Meta on Meta

Feb 4, 2022

Meta is a fascinating company lead by a stone-cold operator named Mark Zuckerberg. On the surface, many think that the company is a zombie of a bygone era – a shell of what it once was –  but there's so much more to unpack. The stock took a big hit after earnings showed the negative effects of Apple's App Tracking Transparency rules. I wouldn't bet against Zuck though – like most things, he's most dangerous when he feels threatened. A list of really interesting things going on with Meta.

  • Facebook and Apple are the tech giants that aren't in the cloud business. Started in 2004, just before the cloud era, Facebook largely runs on its own data centers and software AFAIK. Apple is a big customer of AWS and Google Cloud (iCloud runs on both). It's possible that cloud is a huge distraction for Google, or that Facebook's open source data center software democratizes the space.
  • Facebook can't make large acquisitions right now because it's the target of antitrust hearings. Facebook gets the most scrutiny because its what people are most familiar with. Meanwhile, Microsoft can make huge acquisitions like Activision without much scrutiny because its not as transparent to end users (regulation doesn't happen without a constituency).
  • TikTok is an existential threat to Instagram. Discovery is better on TikTok, and the feed is more engaging than Instagram. But I wouldn't rule out a fair fight here. Meta employs some of the leading AI researchers in the world. Kylie Jenner has 300 million followers on Instagram. But an interesting fact about network effects:
Network effects work both ways. For every user that leaves the platform, utility is reduced for many others. Networks can unravel as quick as they are built.

Zuckerberg showed that he can compete but the strategies he's used in the past no longer work. Google+ almost was the end of Facebook. Standalone Instagram or WhatsApp could have meant a mass exodus from Facebook.

  • Facebook put a very public stake in the ground with Metaverse. Microsoft's acquisition of Activision shows that other companies are figuring out their metaverse strategy as well. How far out is realizing the vision?
  • The talent pipeline isn't as bad as the media portrays, but it is real. Many engineers would love to work at Meta. Hard problems at planet scale. There's complicated questions about free speech and amplification. Careful who you listen to about pundits suggesting what Facebook should do otherwise, they all have their own incentives (even me, take my opinion with a grain of salt as someone who lives 20 minutes away from Meta HQ). Meta still publishes some of the most cutting edge research and open source projects (like React).
  • App Tracking Transparency has severely hurt Facebook's ad targeting on mobile. This should be a net-negative for all advertisers (except for Apple, which also advertises on the App Store and doesn't follow its own rules). Hypotheses were that Facebook would survive because it has already had a decade to build up its data moat.