A Meta Analysis on Meta

I don't like Meta, but this is an unfair assessment. Meta saw Google's deal and likely tried to pay these fees. They've been trying desperately for years - they knew this was possible and saw the writing on the well.

They tried launching their own phone product and learned firsthand how difficult to impossible it was to compete in that space. And unlike with Microsoft, this was an existential issue for Meta. That's largely what Metaverse itself is.

Apple has 100% of the leverage and is building their own ad product, so they likely turned Meta down with zero recourse.

Apple has too much power.

With one flip of a switch, Apple wiped out hundreds of billions of dollars. The entire business of a company. This is monopoly.

Apple captured half of American computing and taxes everything that can possibly be done. Subscriptions, social networking, dating, movies, you name it.

At no point in American history has a company had this much power.

Meta is trying to build the next platform so that they can be the ones to control it. These sorts of total platform monopolization plays are bad for technology, smaller businesses (even 10B market cap ones), and innovation. The DOJ needs to step in and do its job.

Is it too late for Meta to admit the Metaverse has been a mistake and shift their efforts to something else? And what would that something else be?

In my opinion Zuck has been acting weird since the Apple's privacy change announcement. I'm not a long-term shareholder of META/FB, but I have followed the companies IR material for some time and I've never seen Zuck act like this before. On the last few earnings calls it's hard at times not to wonder if he's trying to make investors nervous...

For example, telling investors that they didn't see the Tiktok threat coming. Or that Apple's privacy change is a serious threat to their business. Or just recently that he "thinks" (very unconvincingly) that their huge Metaverse investments will pay off.

One of the main problems Meta has today is that despite their relatively weak moat compared to other big tech companies is that they're treated with far more scrutiny from regulators. And on the flip side you have for dominant companies like Apple which are literally destroying the ad business model that many tech companies rely on while demanding a 30% tax from developers and attracting relatively little regulatory attention while doing so.

One of the things that has made Meta such a strong player historically has been their ability to make very smart accusations, but this is no longer possible because regulators see them as such a dominant player. In some ways Meta was actually strategically stronger as a smaller player.

So perhaps this is just part of the strategy. Historically if you want Western governments to give you a bit of a hand then being out competed by companies in hostile countries isn't a bad move. Similarly if you want to stop companies like Apple from targeting you then making it look like they're doing an unreasonable amount of damage to your business, probably isn't a bad move either.

And Zuck is an interesting position given the share structure of the company. Where other companies would have to bend to investors, Zuck can force down the stock price and ignore investor demands. Again, I'm not saying I think he is doing this, but it's an explanation I'm beginning to weight heavier.

I think Zuckerberg sees it as totally inevitable that VR/MR/AR is the future of computing and he also sees from living through the iOS/Android experience that there is really only room for two players in a space like that. Given Apple will cruise into one of those, it simply comes down to, who is number two? Mark wants to be number two. Who could stop him? There isn't really anybody. In theory Google could have but they've chose to stand by the sidelines. They appear to be making the lazy assumption that, since they are smarter than everybody else in the room, if it turns out to be a mistake they can come back in and overtake - that looks delusional to me but it fits with Google's character. If you're Zuckerberg this looks like utter foolishness and the most important thing right now is to race to cement as much of an advantage before they come to their senses.

Another interesting feature of the iOS/Android comparison is that arguably Google has never really made much money from Android. It has worked for them defensively but it hasn't ever really done more than support their other businesses. Mark doesn't want to be in that position. So he's going to make an open ecosystem play but he's going to do it by owning the hardware and hence a vastly greater share of the profits.

The author asks whether Meta can earn $20B/year from the metaverse. I would say that Mark is shooting here at a 30% chance of making $200B/year. Which is to say in a completely different way, to him at least, it's a no-brainer. However he's effectively taking Meta back to being a startup. So it's right for conservative investors to leave - they never really should have been there in the first place. But it's not necessarily an indictment of his strategy if they do. It's just the wrong risk profile for such investors.

VR was too extreme and narrow a view. The meta verse should have been the extending the space where people and technology over lap, not trying to force everyone to move into frankly terrible VR.

Meta should have went all in on wearable and other augmented reality stuff, hook that into people's Facebook etc.

Imo, HN is probably the only social media I actually use. Sparingly as I'm more certain that much online discourse is pure fabrication.