Zuck did it himself too. No one told him to go all-in on VR. No one. All he had to do was tackle payment and maybe cloud. He first went for crypto and then is in the process of failing with VR.

Meta really needs to be in the cloud business.

FB briefly was in the cloud PaaS business when they acquired Parse.

The problem is that the way Meta runs its data centers and software stack is tightly integrated with the products. It’s not really amenable to running third party applications or storing third party data.

What about the concept of a data center inside a data center? Given their infrastructure size and necessary geographical layout, it should be possible to have a number of IaaS racks stored inside their existing data center footprint.

If they have their own data centers (which I assume they do), this would make a lot of sense, kinda like a ghost kitchen — a virtual data center. That is, assuming they have the physical space to support something like this. It would be a way to diversify income with largely existing resources.

Imagine even a slimmed down service like fly.io or Cloudflare workers running at FB data center scale.

not a ton of market for that. and it changes the risk nature of their own facilities. already plenty of hyperscale datacenters with space to lease. what advantage does meta offer? surely they wont beat on price.

It’s probably not worth the hassle to FB, but it is funny to think about how big of a business this could potentially be. But even a profitable business unit might not make enough profit to actually make it worthwhile.

It could certainly work. But it would probably be too small a business for a company as large as Meta. The differences in scales is (I think) one of their problems. At Meta scale (somewhat a pun), many things are just harder/not worthwhile because of their size.

Nobody's infra business is really neatly separated. If the will is there, it can be done.

So, loosen the connection? Isn't that what thousands of engineers are for? Didn't Amazon do this originally?

I'm not sure cloud is actually such a great thing for FB but if you're going to do it, that's an inevitable step, isn't it?

Amazon’s infrastructure was also tightly integrated with its products. Despite the often repeated and very wrong myth that AWS was founded by Amazon selling its “excess capacity”, AWS was always created with a separate infrastructure that was purpose built to sell to other companies:

https://www.networkworld.com/article/2891297/the-myth-about-...

How would Meta win in the cloud business though?

My opinion is that Meta has the best AI/ML infra in the business.

Both TikTok and Google (Tensorflow etc) would beg to differ on that.

They don't need to win, they just need to be there as another option. Every business I've worked at has been huge on wanting cloud diversity of some sort, and tons of startups act as middle men on this.

Another of the big boys offering a cloud product would guarantee it would pick up customers and give them another avenue they can plausibly hunt for competitive advantage in.

SMB. They are effectively the webmaster for a vast amount of very small business, but also Meta's ad platform ends up being one of the larger expenses for many businesses. In fact, I doubt there is a single entity on earth that has more billable B2B relationships.

I agree that spinning up a pure-play public cloud makes no sense for Meta. Its not in their ethos, moreover selling various abstractions over virtualized compute is a commodity. Why would they get in line, behind IBM and Oracle?

Given that Office 365 is being counted as 'Cloud' imagine what Meta could do with some $100/yr SMB service. On the enterprise end, they have some of the very best big data and ML infra and could do well to bundle up extra capacity sell that on a metered basis. If they had started offering managed Presto in 2015 this conversation wouldn't be happening.

Their network infra (IP space, undersea cables, edge pops etc) is also rather vast and I could see a lot of SMB to F500 customers lining up to leverage it if bundled right. If they wanted to they could write a check for CloudFlare, I checked their balance sheet. Meta Cloudflare would be a juggernaut; so powerful that I pray the FTC wouldn't allow it.

Historically Facebook has been allergic to B2B outside of selling ads. Even within it they bought and killed Atlas, effectively handing a monopoly on ad serving to Doubleclick. Now they are warming up to it, offering Workplace, Kustomer, and Oculus for enterprise. I think that the Metaverse could be a novel B2B play and so do they, calling it "The Future of Work".

tl;dr: Meta could win the cloud business because it has the people, cash, differentiated tech, and existing relationships. They could beat AWS/GCP/Azure in many segments of IT spend by packaging their assets together into a novel kind of cloud.

>If they wanted to they could write a check for CloudFlare, I checked their balance sheet. Meta Cloudflare would be a juggernaut; so powerful that I pray the FTC wouldn't allow it.

