancy later on. The only problem is, I'm
Speaker 1: not really sure that the metaverse is actually the future
Speaker 1: of online That being said, I could just be shortsighted
Speaker 1: and that you know, I'm the one who's totally in
Speaker 1: the wrong here. It's it's fully possible. In fact, it's
Speaker 1: lightly that that's the case. I just it's hard for
Speaker 1: me to see it anyway. Another bit of news that
Speaker 1: shed some light on Zuckerberg's hard push for the metaverse
Speaker 1: was that, for the first time in its eighteen years
Speaker 1: as a platform, Facebook posted a loss of active users
Speaker 1: quartered a quarter. At the end of one the number
Speaker 1: of active users on Facebook was down by about half
Speaker 1: a million people, a lot of them in places like
Speaker 1: Africa and India. Now, keep in mind, Facebook still had
Speaker 1: more than one point nine billion active users, but there
Speaker 1: was a concern that this drop might indicate the beginning
Speaker 1: of a slide for Facebook. And I I'm sure several
Speaker 1: of you out there are saying the same thing I
Speaker 1: said when I first read this, is that one point
Speaker 1: of data is not a trend. Yes, you know, it's
Speaker 1: not good to have lost a half million users over
Speaker 1: the course of a quarter, but you can't be certain
Speaker 1: that this is the start of something from one point
Speaker 1: of data. However, that doesn't stop investors from doing just that,
Speaker 1: So it's also no secret. In fact, it's a it's
Speaker 1: it's a Joe, it's a meme that Facebook's demographic is
Speaker 1: aging that the company is having a real hard time
Speaker 1: attracting younger people to its platforms, particularly Facebook, because who
Speaker 1: the heck wants to join a social network when they're
Speaker 1: a kid that their parents are already on or maybe
Speaker 1: even their grandparents are on it. That's not really cool
Speaker 1: if you're a kid, right, you don't want to be
Speaker 1: where all the old people are. Meta needed to get
Speaker 1: young blood hooked on its platforms, which is one of
Speaker 1: the reasons I think that Instagram really started to launch
Speaker 1: features that appeared to mimic what TikTok was doing, so
Speaker 1: you could see the metaverse as another way to try
Speaker 1: and scoop up the next generation of users. So it
Speaker 1: might be a hard sell to get the younger folks
Speaker 1: of today on Facebook. That's gonna be hard to do
Speaker 1: because Facebook is just not cool. Instagram might be a
Speaker 1: little more successful, but it looks like it's following the
Speaker 1: same trends as Facebook. At a one point, Meta was
Speaker 1: developing and Instagram specifically for younger users, but in the
Speaker 1: wake of those whistleblower events and at the end of
Speaker 1: the company had to backtrack on that because they have
Speaker 1: a pretty terrible record when it comes to things like
Speaker 1: content moderation and user privacy and safety, and when it
Speaker 1: comes to kids, people take that stuff seriously. So Meta's
Speaker 1: plan to try and tap into that young customer market
Speaker 1: was waylaid quite a bit, and it was through all
Speaker 1: fault of its own. So you have to then go
Speaker 1: out there and invent the next big thing to get
Speaker 1: ahead of it, right, Like the ship has already sailed
Speaker 1: on TikTok unless TikTok gets banned in the United States,
Speaker 1: which will talk talk about in another episode. But unless
Speaker 1: that happens, then the only course open to Meta is
Speaker 1: to invent the next big thing. So the metaverse might
Speaker 1: well be Mark Zuckerberg's Hail Mary pass to keep his
Speaker 1: company relevant over the long run. All right, We've got
Speaker 1: a lot more to say about Meta in two, but
Speaker 1: before we get to that, let's take a quick break.
Speaker 1: We're back. So while Zuckerberg is trying to create this metaverse.
Speaker 1: That dedication is costing a lot of money, and the
Speaker 1: company also has showed its hand when it updated its
Speaker 1: revenue projections for the first quarter of twenty two. Wall
Speaker 1: Street had previously predicted revenue of around thirty billion dollars
Speaker 1: for Q one two of of Meta, but Meta's projections
Speaker 1: fell short. It was more like twenty seven to twenty
Speaker 1: nine billion. So this was also a message sent to
Speaker 1: investors of things are not going to be quite as
Speaker 1: positive as you might have previously thought. The decrease in profits,
Speaker 1: the increase in expenditures, the loss of half a million
Speaker 1: Facebook users collectively, all this news gave investors bad mojo,
Speaker 1: and in aftermarket trading in the wake of this earnings call,
Speaker 1: Meta's stock prices dropped from around three twenty three dollars
Speaker 1: a share to two hundred fifty two dollars a share.
