FB - Facebook

[kab60]

Why wouldn't they be allowed to acquire a company?

Others have already said it better than I can, but I think there's a risk they'll be blocked due to antitrust. I don't know the rules, but I do know politics, and I also think it makes sense to not allow them to gobble up whatever emerges as the new new thing. That said, perhaps they can keep crushing them like they've done with Snap.

[mcliu]

My problem with FB is they get to use everyone’s private information for free, and people are now aware of that. What happen to this business model 5-10 years from now is very difficult to guess. They don’t own the internet; people can switch to other platforms (ie wechat) suddenly. People could just quit using FB. They can’t quit using credit cards or a checking account. But they can quit Facebook if it stops being stimulating.

If people are worried about their information on FB, I don't think they'll switch to WeChat.

Can people really quit FB when the rest of the world is using it?

[clutch]

My problem with FB is they get to use everyone’s private information for free, and people are now aware of that. What happen to this business model 5-10 years from now is very difficult to guess. They don’t own the internet; people can switch to other platforms (ie wechat) suddenly. People could just quit using FB. They can’t quit using credit cards or a checking account. But they can quit Facebook if it stops being stimulating.

If people are worried about their information on FB, I don't think they'll switch to WeChat.

Can people really quit FB when the rest of the world is using it?

 

I have. I now use a messaging app similar to WeChat to keep in touch with all my closest friends and family.

 

And for me, it wasn't about my private information. I just find social media nowadays has become so toxic.

[Mungerish]

I was in banking for 30 years. I just had another conversation with one of my kids about not using credit karma ( the free credit check service)

She looked at me like I had 3 heads (she's a 25 year old teacher with a masters). She said that all of her friends would be toast then too....

My point is that this privacy issue is a non event among most people. Nothing is verified on FB or Instagram when you sign up and you could use your dogs information for the account.

I have been telling people for years not to put their birthday on it because that can be a unique identifier for credit card fraud.

No one (hardly) listens.

 

Now think about the very real privacy breaches that happened at Target, BJ's wholesale, TJX, etc....

This is all white noise by the political class and the media.

[ZenaidaMacroura]

The switching cost for most people is "I have X followers, and I've cultivated a list of people whose content I like and I don't want to start all over" for the vast majority of people on instagram, and doubly for the influencers who laypersons join the platform to follow.  It's different than the followers on myspace you might be ok leaving behind because most of those were part of your offline network and you could reasonable expect to bring them with you to a new platform.  Infact, I remember in 2006/2007 when my friends would tell me "you're still on myspace?  you need to add us on facebook dude."  You don't get that kind of conversion when you tell 1,000 followers on instagram to "follow me on VERO."

 

I think there's probably a dopamine high from consistently picking up more followers, likes and other "engagement" activity.  And anyone who monetizes on instagram has a significant switching cost in terms of $$.  The "demographic that matters" is going to be on whatever platform Kylie Jenner is most active on, and Kylie Jenner has a huge monetary incentive to keep doing that on Instagram.

 

On acquisitions, the thing that Facebook will need to acquire won't be obvious to regulators.  it's not going to be another photo sharing app, or messenger -it's going to be something else entirely that isn't very apparent yet.  Anything even remotely obvious and liable to be blocked is probably something they can just graft onto their existing userbase.  I remember when they they bought instagram everyone up and down the street was saying it was evidence that facebook had no moat/and everyone kept saying "a kid in their basement could code an instagram competitor."  I'm in the camp that says it was an amazing acquisition (hardly controversial at this point) but I'm not so sure history would have played out like a lot of people game if Instagram had NOT been acquired.  I think it's not implausible that facebook could have successfully launched their own competitor.

 

Now, especially armed with instagram, facebook has an amazing carrot-on-a-stick.  Anything they want to drive people towards they can do so by leveraging more instagram followers & engagements through the new feature or platform.  There is also more and more lock in from other properties such as tinder linking to instagram profiles. 

 

 

--

Just my opinion  :D

 

 

[nkp007]

I just wish everyone who doesn't like Facebook / Instagram / Whatsapp would just stop using them and leave the 99% of us who don't complain about them every second alone.

[rb]

Can people really quit FB when the rest of the world is using it?