Why would there be any issue from an FTC standpoint? As far as I can tell, they're in completely separate businesses. I do agree it is a brilliant idea to Microsoft-ize the SMB relationships they already have to sell software services.

I support I feel uncomfortable about it, but maybe such a merger wouldn't raise antitrust flags. CloudFlare has an insane amount centralization. I love their services as a web user, developer, and operator, but WOW do they have a lot of power by nature of their business. I worry about a buyout by a less principled company that could do all manner of wrong with CloudFlare's assets. For example, a Meta Cloudflare could start to delay or block 1.1.1.1 DNS queries to their competition, and do so quietly and selectively. Any service that offers "Protection" ought not be part of a conglomerate.

Agree on VR, payments, disagree on Cloud. It's a saturated market, there are half a dozen operators who each have unique selling points. I don't know what Meta's would be.

Doubling down on becoming one of these "everything" apps could have been a good strategy. Become the app frontend for one of the less big food delivery companies in the FB app, tie in to payments. Perhaps even buy Square for Cash App and all the POS integrations to build a network of sellers, all tightly integrated from the consumer perspective into the Facebook app. I'd have hated it, but I suspect it could have worked.

A lot of apps want to become a social network but Facebook was in a good position to do so. Imagine someone posting a picture of their Brunch. They tagged the location. Some AI matches the picture of the food with the pictures from the menu (google reviews already does this to some degree).

That food looks good, imagine if they partnered with Uber or Grab so you can add to cart right below the picture.

Peer to Peer payments could have also been great, especially if you could check-out at a store by scanning a QR code to pay (think WeChat Pay, FairPrice in Singapore, or even Paypal's version of that).

Or even buying event tickets. They already have events on the platform, and they let you put targeted ads, but what about an integrated experience to purchase tickets right on the platform instead of there being an external link?

They could have done so much but the only major change/addition in recent years was Dating (a huge hit in countries that perceive Tinder as only for hookups) and those avatars that people use everywhere instead of text posts.

It would have cratered their gross margins though, which would have meant a (potentially permanent) hit to the share price.

I agree that it would have been a good strategy, but that's (presumably) why they never did it.

Interesting. Is that because payments are much lower margin than ads? Surely investors would be smart enough to see the additional revenue, and likely additional benefit to the ads business, as being worth it?

Investors like standardized numbers apparently

Payment has much higher multiple especially compared to FB. It’s quite literally the closest thing to printing money.

It doesn't have the same margins as advertising.

Very good lesson here for both Twitter, FB and any other upcoming startup. Never treat your 3rd party developers as shit. Look what WeChat achieved with their superapp and developer ecosystem. Twitter and FB tightened their rules a lot over the years, when they had a potential to become super app for West

The rules were tightened by pressure from politicians though?

it started long ago, before government started scrutinizing internet platforms.

You have to make big bets to continue winning. It's easy for us to sit in our armchairs and criticize their failures, but for example their plays with going mobile-first in 2008 and the acquisition of Instagram in 2012 worked out very well.

It's better to make many small bets and when they start to take off, THEN put the foot on the pedal. Zuck has been notoriously bad at creating new products, so betting the company on that he'll manage it this time seems like a very bad idea.

Buying Instagram was a real jaw dropping moment if I remember. $1 billion sounded like a lot of money back in the day!

How do you start a Tesla with small bets?

With the roadster.

He also started SpaceX with Falcon 1, not Falcon 9, and certainly not Starship.

That's a good point. The principle of proving a simple possible version makes sense. Just pointing out that those "small" steps Tesla took are already a lot bigger than most software projects.

Mostly because those projects are badly mismanaged from before they even write the first line of code :P

hmm, maybe, but it seems like a golden age for tech where it was hard to fail from a strong starting position. MS, Google, Amazon, Apple, have all done much better than Facebook.

I thought this problem is less related to vr and more related to ads revenue that dropped because of apple. vr was just a way to create a platform from the ground where ads will continue to be their business model

Their payment attempt was stifled by regulators though. I wonder where they would be at if they had launched Diem instead of shutting that down

I'm not looking to praise Zuck but he did at least try something new. That's how companies stay alive and vital and relevant. Innovation. He gambled big on VR and it didn't pay off. At least not yet. I don't think it will pay off but I have to respect that he went big on a new direction for the company.

