After a few weeks of hype, Mark Zuckerberg today unveiled his big distraction from the last few weeks of bad news. It’s the so-called metaverse, or the “embodied Internet,” as the he called it. Look up. See the world around you, outside your screen? It encompasses virtual and augmented reality, avatars, lots of little sensors over everything, and special glasses to experience it all. That, in a sense, is the idea.
The big product announcement came with a major rebranding, too. Facebook is changing its corporate name to Meta as it plows resources into building this next phase of its business. The plan to create this metaverse will take years and billions of dollars — and breakthroughs in technology— but at stake is nothing less than the Internet’s future.
There’s a sense that the Internet we interact with today is deficient. It’s not just the excessive screen time, or that it makes us angry. On one side, you have people who miss Web 1.0—the disconnected blogs, personal web pages, and ASCII art that in retrospect was attractive because it was benign.
On the other side, many people want to remake the Internet entirely. Crypto enthusiasts have taken the verification capabilities inherent in blockchain technology and smart contracts to improve how we can trust each other. With Meta, Zuckerberg is looking to go even further. For him, the whole boundary between the Internet and real life might as well be thrown into a bath of acid.
In his presentation, Zuckerberg took a few veiled swipes at Apple that were nonetheless revealing. One was his lamenting that the Internet of today is too focused on apps, not people, and the “tax” associated with it is too high to allow for true technological creativity. This was a clear dig at Apple’s App Store, which has lost several battles over its fees. The other was a dig at screens, and how much we rely on them. For Apple CEO Tim Cook, apps and screens have become the whole enchilada, the reason why Apple is a $2.5 trillion market cap company, and worth nearly three Facebooks.
Meta seems to be making a play for all the real estate outside a flashing 6.7-inch piece of glass and metal. The presentation by Zuckerberg of the metaverse seemed like a whirlwind tour of the best days of your life— full of art, concerts, world-building, video games, and successful business. It was all extremely compelling, even if the Facebook executives were all very wooden and the graphics themselves were kinda hokey.
But that’s just the lure. For as much of this was a pitch to the general public, the real audience went unmentioned. I tried to think of it through the eyes of Facebook’s most important partner, the ad industry. A metaverse provides an infinite amount of space for product placement, commercials, and banners. Why not make people watch an ad before meeting up with their friend’s avatars, the way we have to sit through clips before watching a YouTube video?
Last month, New York Times writer Shira Ovide wrote a column asking if smartphones are “too good.” The sense was that this technology is so good, so encompassing, that it’s functionally the apex. Zuckerberg looks like he’s saying that the smartphone, for as much as it’s changed our lives since 2007, is still thinking too small.
Could this work? R.W. Baird analyst called it “not quite the iPhone moment” in a cautious note. Zuckerberg’s initial foray into the metaverse looks dicey, at best. The rest of it just kinda seems like wishful thinking. Zuckerberg still puts bringing people together as his guiding principal, and this is how to do it, even if it just has them interact more with sensors and goggles than with other living, breathing people. It all seems kinda bleak, like when you first see how people are harvested to make up The Matrix. As Morpheus says, channeling the French postmodern philosopher Jean Baudrillard, “welcome to the desert of the real.”
But as Facebook’s continued dominance in social media attests, you don’t really even need people to like your product very much in order for it to be extremely powerful and widely-used. Zuckerberg, who’s 37, laid out a plan that gives himself years, if not decades, to get this off the ground, which is a large runway to absorb a lot of mistakes before getting it right. It’s also a lot of time to sink deeper into folly.
Kevin T. Dugan
Apple grows... Tim Cook's company raked in nearly $100 billion in profit through the end of its fiscal year, a record, even as it warned that supply chain issues loom ahead of the holidays, according to the Wall Street Journal. Disruptions caused by COVID-19 cases in Southeast Asia have slowed down chip manufacturing, leading to delays in fulfilling sales.
...While Amazon stumbles. Jeff Bezos' e-commerce giant reported a disappointing third quarter, bringing in $3.2 billion in profit, down from $6.3 billion during the same period last year, the Journal reports. Tight labor markets, supply chain issues, and heavy spending on its fulfillment centers all contributed to the rise in costs.
Tech tamp down. A Senate committee approved Jonathan Kanter, a noted critic of Big Tech, to lead the Justice Department’s antitrust division, the New York Times reports. If approved — which is expected — Kanter would join other influential critics of the tech industry, like Lina Khan, who’s leading the Federal Trade Commission, and Tim Wu, a White House economic adviser.
Know your crypto. The Paris-based Financial Action Task Force unveiled new proposed rules for countries in order to regulate the trade of cryptocurrencies, including forcing firms to know the identities of the holders, in an effort to stifle money laundering, according to the Wall Street Journal. The recommendations were met with swift criticism from the crypto industry, which said it would hamper innovation.
Vroom, vroom. Almost half of all money spent in the U.S. options markets was spent betting that Tesla stock will go higher, according to the Journal. The timing came as Tesla blasted through a $1 trillion valuation, solidifying CEO Elon Musk’s position as the world's richest man.
FOOD FOR THOUGHT
News you can lose. One complaint you hear from the technorati about the traditional media is that we, the journalists, are upset because they have democratized information, and journalists have lost our status as gatekeepers. This results in a loss of power and influence and, of course, money — which is the real reason the media has been so critical of the tech industry.
This obscures the fact that the power wielded by the tech gatekeepers can be far more devastating than the imagined past of the Walter Cronkite era of news. Case in point: YouTube. The Alphabet-owned video site takes down 2,000 channels hourly. Much of it is spam or porn, but what happens when it’s a news site? That’s the case here when a left-leaning online news channel in the UK called Novara for opaque reasons. YouTube eventually reversed course, but the implication is clear: if you think information is democratized, think again.
From the New York Times article:
Novara’s editors said they had been careful not to run afoul of YouTube’s rules. It has relied on the platform to publish all its videos, and sometimes used YouTube’s studio in London to film. Staff mined Google’s analytics tools for ways to find new viewers. About 92 percent of Novara’s budget comes from individual donors, many of whom discovered them through YouTube.
“They are a monopoly, there is no alternative,” said Michael Walker, who hosts Novara’s show “TyskySour.” “If we move to Vimeo or whatever other platform, we wouldn’t acquire the viewers.”
IN CASE YOU MISSED IT
A man who takes 6 months of parental leave ‘is a loser’, says Palantir founder and Thiel associate Joe Lonsdale by Lizette Chapman and Bloomberg
Startup employees can breathe easier after scaled-back tax plan by Vieje Piauwasde
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BEFORE YOU GO
Programming note. This is my last Data Sheet before I transition into a new role at a different publication. It’s been an absolute privilege writing this newsletter, and working with the incredibly smart and incisive team of editors and reporters at Fortune has been a dream. I’ve also loved hearing from my readers, even — and especially — when they think I’ve gotten something wrong. I’ll still be writing and reporting, so I hope that if you liked reading my essays, you’ll continue to follow my work, in addition to the smart and thoughtful analysis in this newsletter every day.
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