Speaker 1: That's a huge drop and things would not really improve
Speaker 1: over the course of the year. As I record this episode,
Speaker 1: Meta stock is at around a hundred seventeen dollars a year.
Speaker 1: In fact, it dropped below a hundred seventeen at one
Speaker 1: point while I was writing this. So yeah, if you
Speaker 1: started off in the three thirties and now you're down
Speaker 1: to one seventeen. Things have not gone well, but it
Speaker 1: has been a more gradual decline through two. We saw
Speaker 1: that sharp drop in February after the Q one earnings
Speaker 1: call or Q four nings called excuse me. But since
Speaker 1: then it's been more of a gradual decline. And there
Speaker 1: was one point in November where the stock price actually
Speaker 1: dipped below ninety dollars. So it's not as bad as
Speaker 1: it was back in November, which I guess is saying something. Now,
Speaker 1: one thing that Meta could not have predicted. You cannot
Speaker 1: blame the company for this, but it is something that
Speaker 1: very much has had an impact on the company. Happened
Speaker 1: in late February two. That's when Russia invaded Ukraine. Now
Speaker 1: I'm sure that I'll at least mention this war in
Speaker 1: other episodes in this series as we look back at
Speaker 1: the tech news of two. Now, in March two, Russia's
Speaker 1: federal regulator Roscom Natzer, which I'm sure I mispronouncing, shut
Speaker 1: down access to Facebook within Russia. So this was part
Speaker 1: of Russia, or at least the government of Russia, attempting
Speaker 1: to control the narrative with regards to the war in Ukraine,
Speaker 1: which the Russian government was insisting was just a quote
Speaker 1: unquote special military operation at the time. They would then
Speaker 1: go on to subsequently block Instagram in Russia, which was
Speaker 1: yet another blow to Meta. Russian representatives called Facebook and
Speaker 1: Instagram extremist, which the company appealed in June of two.
Speaker 1: It lost that appeal. That is not really a surprise
Speaker 1: because the Russian court system typically sides with government prosecutors
Speaker 1: in court cases. Big shock there, and Meta missed a
Speaker 1: subsequent deadline in November to appeal the ban a second time.
Speaker 1: As a little side note, Russian reps said that Russians
Speaker 1: who accessed the platforms by relying on tools like virtual
Speaker 1: private networks or VPNs would not be punished for doing that. However,
Speaker 1: Russia had also already restricted the use of several popular
Speaker 1: VPNs within the country, and in two even Kaspersky, which
Speaker 1: itself is a Russian company, announced that it was going
Speaker 1: to end its VPN service within Russia. It would honor
Speaker 1: any existing subscriptions until they expire or until the end
Speaker 1: of three So yeah, you know, Russia's really cracking down
Speaker 1: on people having a way of accessing or expressing information
Speaker 1: that might contradict the government narrative around Russia's invasion of Ukraine. Anyway,
Speaker 1: the laws of the Russian market obviously would impact Meta's revenue,
Speaker 1: and of course that wasn't the only aspect of Russia's
Speaker 1: war with Ukraine that would have an impact on the company.
Speaker 1: As you might suspect, Facebook would have to deal with
Speaker 1: various misinformation campaigns aimed at spreading false news about the
Speaker 1: ongoing war. In September of two, Meta announced it had
Speaker 1: shut down two networks of fake accounts designed to spread misinformation.
Speaker 1: One of them, the smaller of the two, originated in
Speaker 1: China and the other in Russia. The Chinese network, like
Speaker 1: I said, was relatively small and it was mostly aimed
Speaker 1: at influencing mid term elections, which had really no measurable impact.
Speaker 1: I think the Russian campaign was far larger, and Meta
Speaker 1: said that the campaign had spent more than a hundred
Speaker 1: thousand bucks on ads both on Facebook and on Instagram
Speaker 1: in an effort to push pro Kremlin stories regarding the
Speaker 1: war in Ukraine. So they shut those down. So again,
Speaker 1: that war continues to have an impact on Meta, as
Speaker 1: well as numerous other tech companies. Now, moving on with
Speaker 1: Meta's very bad year. It's earnings call in Q one
Speaker 1: met the adjusted projections Meta had made because the company
Speaker 1: brought in twenty seven point nine billion dollars in revenue,
Speaker 1: so it sort of hit the middle of the range
Speaker 1: it had predicted. It said twenty nine it got twenty
Speaker 1: seven point nine. Ad revenues were slightly down, but the
Speaker 1: company did say that more users had joined across all
Speaker 1: platforms owned by the company, so it was not showing
Speaker 1: a continued loss of Facebook users, so again there was
Speaker 1: no trend there. However, in July, the company reported a
Speaker 1: decline in revenue. It was just a one percent drop
Speaker 1: year over year of a decline in revenue, but that
Speaker 1: was the first time Meta had ever posted a drop
Speaker 1: in revenue since it had become a publicly traded company.
