Hemmed in by regulators, Meta’s real growing pains are still to come
Good morning and Happy Friday! David Meyer here in Berlin, filling in for Alan.
This has been a terrifically informative week for anyone who has been wondering how Meta/Facebook’s regulatory dealings are going. In a nutshell: not great, though it’s a nuanced picture.
The big news was the death of Diem, formerly known as Libra—Mark Zuckerberg’s bold attempt at building a new, global digital currency.
The original idea there was to have one “stablecoin” that was pegged to a basket of different fiat/real currencies. Central banks spat fire from the start, leading launch partners such as Visa and Stripe to swiftly back away mere months after the 2019 unveiling. Then Facebook tried to reframe its one-stablecoin-to-rule-them-all concept as a collection of tokens that would each be pegged to a national currency. By May last year, it was down to one dollar-pegged stablecoin that would be issued by a partner bank, Silvergate Capital, in the U.S. only.
Even that wasn’t to the liking of the U.S. Federal Reserve, which reportedly didn’t give the Diem consortium assurances that it could launch without a crackdown. Now the group is winding down; according to the Wall Street Journal, Silvergate is buying its tech assets for around $200 million.
Two immediate lessons here. Firstly, the days of moving fast and breaking things, while regulators look the other way, are long gone. Secondly, this is yet another reminder that Facebook—the company that is allegedly going to build the metaverse—has never actually managed to build anything of real significance apart from its social network. Whether they involved drones or phones, its plans to organically become something more have all, for various reasons, bitten the dust. Its biggest successes in recent years, Instagram and WhatsApp, were bought in.
But these days, the M&A route is getting trickier to navigate. Earlier this month, the FTC got clearance to move on with a suit that could force Meta to divest those prize purchases. British antitrust regulators already ordered Meta to sell Giphy, a library for GIFs and video clips, late last year. And yesterday, the European Commission cleared Meta’s takeover of a customer-services and support startup called Kustomer—but with strict conditions about allowing other customer relationship management (CRM) companies to enjoy equivalent privileges on Meta’s messaging services, for the next decade.
Even the fact that the Commission weighed into the B2B-focused Kustomer acquisition was novel—it’s so small that it previously wouldn’t have registered on the Commission’s antitrust radar, but in these anti-Big Tech days, EU countries have been empowered to ask the Commission to probe even tiny takeovers that could one day turn out to have been “killer acquisitions.” Heaven knows what awaits Meta when it next tries to make a large purchase.
So it’s not hard to see why the company is betting the farm on a Meta-made metaverse. If only there were reason to believe the endeavor will pan out. More news below.
The president of the European Commission, Ursula von der Leyen, is under pressure to reveal text messages sent between her and Pfizer CEO Albert Bourla in early 2021, when the EU was scrambling to secure vaccine supplies. VdL happily talked about the texts in a New York Times interview last April, but the Commission then refused a freedom-of-information request from a journalist who actually wanted to read them. It claimed there was no record of the messages. The European Ombudsman has now accused the Commission of maladministration and ordered it to take another look. Fortune
Apple handily beat Wall Street estimates with its latest quarterly sales, which were up 11%. The results could provide some reassurance to investors after the recent slump in tech stocks, and amid fears of long-lasting supply-chain problems (which just knocked 11% off Tesla's share price). Fortune
U.S. lawmakers want the biggest Bitcoin miners to explain their environmental impact. Sen. Elizabeth Warren and others wrote to the companies: "Given the extraordinarily high energy usage and carbon emissions associated with Bitcoin mining, mining operations raise concerns about their impacts on the global environment, local ecosystems, and consumer electricity costs." Fortune
SoftBank's chief operating officer, Marcelo Claure, is leaving the Japanese conglomerate after reportedly being refused a $1 billion bonus. That would be more than 2% of SoftBank's profits. Fortune
AROUND THE WATER COOLER
In a piece appearing in our latest magazine issue, Fortune's Beth Kowitt examines the legacy of Kent Taylor, the Texas Roadhouse founder who committed suicide after a bout with COVID-19. "What I discovered in Taylor and his company is much more than a story of loss," she writes. "There are lessons to be learned from the founder and the success he discovered in stubbornly insisting on following his own path." Fortune
Also from the new issue, Fortune's Megan Leonhardt examines how companies are preparing for a future where, if Omicron is anything to go by, vaccinated employees will continue to experience "breakthrough" infections. "Their approaches could help the economy weather COVID's next phases—though only if wider vaccination, reliable health care, and the evolution of the virus itself keep rates of severe illness relatively low," she writes. Fortune
Neil Young yanking his music from Spotify over the platform's patronage of misinformation-vector Joe Rogan has turned out to be quite a big story. Take this with the pinch of salt that should usually accompany stories about social-media activism, but the #SpotifyDeleted hashtag has been trending on Twitter. Bloomberg
Joseph Gordon-Levitt is Travis Kalanick. Uma Thurman is Arianna Huffington. Kyle Chandler is Bill Gurley. Check out the trailer for Showtime's Super Pumped: The Battle for Uber. Deadline
This edition of CEO Daily was edited by David Meyer.
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