"Today, only a fraction of time spent on Meta’s services – 7% on Instagram, 17% on Facebook – involves consuming content from online “friends” (“friend sharing”). A majority of time spent on both apps is watching videos, increasingly short-form videos that are “unconnected” – i.e., not from a friend or followed account – and recommended by AI-powered algorithms Meta developed as a direct competitive response to TikTok’s rise, which stalled Meta’s growth"
"Social" media is just media now.
Meta's recent earnings report was great partially because AI was used to boost engagement on ads by 5% to 10%, which was enough to get investors on board for the massive capex. ("Datacenters the size of Manhattan" as per Zuckerberg).
Datacenters the size of Manhattan and dedicated nuclear power plants, for an 8.5% boost in advertising engagement. The world is in a very sad state in some respects. The ideal end state of this optimization process is quite literally zombie consumers. I would think that heading off outcomes like this is partly why we create rules and guardrails as a society, but despite the occasional pushback, I do think that for now we are generally embracing this dystopia. I'm a positive person and think AI is incredible and will do many great things, but Meta's earnings report got to me.
But these stats are troubling
Not to mention a backlash is brewing amongst people who both don't want to use AI and don't want their world to change so quickly.
Make a social isolation app and attention sink, sell virtual friends to fill the void.
The best advice is to delete your Meta accounts and meet people in real life.
Critical thinking is not what most of the population is taught.
Meta being Meta is nothing surprising. Why do people even bother using Instagram and Facebook?
Their plan is to watch the world burn.
Hes a professional sociopath whose entire existence revolves around building the most advanced social engineering platform that has ever existed.
World would be a better place if he drowned the next time he went surfing at his private beach.
Mark Zuckerberg -> Kingsman's Richmond Valentine
Jeff Bezos -> Austin Power's Dr. Evil
Elon Musk -> The 5th Element's Jean-Baptiste Emmanuel Zorg>Deny signups
>Notification blocked.
>Scroll down 2 screens consisting or 1.7 screens worth of ads.
>The ad-video I scrolled past becomes a sticky party of the header and consumes 30% of the screen real estate. Despite this a new static ad enters my screen before the last one is out of it.
Oh yeah it's totally Zucks vision that is the horror here.
That said, it wasn't that long ago where the space had a total washout (2022), and despite markets being relatively richly valued, the mega-cap ad companies have only gotten a strong bid more recently (institutional money has actually been under-exposed to the large tech names ex-NVIDIA based on historical look back). Google was actually near value territory until recently.
It's hard to predict how sustainable at all is though. One of the big factors is that these companies had a lot of intangible value that they could pull from. Ex: Meta could monetize Whatsapp, Google could actually ban YouTube ad-blockers (hey, they finally forced me to subscribe), and these companies also have some pricing power to harvest if needed. Then there is a layoff angle, which may not be great for their long-term success, but they have the power to lighten up and route massive buybacks if they ever want to focus on stock price (see META post 2022).
The other poster commenting about the sheer size of these companies is right too. The passive investing complex drives ever more money into ever bigger companies. Then you have trend following money (and most investors are trend following to some degree) reinforce those flows, and it creates a virtuous cycle ever upwards. On the sustainability question, it does look like quite a self perpetuating cycle but there's the caveat that these flows can reverse. If money were to flow out of US markets on net, such as the mega sell off earlier this year with 7% down days, then the piper is paid.
So to break it down, it's sustainable as long as American financial exceptionalism remains strong, and as long as these companies don't exhaust the levers that they can pull. Nonetheless, advertising is cyclical, and sometime in the future, you can guarantee that there will be another cycle of pessimism combined with weaker earnings (both of which combined to cause a major earnings contraction in a sector). When that happens, well that's not so easy to predict. In the meantime, these companies have pretty huge cash flows.