Speaker 1: Profits were down significantly more than one percent. It was
Speaker 1: backed down by thirty six percent year over year. But again,
Speaker 1: this is understandable when you start thinking about the ongoing
Speaker 1: huge expense of trying to make the metaverse happen, which is,
Speaker 1: you know, kind of giving me mean girls vibes. Stop
Speaker 1: trying to make the metaverse happen. It's not going to happen.
Speaker 1: Note I do not actually know if the metaverse will
Speaker 1: in fact not happen. It probably will, and I'll probably
Speaker 1: be salty about it. Now. By this point in the year,
Speaker 1: the world in general was gearing up for economic uncertainty
Speaker 1: like that. There had been talk about this since the spring, right.
Speaker 1: There have been various people in finance and business who
Speaker 1: were starting to recognize troubling signs ahead. And whether you
Speaker 1: wanted to call it a recession or not is up
Speaker 1: to you. At this point, I don't even understand what
Speaker 1: the qualifications are to call something a recession. But by
Speaker 1: the middle of spring and then into the summer, it
Speaker 1: was more and more obvious that economic belts were going
Speaker 1: to have to start tightening, and it would be no
Speaker 1: different for tech companies in general and Meta in particular.
Speaker 1: In the summer, The Verge published a piece that cited
Speaker 1: a recording of Mark Zuckerberg saying, quote, realistically, there are
Speaker 1: probably a bunch of people at the company who shouldn't
Speaker 1: be here end quote, suggesting that maybe Meta was overstaffed,
Speaker 1: that they had more employees than they had work to do,
Speaker 1: and thus we're being inefficient. Around this time, we were
Speaker 1: starting to hear the about tech companies at least easing
Speaker 1: off the gas pedal. When it comes to staffing. It
Speaker 1: wouldn't be much longer before we started hearing about hiring
Speaker 1: freezes at Meta and at other companies. We started hearing
Speaker 1: about Meta in particular, but other companies to increasing employee
Speaker 1: standards in an effort to kind of downsize and only
Speaker 1: keep the best workers. And then eventually we started hearing
Speaker 1: about layoffs. Now, again, this is not a problem that
Speaker 1: was unique to Meta in two. A lot of companies
Speaker 1: in the tech space and outside of it we're going
Speaker 1: through similar stages. But Meta, being a huge company, had
Speaker 1: a lot of folks on the payroll, and in November,
Speaker 1: Zuckerberg laid out his plan to reduce headcount by which
Speaker 1: translates to more than eleven thousand employees. That is a
Speaker 1: lot of people. Now, one person who left Meta did
Speaker 1: so back in June, and in this case, it wasn't
Speaker 1: that she was laid off, she chose to resign. That
Speaker 1: person was Cheryl Sandberg, the former chief operating Officer or CEOO.
Speaker 1: She had worked at Meta slash Facebook for fourteen years.
Speaker 1: She was instrumental in how the company grew and developed
Speaker 1: over those fourteen years. But according to the rumor mill.
Speaker 1: Things had been taking kind of a bad turn for
Speaker 1: Sandberg over the last couple of years. There were stories
Speaker 1: that she and Mark Zuckerberg were increasingly at odds over
Speaker 1: company strategy and that the teams that she was managing
Speaker 1: we're being shifted around or reduced in size, so she
Speaker 1: was given less and less to do. It kind of
Speaker 1: reminds me actually of what happened to Steve Jobs in
Speaker 1: the eighties when they brought in a new CEO. Steve
Speaker 1: Jobs was kind of moved off to the side of Apple,
Speaker 1: and depending upon which version of the story you hear,
Speaker 1: he either left in protest or was effectively fired. But
Speaker 1: either way, he had already been given the message loud
Speaker 1: and clear that the company didn't want him or the
Speaker 1: new leadership of the company did not want him. Now.
Speaker 1: Sandbird's reputation, as I said, was tightly tied to Facebook's
Speaker 1: enormous growth over the last fourteen years. Like this is
Speaker 1: a company that at at certain points is boasted at
Speaker 1: having over two billion users for just one of its platforms,
Speaker 1: that being Facebook. Her focus on ad revenue, likewise, had
Speaker 1: become a core Facebook feature. But this focus on growth
Speaker 1: was kind of a double edged sword. You know, some
Speaker 1: people saw it as a huge positive because for a
Speaker 1: long time it was netting investors lots and lots of
Speaker 1: returns on their investment, at least until things started to
Speaker 1: turn against the company. But others saw her as valuing
Speaker 1: growth over everything else and that this in turn would
Speaker 1: set up Meta slash Facebook for some of the big
Speaker 1: problems that it faces today regarding issues like content moderation
Speaker 1: and you know, regulatory agencies butting in on Meta's operations.
