(Preview) Meta and Its Many Plans in AI, Apple Gets Hammered in Court, The Costs of Waiting to Do the Right Thing
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Hello and welcome to a free preview of Sharp Tech. Hello and welcome back to another episode of Sharp Tech. I'm Andrew Sharp and on the other line, Ben Thompson. Ben, how you doing? I'm doing great, Andrew. In the sort of conclusion of when the longest running saga is at Sharp Tech, my nose is no longer running. I was already physically recovered. I just had a random runny nose.

That is finished, so I'm feeling great. You sound good. And look, when we talked on Monday, you were in Taiwan. We are talking on Wednesday night in America, Thursday morning your time. You are once again in Taiwan. I am in Taiwan, yes. But in between those two podcasts, you did a bit of traveling. You were living the globalist life this week.

just popping over for about 18 hours earlier in the week to talk to Mark Zuckerberg. So I'm impressed that you're feeling better at all. If I'm traveling that far in the span of a day, my body usually feels it afterward. Yeah, no, it was actually about 11 hours, which is actually better. And I would tell you, it shocks everyone.

No, the shorter the trip, the better. There's no adjustment. You go there, you sleep on the plane, you're there, and then you get on the plane, you sleep on the way back. And it's not that, I mean, yeah, not that big of a deal. I got to say, it's a douche. But no.

I mean, yes. This is what I mean. I love when we expose you as a globalist. This is Davos, man. It's really bad. It's really bad. Look, this was a week I spent a lot of money on trajectory content. I bought a ticket to fly to America. I don't accept. And then I spent $1,200 on a punch bowl subscription. $1,200 punch bowl subscription. It's really great stuff.

Well, we've got a lot to get to. I feel like I got more value from the airplane ticket. I'm going to tell you that. But you did the right thing. You subscribed. We have big tech news across the board here. We had some Apple news. I do feel like I was going to do that. I subscribe to everything, as you know, because you know, we have a, you know, it can benefit you as well. And I'm a believer in this description model. So I'm not going to like.

If people want a subscription model, that's great. I want to support that. I looked at that Punchbowl line for a long time. As a matter of principle, you could probably find your way around the payroll. You were trying to do the right thing, but man, they made it hard. But you did it. I can't say it was too expensive for me to subscribe when I make a lot of money off subscriptions. I can afford it.

So I paid it. But there you go. Well, and for anybody who didn't read Wednesday's Daily Update on Sir Techery, what we're referring to is Punchbowl. They have a premium tier and a newsletter that's dedicated specifically to tech policy reporting that broke a little bit of news that was quickly condemned by the White House and then walked back. Yes, about Amazon. I think we'll get to it a little bit. We will. We will.

But the point is, it was behind a paywall and it was a $1,300 subscription to get behind that paywall. Okay, $1,200. Yes. Well...

In any event, an expensive week. If you want any punchable news items, just hit me up on WhatsApp, Andrew. I'll be happy to send them. I can't wait. I'm going to be following all year. All right. So we have Meta. We have Apple. We have Amazon. We'll start with Meta. On Tuesday, Meta announced they're launching a standalone Meta AI app built on Lama 4, which they described as the first step toward building a more personal AI. Get excited. So you visited Meta.

spoke to Mark Zuckerberg. I believe they allowed you to demo the app a little bit. I don't want to step on everything you discussed with Zuck, but let's start with the obvious question. Why is Meta launching a standalone app and what interests you about this effort? It's pretty interesting because I, my initial thought is to be anti the Meta AI app in that the like the,

I feel like meta has so many opportunities around generative AI that there's an extent to which the app is almost like a distraction. Right. Distracting yourself with a competition with chat GPT that you're probably not going to win anyways. Right. Exactly. And so like what's kind of like what's the point here? I think I've come around to I like it.

And so I think that evolution is sort of interesting. So big picture, if anything, I feel like Facebook is insufficiently ambitious about generative AI with their services. In that, like my vision, which I articulated last year, like first off, I think the ad opportunity is massive. Yeah.