I still think Facebook is evil and I feel like they should have tried to buy Tik Tok although I don't know how feasible that ever was.

>Meta really needs to be in the cloud business.

That's an interesting idea.

TikTok is a Chinese company bringing in mountains of data on US citizens, including the ability to influence what people in the US see on a daily basis. The Chinese government would never sell that kind of leverage to anyone, let alone to Facebook, which is banned in China.

It is baffling why the U.S. government didn't ban TikTok. I'd rather zucc steal people's info than chinese ppl.

Because some and certain high ranking US officials are working with China

Who?

I don't know who, maybe Trump? Biden? But it wouldn't be allowed if some weren't allowing it.

How can you speculate if you don't know? This is the problem of american politics. People just make up stuff.

That's the definition of speculation. You have an observation and suspect something. So I suspect there are US officials who are working with China.

It’s because once trump said it, everyone who hates him had to take the opposite position, even though he was right.

TikTok is incredibly popular in the US and there isn’t really a huge similar precedent where the US takes a page from China’s playbook and blocks a social media network completely. If banning TikTok was reasonable, and I’m not sure it is, I think it makes a lot of sense to be cautious about setting bad precedence.

> That's an interesting idea.

That's a crazy idea, if original. What do Facebook know about building and selling general cloud services?

Google didn't innovate in the last 10 years and it's very alive and vital. Maybe doing good one thing is enough. Like Google doing ads.

Aren’t people constantly complaining about Googles failing products and slowly worsening core products like search?

That is exactly lack of innovation. 15th version of Hangouts and worse search every year.

Google's portfolio is a bit more diversified than FB. Besides, Google services have some value, they offer some essential services. FB not so much.

Besides, Google is trying 50 different things but it didn't go full throttle on any idea like FB did for Metaverse. Huge difference.

> No one told him to go all-in on VR. No one.

You can't possibly know that. Try not to get caught up in your own speculation and speculation from pundits.

AWS has the first mover advantage, Microsoft knows enterprise, Google has some awesome tech. I'm not sure what Meta could bring to the table?

100%. I do think there is room for another company though... but definitely not Facebook.

But there are other companies, who are already doing pretty well: Oracle, Alibaba/AliCloud, Hetzer, Digital Ocean, even Rackspace.

If I put on my rose colored glasses, I still wish Facebook had just stuck to identity.

They could’ve been “the login for the social internet”… they even built that platform! They just were so paranoid about losing control of the graph they shut it all down. Twitter also failed on the developer/platform front for the same reason.

They could’ve been the identity platform for every hot startup in the last 10 years. They could’ve courted developers such that every platform add-on they did got immediate head start… like ads! They could’ve out-AdSensed Adsense.

Anyway, I’m sure that’s all terrible business strategy, but it’s what I wish they had done. Even though I’d probably be cursing their name now if they owned all of our logins.

Screw that, I think the meta verse will pan out. Zucc will rise from the ashes.

They should have never given up on mobile. Burning a few billion a year on an android fork would have had much better returns than trying to go warp speed on VR.

> meltdowns

Huh?. Meta's growth has slowed, but they are a money printing machine. Earnings have gone down because of the enormous bet Zuck has made on the metaverse.

Twitter has been barely scraping by for years. The two companies are not really even comparable.

No, earnings have been going down because Apple fucked Meta with Apple's policy change on asking for consent to be tracked. Meta has even stated as much in various earnings calls since this happened.

This has severely hurt Meta's ad revenue, i.e., earnings.

The metaverse stuff is a bad bet, you are correct, but is not likely impacting earnings in any significant way.

Revenue has slowed from the Apple change, but the drop in Q3 profits can almost entirely be pinned on RL as staff and other investments has accelerated.

> company’s rising costs and expenses, which jumped 19% year over year to $22.1 billion during the quarter.

> Meta’s Reality Labs unit, which is responsible for developing the virtual reality and related augmented reality technology that underpins the yet-to-be built metaverse, has lost $9.4 billion so far in 2022.

The effects from the Apple changes are mostly in the rear view mirror at this point. You could attributed a 4% revenue hit to them, but those can also be attributed to a general slowing economy.

https://www.cnbc.com/2022/10/26/meta-plans-to-lose-even-more...