Speaker 1: So it goes both ways, and Sandberg was leaving the
Speaker 1: company just as the business world was really starting to
Speaker 1: get a bit concerned about where things were headed economically.
Speaker 1: One thing that anyone in the ad business can tell
Speaker 1: you is that when things start getting tight, marketing budgets
Speaker 1: frequently are one of the earliest ones to get scaled back,
Speaker 1: and they typically get smaller until things improve. And for
Speaker 1: a company like Meta, ad revenues are the chief source
Speaker 1: of income. So the company was already struggling because of
Speaker 1: the blow that was dealt by Apple. It was having
Speaker 1: the issues because of these increased expenditures in developing the metaverse,
Speaker 1: and now it was looking at the potential of advertising
Speaker 1: companies decreasing their marketing budgets, which means fewer customers for Facebook. Remember,
Speaker 1: like Facebook and Instagram, we aren't the customers, We're the product.
Speaker 1: The customers are advertisers, and what they're buying is access
Speaker 1: to us. So that's when I talked about Facebook having
Speaker 1: fewer customers, it's because all these companies are cutting back
Speaker 1: on their advertising budgets. Meanwhile, Meta was also facing a
Speaker 1: lawsuit from the US Federal Trade Commission, or FTC, accusing
Speaker 1: the company of practicing a buy or barry approach to competition,
Speaker 1: which means that they were saying Meta's approach to competition
Speaker 1: is to either buy up a rising competitor before it's
Speaker 1: a real threat, or attempting to squish a competitor out
Speaker 1: of existence, maybe by mimicking the competitor's own products. And
Speaker 1: I think that's pretty darn fair to say that Meta
Speaker 1: has been doing that for like all of its existence,
Speaker 1: pretty much. The FTC would also get involved in an
Speaker 1: effort to try and block Meta from acquiring a VR
Speaker 1: company called Within Unlimited Incorporated. I talked about a little
Speaker 1: bit on Monday, uh That company makes a VR fitness
Speaker 1: app called Supernatural. That particular story is still unfolding as
Speaker 1: we end out two. So uh, still no word yet
Speaker 1: on whether or not the FTC's lawsuit to block that
Speaker 1: acquisition will actually be successful. Uh. The FTC has refined
Speaker 1: its lawsuit to make it a little more specific, but yeah,
Speaker 1: we still haven't got to the end of that story yet. Okay,
Speaker 1: but let's talk about VR for a little bit. With
Speaker 1: regard to meta so VR or virtual reality, it's been
Speaker 1: a developing technology since the late nineteen eighties, at least
Speaker 1: at least as far as the general public has been
Speaker 1: aware of it. There was a brief hype cycle around
Speaker 1: VR in the nineties, but that deflated pretty rapidly once
Speaker 1: people saw the limitations of the technology at that time.
Speaker 1: So back then, your typical VR headset was massive, and
Speaker 1: it was heavy, and it had to be suspended from
Speaker 1: like a frame by cables in order to support the
Speaker 1: weight because it would be too heavy for someone to
Speaker 1: just wear for any length of time. Graphics were really
Speaker 1: primitive because we just didn't have the processing power to
Speaker 1: handle something more sophisticated, and folks got disenchanted with what
Speaker 1: VR was compared to what it was promised to be. Thus,
Speaker 1: interest faded in VR in the nineties, and as a result,
Speaker 1: the people who had been working on the technology to
Speaker 1: turn VR into our r by what which I mean,
Speaker 1: to make VR a real reality found themselves either with
Speaker 1: reduced budgets or completely out of a job. And it
Speaker 1: took years before folks in general were ready to entertain
Speaker 1: the idea of VR. Again. Development didn't stop, but it
Speaker 1: was severely hampered. Then you get eventually to the arrival
Speaker 1: of the Oculus VR headset, and things began to change. Uh.
Speaker 1: The Oculus was relatively lightweight compared to earlier VR headsets.