And that's why I've always been very bullish for Google and Facebook in particular. We've talked about the black box advertising. Just tell us what you want to achieve and we'll do it for you. Now you add on this completely new variable of we'll actually make all the creative for you and everything. And given the, how they dominate the long tail of advertisers and the leverage that gives them in the market and the anti-fragility that gives them. And in Google's case, like the whole, the whole ad antitrust bit is downstream of the,

a bunch of small medium sized advertisers that just don't go anywhere else. And that's the leverage Google has in these markets. And this seems tremendously additive. And again, the more variables. Can I just add one note on the ad business and what's possible there? There was one line that Zuckerberg had on advertising in your interview where he was talking about companies coming to Meta with certain demographics they want to target.

And Meta basically says, look, we can go with your demographic, but you're going to end up limiting yourself if you don't just trust us to find the customers for you. We'll find more customers that way. I think Zuck's exact words in the interview were, we believe at this point, we're just better at finding the people who are going to resonate with your product than you are. And

I think I knew that that was true, but the dots hadn't been connected until he articulated it that way. And AI should make the value proposition, you know, twice as valuable going forward if they could do all the creative for people as well.

Absolutely. And I think that's actually been the case for a long time. But there's a bit where it's just so obviously the case that even probably the bigger advertisers that have teams that do measurement and do all their own targeting, it's kind of getting to the point like just you got to give in. Stop spinning your wheels. Just trust us and pay us. Eric and I talked about this a bit last week. And it's always been the case for the smaller advertisers. And now it's getting the case like just give in to the black box. Like it's like –

you know that Facebook gets better margins on the black box yet. They get better margins and you get better returns and you just sort of have to accept that that's reality. And I think that's, that's definitely, that's definitely increasingly the case. So, so that, that opportunity is clear. I was glad he articulated it. I've obviously been big on that, but, but there's, you know, people are using MetaEye in the apps. You noted it's by and large in WhatsApp. Um,

which is, we'll just come back to in a moment. You can have a conversation in group chat, you can talk to people, you can talk to Meta AI. And it fits with our talk about chat is the natural interface. And then the third one is content in the apps. Call it slop, call it what you will. Facebook, we've talked about Netflix, right? There's a lot of filler content that Netflix comes up with when you're the default TV experience. And

Somehow people watch seven or eight hours of TV a day. It's not all prestige TV. That is also Facebook and Instagram and reels and stuff and mobile. And so that might be a, I generated and the costs there are kind of interesting because it's actually more expensive because as opposed to people just pushing their own slop, but Hey, the more slop the better, right? I mean, I say that firmly tongue in cheek, but from a business perspective, the more slop the better. So there's also two more ones, which I'm very, very,

excited about from my perspective, which is number one, maybe I'm the only one that still thinks AR VR could be a thing at some point. I think this gen AI is going to be definitely the only one on this podcast to do all of this. And then the other thing is,

everything on Facebook should be understandable and monetizable, right? Like we talked about like the t-shirt thing. Like if you're, you have a cool t-shirt on right now, if you posted the Instagram photo and I like your t-shirt, why should I be able to click on that bill to buy that t-shirt, right? Like, I mean, this is a bit more far flung. There'd be a lot to figure out here, but like, I just, the it's theoretically possible and there's just so much to do. Why do you need to compete in the chat app arena? Like,

That's it. I think he changed my mind. Okay. And so a couple of compelling points that I think he made were number one,

In the U.S., WhatsApp isn't dominant, which is his point that he thinks is going to surpass iMessage was an interesting sort of aside. But in the U.S., we use different apps for different functions. It's not a super app sort of situation like the sort of China thing. And it's funny because I wrote about this years ago, including in the context of Facebook and their desire to make a phone and saying, look, path dependency matters. The way the U.S. market works matters.

is if we use different apps for different things. That's the way things are organized. And to that point, if they want to compete in the U.S. market, you need a standalone chat app. That's the way people are conditioned to experience it. It's the most important market. It's the most valuable market in terms of advertising in the long run. And so that's number one. Number two, this idea that they have a head start in personalization and the AI knowing you because they're Facebook.

All right, and that is the end of the free preview. If you'd like to hear more from Ben and I, there are links to subscribe in the show notes, or you can also go to sharptech.fm. Either option will get you access to a personalized feed that has all the shows we do every week, plus lots more great content from Stratechery and the Stratechery Plus bundle. Check it out, and if you've got feedback, please email us at email at sharptech.fm.