Earnings down 4% in bad macro conditions for advertising and compared to a pandemic when people spent more time on the internet. I don't think facebook revenue is going anywhere soon, a decade from now though who knows.

Their income and operating margin has almost halved, compared to 2021. Their free cash flow is 1/50th of the previous few quarters. Those are truly horrible results.

FB was a money printing machine, but they trashed it.

Apple trashed it, not FB itself.

FB started sinking money into the Metaverse long before that.

Not at the same scale. It's been accelerating and continues to accelerate. From another announcement today:

> "We continue to anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,"

https://www.marketwatch.com/story/meta-lowers-expense-foreca...

Everyone wants to dance on Meta's grave, but it's way too soon. Yes, the Apple change gave them a top line haircut, but if the RL spend is excluded, they are making a ton of money. I'd also argue that the real headwinds are the general economy and TikTok.

>the real headwinds are the general economy and TikTok

Right, and not Apple's actions.

They are still making insane profits.

High revenue but the stock is down 74% this year for a reason.

Because it's run by an unaccountable megalomaniac who has signalled that he doesn't give a shit about his investors, not because of any fundamentals.

Bad governance is fundamental!

I don't think Mark saying "we're going to focus on the metaverse instead of making money for a few years" is a meltdown. They're still making money, their earnings are still sky high, they're just spending more than they need to.

Correct me if I am worng, but hasnt Twitter has seen more growth in the last week than it has in some time? 15 million new users isn't a meltdown, nor is thinning a bloated and wasteful enterprise. Also, if twitter goes completely belly up, Musk would still be worth hundreds of billions of dollars. Grave? I'm game for some hyperbole, but not this early.

You being downvoted just shows even this community prefers emotional projections over simple facts.

There is no Twitter meltdown. Before Musk it was already in grave financial trouble and would have made 800m$ cuts anyway. Musk most certainly is clumsy in his actions and communications, but Twitter isn't going anywhere.

Likewise, Facebook isn't having a meltdown either. There's a dent in ad spent against a backdrop of 2 years of dramatic overhiring (same as Google, Stripe).

There's a 4% decline in revenue on a 27 billion quarterly revenue. Meltdown? There's a handful of companies on this planet being this profitable.

Financially twitter is in a rough spot. They were not really making money. Now they have loans to pay too. It isn't in meltdown but certainly there are things to look at there. Sure, Elon can keep it going for as long as he'd like. But he's a fickle personality. I mean he went back and forth several times just with buying the company. Who knows if he'll lose interest.

You're right, but Twitter basically has been in continuous financial trouble since eternity. In 2016 they almost went bankrupt. They tried to sell then but nobody wanted it. Just before Musk they were also in financial catastrophe mode. Under Musk, that will likely continue for at least a year. It's a fundamentally unhealthy businesses.

I'd like to use a common Dutch expression to explain the Twitter situation: "the soup isn't eaten as hot as it is served".

Musk wants absolute free speech but that's just a random interview quote, not the actual plan for Twitter. Users are abandoning the service in droves. No, they are not. A handful of advertisers stop spending (conveniently part of an economic downturn) but that doesn't mean the vast majority do, or do so indefinitely. Twitter is an awful place now, whilst he hasn't implemented a single change yet. Checkmarks will get decimated whilst his original unhinged idea is already dialed back.

Everybody's jumping on all kinds of hysterical projections that are not supported by the facts. There is no meltdown.

Yup, they are worse off in some ways, and better in others. There is a lot of upsides with having a single person like this calling all the shots, and love him or hate him Musk has been successful in the past.

"Twitter usage is at an all-time high lol"

November 7th: https://twitter.com/elonmusk/status/1589784134691741696

The questions are: can they monetize that, and will it continue? But as far as twitter dying, the opposite is currently true. It's never been more alive.

FB is making like $30bn year in profit. I am not sure if they are melting down?

Zuck is doing first ever mass layoffs for a company he started from his dorm room 18 years ago and grew to a ~trillion dollar valuation.

Musk is following the standard playbook of private equity takeover + gutting the company to squeeze out remaining profits and then sell for parts. There is no question of even a bit of emotion involved from his side.