Speaker 1: Processing capabilities were much better because you could pair the
Speaker 1: Oculus with a significantly powerful computer and thus take advantage
Speaker 1: of that computer's abilities, and the headset would just act
Speaker 1: as kind of an interactive display um. And then it
Speaker 1: looked like VR might actually stand chance of catching on
Speaker 1: at least a little bit. Meta, which at the time
Speaker 1: was just Facebook, purchased Oculus in two thousand fourteen. Uh,
Speaker 1: that story is complicated in its own right. It doesn't
Speaker 1: really matter for our episode here, so we're gonna skip
Speaker 1: ahead of bit. In October twenty twenty, Meta would release
Speaker 1: a pair of headsets called the Oculus Quest two as
Speaker 1: you might guess this was a follow up to an
Speaker 1: earlier Oculus quest. When Facebook rebranded into Meta In the
Speaker 1: Quest To also got a rebrand, it dropped the word
Speaker 1: Oculus entirely. Now it's the Meta Quest too. Well. When
Speaker 1: the company launched those headsets back in there was a
Speaker 1: sixty four gigabyte version which sold for two hundred nine
Speaker 1: dollars and a two hundred fifty six gigabyte version for
Speaker 1: three dollars. And on Facebook phased out the sixty four
Speaker 1: gigabyte model, replaced it with a hundred twenty eight gigabyte model,
Speaker 1: but kept the price point at to Now skip ahead
Speaker 1: again to this year two. Over the summer, mark Zuckerberg
Speaker 1: announced that the company was going to increase the price
Speaker 1: of the two Oculus two models by one dollars each.
Speaker 1: Nothing else changed, so the headsets didn't get more features,
Speaker 1: they didn't become more powerful, they didn't introduce models with
Speaker 1: more storage, They did not provide more immersive experiences. Someone
Speaker 1: who bought a base Oculus well in this case Meta
Speaker 1: Quest Too, at the end of July would pay to it.
Speaker 1: Someone who bought one in the beginning of August would
Speaker 1: buy it for three and there would be no difference
Speaker 1: between the two headsets besides that price tag. Uh And
Speaker 1: obviously if you were to buy a two D fifty
Speaker 1: six gig by version then it would set you back four.
Speaker 1: Zuckerberg tweeted that this was done quote in order to
Speaker 1: continue investing in moving the VR industry for for the
Speaker 1: long term end quote. We'll talk more about that strategy
Speaker 1: after we come back from this quick break. Okay, So
Speaker 1: this past year, Meta increases the cost of the Meta
Speaker 1: quest to headset. It is not often that a company
Speaker 1: will actually boost the price of a tech product, particularly
Speaker 1: a tech product that's debuted nearly two years earlier. And
Speaker 1: just as a side observation, any version of the metaverse
Speaker 1: that is going to feature VR exclusively or extensively is
Speaker 1: also going to have to solve the problem of making
Speaker 1: VR equipment accessible and affordable and attainable. So one of
Speaker 1: the big advantages Facebook and Instagram and WhatsApp have is
Speaker 1: that these are all products that are accessible on mobile devices,
Speaker 1: and these devices aren't necessarily super expensive. Some of them are,
Speaker 1: but some of them aren't. You don't have to get
Speaker 1: a flagship phone model if you don't want to. But
Speaker 1: I bet you can run Facebook on it if it's
Speaker 1: a smartphone. So these are affordable portable devices, and most importantly,
Speaker 1: in my opinion, you don't have to wear them on
Speaker 1: your face if you don't want to. VR is a
Speaker 1: tougher cell. It's harder to see the value of VR
Speaker 1: unless you try it out for yourself, and in the
Speaker 1: process of trying it out, you might encounter issues like
Speaker 1: motion sickness. Some people are more prone to it than others.
Speaker 1: I am extremely prone to It didn't used to be,
Speaker 1: but as I get older, I fall victim to motion
Speaker 1: sickness more and more frequently. So I think there's always
Speaker 1: going to be a smaller market for VR, and probably
Speaker 1: a R two at least in headset formats. It is
Speaker 1: an expensive peripheral. It has lim it in use cases,
Speaker 1: so making it more expensive is a tough measure. It's
Speaker 1: a and it's it's a hard thing to tell potential customers,
Speaker 1: right like people who might have been looking into VR,
Speaker 1: and you tell them, oh, well, this thing now costs
Speaker 1: a hundred dollars more than it used to, but it
Speaker 1: doesn't do anything more than it did before we hiked
Speaker 1: up the price. That doesn't necessarily go over well, but
Speaker 1: we're not done yet. Meta also introduced a new VR
Speaker 1: headset model this past year, the Quest Pro. Zuckerberg unveiled
Speaker 1: this in October two, and this headset is meant to
Speaker 1: show off how VR headsets could potentially be used in
Speaker 1: settings outside of your typical VR experience and VR games.
