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A full news cycle has gone by since Mark Zuckerberg’s pivot to encryption, and many questions remain. The most important of these can’t be answered soon: How will this affect Facebook’s bottom line?
It is tempting to see the 1.96% decline in the company’s stock price Thursday as some sort of commentary on the news, a signal that the market thinks Facebook is abandoning its evil-but-lucrative advertising business. That wouldn’t explain the 1.95% drop in Netflix shares or the 2.58% decline in Amazon. Neither company released paradigm-shifting news this week.
Moreover, if you take Mark Zuckerberg at his word—and in this case it makes sense to do so—Facebook isn’t forecasting any quick shift out of ads. In fact, I view Zuckerberg as trying to have his cake and eat it too. In other words, Facebook hopes to keep making billions off its namesake platform and add new business models to its encrypted communications and messaging services, namely payments and e-commerce, which is WeChat’s model in China.
Writing Thursday in CEO Daily, Alan Murray smartly compared Zuckerberg’s privacy manifesto to ExxonMobil getting out of fossil fuels. That’s a clever observation, but not precisely the one I’d choose. To me, it’s more like when BP said it was going hard into “green” or other alternative energy products—without abandoning its oil business. BP’s efforts never amount to much compared with the petroleum business, still its main line. But Zuckerberg and his company are truly gifted at digital product development and have shown once before the ability to undertake a major product-oriented strategic shift, from desktop to mobile. More, with Whatsapp and Facebook Messenger, they have the building blocks for the new products, just as the Facebook user base and functionality were the building blocks for the re-skinning of Facebook.com in a PC environment to an app for mobile.
Venture capitalist Fred Wilson had a similar but different take, that Zuckerberg’s epiphany reminded him of Bill Gates’s long-ago awakening about the Internet. Microsoft never delivered on that vision, a bad omen for Facebook.
Consulting giant McKinsey & Co. has been under attack of late. I interviewed its global managing partner, Kevin Sneader, the other day as he wanted to address the criticism. He disclosed a few choice nuggets about the secretive firm, including that its feared cost-cutting practice is a diminishing part of its business. (That assertion will come as cold comfort to employees dismissed from their jobs in the wake of a McKinsey “engagement.”) Sneader also released a letter to McKinsey’s U.S. employees discussing similar topics. “We cannot return to a time when we were in the background and unobserved,” he wrote, even as he reminded colleagues of McKinsey’s historically secretive ways. “Those days have gone. Indeed, I have little doubt that scrutiny—fair and unfair—will continue. It is the price we pay for being ‘in the arena’ and working on what matters.”
It is also the price McKinsey pays for doing business with unsavory characters, for being duplicitous in its dealings in bankruptcy court, and for being known as the consultants that CEOs hire when they don’t know what to do themselves.
Achieving new heights. Fortune published a series of stories and videos for International Women’s Day, including great pieces about women revealing a superpower and naming a nemesis. The most fun may be women choosing a favorite “pump up” song, though.
Conspicuous absence. Almost the entire U.S. streaming music industry—Spotify, Google, Pandora, and Amazon—filed an appeal to a ruling by the federal government’s Copyright Royalty Board that increased songwriter royalty rates by 44%. Apple alone is sitting out the appeal.
Hair on fire. Everyone who uses the Chrome browser should immediately download the latest update, which patches a high-risk security flaw that hackers are already exploiting, Google says. While little is known about how the threat, called CVE-2019-5786, works, Justin Schuh, Google’s Chrome engineering and security desktop lead, tweeted on Tuesday that everyone should update their Chrome browser “right this minute” on every device.
Crowning achievement. Feeling a little royal this morning? Maybe it’s because Queen Elizabeth II has joined Instagram. The 92-year-old monarch’s initial post shared a picture of an old letter from her great, great grandfather Prince Albert to computer pioneer Charles Babbage. In a jokier social media twist, Apple CEO Tim Cook replaced his last name on Twitter with the Apple logo after President Trump misnamed the executive “Tim Apple” at a meeting on Wednesday.
Projecting. Speaking of Tim Cook’s imagination, well-connected analyst Ming-Chi Kuo reports that Apple’s first augmented reality glasses could go into production as soon as the end of this year. The first-gen product would be dependent on a user’s iPhone, he says.
Night on the town. Prepping for its IPO, Airbnb expanded into the boutique hotel segment, purchasing last-minute hotel room seller HotelTonight for an undisclosed amount. HotelTonight was most recently valued at $463 million in March 2017.
Critical flaw. In a nightmare scenario for high school seniors (and their parents), hackers breached the admissions databases of Oberlin College, Grinnell College, and Hamilton College and then tried blackmailing applicants. The schools said they had contacted the FBI.
FOR YOUR WEEKEND READING PLEASURE
A few longer reads that I came across this week that may be appealing for your weekend reading pleasure:
The World’s Last Blockbuster Has No Plans to Close (New York Times)
With the closing of a Blockbuster store in Australia, the one in Bend, Ore., will be the last to survive changes in technology and shopping that reshaped the way people watch movies at home.
What Was the Happiest Day on the Internet This Decade? (The Ringer)
From Double Rainbow Guy to the Ellen Selfie to the Dress, let’s take a pseudoscientific journey through the past nine years of internet history to determine the single best day to be online.
AT&T Is Dragging HBO’s Streaming Strategy Out of the Dark Ages (Bloomberg Businessweek)
With Richard Plepler out, new boss Robert Greenblatt will need to fix years of missteps to catch up to Netflix.
Tolkien’s Drawings Reveal a Wizard at Work (1843)
J.R.R. Tolkien himself was undoubtedly born with that “elvish craft”, as an exhibition at the Morgan Library in New York makes clear. To help him create a believable “Middle-earth,” the setting for The Lord of the Rings and The Hobbit, Tolkien produced hundreds of drawings and maps. They grounded his stories and helped him to keep track of thousands of years of history, sprawling geographies, and complex languages.
FOOD FOR THOUGHT
If there’s one sure bet, it’s that the amount of digital data being produced, collected, and analyzed will continue increasing at a dizzying pace. That’s prompting scientists and mathematicians to ponder the International Bureau of Weights and Measures’ naming schemes for really big numbers. Sure, there’s gigabytes and petabytes, and so on. But the whole prefix system tops out at yotta, representing amounts with 24 zeros. It may not be enough, as Jo Craven McGinty reports for the Wall Street Journal. The bureau will weigh some new ideas at a meeting in October, and British chemist Richard J.C. Brown has some ideas, McGinty notes:
IN CASE YOU MISSED IT
Okta Says It Will Acquire Workflow Automation Startup for $52.5 Million By Robert Hackett
BEFORE YOU GO
The photogs among you may join me in lusting after the newest camera from very-high-end camera maker Leica. The Leica Q2 has a single fixed lens (28 mm) and snaps full frame 47.3-megapixel shots. Oh, and it costs $5,000. As The Verge reviewer Dan Seifert notes: “If you want to own one of the most unique and enjoyable to use cameras on the market, that’s what it will cost you.”