Speaker 1: It's meant, in part to open business owners eyes to
Speaker 1: the potential use of VR in professional settings. This headset
Speaker 1: costs a hefty five hundred dollars, but again, Meta has
Speaker 1: been positioning it more as a professional tool, not something
Speaker 1: that's meant to attract gamers and hobbyists. Now, some early
Speaker 1: reviews of the Quest Pro, we're pretty quit critical of it,
Speaker 1: um not really praising it so much, And in a
Speaker 1: curious move, Mark Zuckerberg and met us seemed to kind
Speaker 1: of acknowledge that the Quest Pro isn't, you know, really
Speaker 1: very good yet. Instead, the messaging is more like the
Speaker 1: Quest Pro is an early model and that something a
Speaker 1: bit more practical will have to wait for a few
Speaker 1: iterations down the road, like maybe the Quest four or
Speaker 1: the Quest five, Which I mean, that's that's a weird
Speaker 1: message to send out to potential customers, right, I mean,
Speaker 1: it could be the truth, which you know, great for
Speaker 1: them being transparent about it, but it's weird to tell people, hey, yeah,
Speaker 1: this one kind of stinks, but it's putting us on
Speaker 1: the path to where we want to be, and hey,
Speaker 1: you want to buy one for smack a ruse? Now.
Speaker 1: The Virgins review of the Quest Pro was fairly critical.
Speaker 1: Addie Robertson doesn't mince words and says, quote, the problem
Speaker 1: is the Quest Pro isn't very good. It's device seemingly
Speaker 1: launched without plan or purpose, highlighting vrs persistent drawbacks, without
Speaker 1: making good use of its strengths, and topped off with
Speaker 1: some irredeemably bad software. Yikes. And y'all, if I'm honest,
Speaker 1: it's really hard to convince me that VR has a
Speaker 1: real place in most business settings. I can definitely see
Speaker 1: it for some use cases. For example, if you wanted
Speaker 1: to show off a three dimensional virtual model of a product,
Speaker 1: VR or a R could come in really handy. If
Speaker 1: you could make real time tweaks and changes to this
Speaker 1: model while people are looking at it and giving you feedback,
Speaker 1: that could be really valuable. It potentially speed up the
Speaker 1: design process considerably. It would be even faster than three
Speaker 1: D printing, which has revolutionized the speed of developing new
Speaker 1: products in lots of different industries, but for any businesses
Speaker 1: that aren't in product design, it's harder to sell the
Speaker 1: idea of VR to me, Like, I don't really like
Speaker 1: the idea of having to put on a VR headset
Speaker 1: in order to attend a virtual meeting. I mean, I
Speaker 1: don't even like having my camera or my microphone on
Speaker 1: for most virtual meetings unless I'm presenting something or I'm
Speaker 1: asking a question. And it's super hard to imagine VR
Speaker 1: helping out when I don't know, when you're talking about
Speaker 1: a spreadsheet or a power point presentation. I'm not sure
Speaker 1: there's any added value to what you could already do
Speaker 1: with just various virtual meeting software suites that work on
Speaker 1: regular old computer screens. Now, I assume Meta's goal was
Speaker 1: to start getting businesses on board with the idea of
Speaker 1: adopting metaverse technologies and concepts. I'm not sure the company
Speaker 1: has been successful in doing that. Perhaps it's just too
Speaker 1: early to kind of make Meta's sales pitch for VR,
Speaker 1: And with that comes a danger that going so hard,
Speaker 1: so early and so publicly, that Meta could be shooting
Speaker 1: itself in the foot, because again, We've seen it happen
Speaker 1: in the nineties when people got unenthusiastic about VR because
Speaker 1: they saw the limitations. If you push VR too hard
Speaker 1: before it's capable of doing the things you wanted to do,
Speaker 1: you run the danger of repeating that all over again.
Speaker 1: All right, So to put a pin on where META
Speaker 1: is so far, I figured we can look at it
Speaker 1: this way. At one point in two Mark Zuckerberg's personal
Speaker 1: net worth fell one hundred four billion dollars from where
Speaker 1: he started out at the beginning of the year. He
Speaker 1: went from being the third well beiest person in the
Speaker 1: world to the twenty nine. But I mean he's still
Speaker 1: made the cut, right I didn't, But yeah, that's still
Speaker 1: that is a massive drop. Now. To be clear, since
Speaker 1: that time, Meta has rallied a little bit, because it
Speaker 1: was at its lowest when it dropped below ninety dollars
Speaker 1: a share, and a lot of Zuckerberg's wealth is tied
Speaker 1: up in shares of his company. But since then we're now,
Speaker 1: like I said, around a hundred seventeen dollars, So it's
Speaker 1: a little better than what it was at its lowest.
Speaker 1: And I'm not sure where Mark Zuckerberg ranks in the
Speaker 1: list at this point. Plus you know, we have other complications,
Speaker 1: right because Elon Musk was the wealthiest person in the world,
Speaker 1: but his values kind of taken a nose dive because
Speaker 1: Tesla shares have been dropping and I don't know, maybe
Speaker 1: we're gonna see is a race to the billionaire bottom
Speaker 1: and I will spring for popcorn if that happens. Before
Speaker 1: I wrap up this episode, I want to talk just
Speaker 1: for a short bit about a one of other companies
Speaker 1: that had a rough time in and a really big
Speaker 1: one in that category is Netflix. And you could argue
Speaker 1: that Netflix's struggles have had a massive ripple effect on
Speaker 1: streaming in general. So we go back to April of
Speaker 1: this year. Netflix holds an earnings call, and the company
Speaker 1: reveals that for the first time in its history, it
Speaker 1: had lost more subscribers over the previous quarter than it
Speaker 1: had added. There were two hundred thousand fewer Netflix subscribers,
Speaker 1: and boy howdy, did that set off an investor panic.
Speaker 1: The company's stock price, which had been at around six
Speaker 1: hundred dollars a share at the beginning of two dropped
Speaker 1: down to around two hundred dollars a share in the
Speaker 1: wake of that earnings call. So Netflix's value took an
Speaker 1: enormous hit over the last year. The company had a
Speaker 1: load point of a hundred sixty two dollars or share,
Speaker 1: so that's where it kind of bottomed out. It has
Speaker 1: since recovered quite a bit. It's now just a little
Speaker 1: bit below three a share, still not where it was
Speaker 1: at the beginning of this year, but at least it
Speaker 1: looks as though it's pulling out of a nose dive. Now.
Speaker 1: Netflix's investors were showing a lot of concern and you
Speaker 1: can kind of understand why when you start to really
Speaker 1: critically think about the streaming content business. So to attract subscribers,
Speaker 1: you need content, right, you need good content. Netflix initially
Speaker 1: built up its domination in the space largely by featuring
Speaker 1: content that was created by other studios, but gradually the
Speaker 1: power players in the entertainment industry started to get worried
Speaker 1: about Netflix and started with whole deals of some of
Speaker 1: its most popular i p So Netflix is finding it
Speaker 1: more and more challenging to land contracts that give it
Speaker 1: access to the types of stuff people actually want to see.
Speaker 1: So then Netflix starts to make its own content, and
Speaker 1: it starts making some premium, prestige content and of course
Speaker 1: this started several years ago, but now people know about it.
Speaker 1: People know that Netflix makes tons of content of its own,
Speaker 1: and it really became a production company, not just a
Speaker 1: distribution company. Well, here's the thing, producing good stuff, or
Speaker 1: at least good looking stuff. The content itself might not
Speaker 1: be good, but it's expensive. Netflix produced a lot of it.
Speaker 1: So there have been some questions about whether the amount
Speaker 1: of money Netflix has spent on producing content makes sense.
Speaker 1: Because if your business strategy revolves mostly around adding more subscribers,
Speaker 1: you eventually hit a point where you really aren't going
Speaker 1: to be adding many more folks because you're meeting market saturation.
Speaker 1: The cable companies ran into this problem decades ago. Streaming
Speaker 1: services are running into it now. And of course there's
Speaker 1: also way more competition in the space, right because now
Speaker 1: everybody has a streaming service. So Netflix, in the wake
Speaker 1: of this, starts to cut costs. Entire departments were gutted.
Speaker 1: Just take a look at the number of animated projects
Speaker 1: that got the acts at Netflix over the last year.
Speaker 1: The company also laid off employees. It announced plans for
Speaker 1: a couple of new types of subscriptions, one that lets
Speaker 1: existing accounts add additional households for a few dollars extra
Speaker 1: per month, and this was an effort to crack down
Speaker 1: on people who are sharing their Netflix log in credentials
Speaker 1: with friends and family who you know aren't actually part
Speaker 1: of the same household. The company also announced plans for
Speaker 1: an ad supported tier of service that would have a
Speaker 1: reduced subscription costs, so people who either didn't want to
Speaker 1: or couldn't afford the full subscription cost could go at
Speaker 1: a lower tier UH and just endure ads and not
Speaker 1: have access to all the content that's otherwise is available
Speaker 1: on Netflix. Now, over the course of two Netflix was
Speaker 1: actually able to reverse the trend of losing subscribers, and
Speaker 1: it was kind of a trend for Netflix because by
Speaker 1: the second quarter they were down almost a million, but
Speaker 1: they were able to reverse that over the last half
Speaker 1: of the year, and they even beat out projections in
Speaker 1: the process. They added more people than they even predicted.
Speaker 1: Right now, for Netflix, things are in a better place
Speaker 1: than they were in April after that earnings call. But
Speaker 1: across streaming in general, we're seeing companies struggle with this
Speaker 1: problem of how do you produce content that attracts customers
Speaker 1: and keeps the existing ones happy while you also are
Speaker 1: able to do it in a way that makes a profit.
Speaker 1: And it's complicated, and it's made more complicated because it's
Speaker 1: harder to ascribe numbers to this stuff. Did someone subscribe
Speaker 1: to your service just to access a spece civic piece
Speaker 1: of content or did they happen to access that specific
Speaker 1: piece of content because they already subscribed to your service.
Speaker 1: This isn't like the movies, where box office is a
Speaker 1: pretty decent indication about whether a film is resonating with
Speaker 1: audiences or not. We've also seen another company struggle with
Speaker 1: this over the second half of two will close out
Speaker 1: with this. That would be Warner Brothers Discovery UM. Warner
Speaker 1: Brothers Discovery was not struggling with any problems in the
Speaker 1: first half of two because it didn't exist yet a
Speaker 1: T and T spun off. Warner Media and Discovery merged
Speaker 1: with Warner Media in April of this year and thus
Speaker 1: formed Warner Brothers Discovery. Of course, we knew this was
Speaker 1: going to happen because it was announced last year, but
Speaker 1: it was this year when it finally concluded and David Zaslov,
Speaker 1: the head of Discovery, became the head of the newly
Speaker 1: merged company and started making some serious changes now, y'all.
Speaker 1: At one point, when I was recording Tech Stuff back
Speaker 1: in the day, it was part of Discovery COMMU Dications.
Speaker 1: Discovery Communications was daddy to Tech Stuff and to all
Speaker 1: the other how Stuff Works podcasts back in the day,
Speaker 1: and it was led by Mr David Zaslov at the time.
Speaker 1: And I'm pretty comfortable saying that nothing he has done
Speaker 1: since taking charge of Order Brothers Discovery has surprised me.
Speaker 1: That includes him, uh acting the Batgirl film which was
Speaker 1: almost finished and then writing it off for tax purposes
Speaker 1: didn't surprise me even in the slightest. Didn't even surprise
Speaker 1: me when he started doing things like having Westworld pulled
Speaker 1: off of HBO Max not just canceled, but pulled from
Speaker 1: the service. Uh, didn't surprise me when he shook up
Speaker 1: the leadership over at d C. He still has to
Speaker 1: cut billions of dollars of debt from this merged company,
Speaker 1: So nothing he's gonna do is really gonna surprise me.
Speaker 1: We are not all the wood's by far with the
Speaker 1: changes for Warner Brothers Discovery, but zas Love has said
Speaker 1: the streaming business is a tough one. He's coming at
Speaker 1: it from the cable business, which similarly has become really
Speaker 1: tough as it's hit saturation. So to make financial sense
Speaker 1: out of streaming is challenging, and changes have to happen.
Speaker 1: You can't just go on producing super high end content
Speaker 1: for streaming without some other way to monetize it, or
Speaker 1: else you'll eventually go out of business. And I think
Speaker 1: he's right. I think zas Love is on the right
Speaker 1: path here in the sense that you've got to figure
Speaker 1: out a way to make this make financial sense, or
Speaker 1: else you'll ultimately produce yourself out of business. You'll you'll
Speaker 1: spend too much money, you'll overextend yourself, and you'll collapse.
Speaker 1: I do think zas Love is taking a much more
Speaker 1: brutal approach than what I or a lot of other
Speaker 1: folks would like to see, especially fans and creators. But
Speaker 1: I do think this reckoning was a long time coming.
Speaker 1: It was just a matter of when and who was
Speaker 1: going to launch it, and we're starting to see it
Speaker 1: play out across other streaming services as well. Anyway, I'm
Speaker 1: sure we'll talk more about Warner Brothers disc coovery in
Speaker 1: as well as other streaming companies and how they navigate
Speaker 1: waters moving forward. But really, I think Netflix is bad.
Speaker 1: April of two was kind of the the bit that
Speaker 1: got the snowball rolling down the hill. Okay, that's it
Speaker 1: for this episode. We will continue our look back on
Speaker 1: two in the next one. Hope you're all well. Please
Speaker 1: reach out if you have suggestions for topics you would
Speaker 1: like me to cover. Things to look forward to in three.
Speaker 1: You can do that on the I heart Radio app.
Speaker 1: Just download the app. It's free to use, free to download.
Speaker 1: Navigate the Tech Stuff use that little microphone icon. You
Speaker 1: can leave me a voice message up to thirty seconds
Speaker 1: in length, or reach out to me on Twitter. The
Speaker 1: handle for the show is tech Stuff H s W
Speaker 1: and I'll talk to you again really soon. Tech Stuff
Speaker 1: is an I Heart Radio production. For more podcasts from
Speaker 1: I Heart Radio, visit the i heart Radio app, Apple Podcasts,
Speaker 1: or wherever you listen to your favorite shows. H