I'm not using it and I'm doing just fine. I have the odd person that wants to message me on facebook and gets upset that they can't but they'll just have to live with that. As if sending an email is so hard.  ::)

[Guest 50centdollars]

Can people really quit FB when the rest of the world is using it?

I'm not using it and I'm doing just fine. I have the odd person that wants to message me on facebook and gets upset that they can't but they'll just have to live with that. As if sending an email is so hard.  ::)

 

I deleted my account 8 years ago and haven't thought twice about signing up again. I rarely used it when I had it anyway.

[Spekulatius]

My problem with FB is they get to use everyone’s private information for free, and people are now aware of that. What happen to this business model 5-10 years from now is very difficult to guess. They don’t own the internet; people can switch to other platforms (ie wechat) suddenly. People could just quit using FB. They can’t quit using credit cards or a checking account. But they can quit Facebook if it stops being stimulating.

 

It’s hard to give up credit cards entirely, but it’s very easy to switch providers, or even totally abandon a network like Visa. Giving up FB for which there is no straightforward substitute is much more difficult, IMO. And who with a clear mind would start an account with a chinese company like Wechat if one is concerned about privacy and data retention?

[Mungerish]

So if Facebook or Google are declared a monopoly and/or become highly regulated for giving away the product which is not necessary or required for daily life.... and this happens while NO ONE is required to join or become a member and NO ONE is relying on FB to have a phone, heat, electricity, or operate a computer....I will go so far as to say it's the end of capitalism and free markets as we know them.

 

I think the attention lost to smart phones is a very real issue,but I also think exercising free will and free choice is responsibility of the user. Twitter, email, texting and even message boards all consume the users time and attention.

 

For comparison, one can prudently enjoy moderate alcohol consumption or you can let it ruin your life. We permit that freedom in our society even though it has ruined families and lives for generations because prohibition was a failure and many can enjoy a glass of wine or two at dinner without becoming addicted. Which has more functionality? Staying in touch with family and friends all over the world or alcohol induced socialization? ( That is a fat pitch for easy beer/booze jokes)

 

Here is Soros in Davos last January: “The power to shape people’s attention is increasingly concentrated in the hands of a few companies. It takes a real effort to assert and defend what John Stuart Mill called ‘the freedom of mind’. There is a possibility that once lost, people who grow up in the digital age will have difficulty in regaining it. This may have far-reaching political consequences.”  https://www.theguardian.com/business/2018/jan/25/george-soros-facebook-and-google-are-a-menace-to-society

 

I believe I will use my freedom of mind to assert that the traditional media elite see's its grip and influence on popular opinion slipping away from them and their favored class of elites AND THEY don't like it one bit.

When Obama used social media effectively, he was a political genius in the eyes of the fawning media. When the "Arab Spring" took hold in places like Egypt, it was a sight to be seen like no other.

 

In the 2018 election, the Boston Globe is forced to buy sponsored ads in my facebook news feed to get the message to me that they have endorsed a particular candidate. I read between 3-5 newspapers a day and stopped my subscription to the globe in the 1990's because they were beyond traditional bias and essentially political activists in my view...So I voted with my free will and free feet. So many others did the same for different reasons that their influence and power is greatly diminished...So it is with the NYT as well. These newspapers had the functional equivalent of regional monopolies in classified advertising for a long time until technology made them obsolete

 

I don't think should blame Alexander Graham Bell if evil deeds are facilitated by the use of a telephone any more than we should have grounded the airlines that had their planes stolen and flown in to buildings on 9/11. We don't make everyone blow into a breath machine before they can start their car because a small minority will repeatedly drive drunk and kill other innocent people

 

I think the masses are very much disinterested in having their social media curtailed or highly regulated even if it comes with risks of abuse. It will be wildly politically unpopular to try. They might as well try to close the pubs and bars.

Just my $02

 

[Astrea]

I have to agree Mungerish. And look at who's behind the "Freedom from Facebook" movement, a former Renaissance Technologies guy called David Magerman. Doesn't look so bottom up/grass roots to me.

 

https://news.vice.com/en_us/article/yw7wxm/facebook-is-so-afraid-of-this-man-it-smeared-him-as-both-backed-by-george-soros-and-anti-semitic

 

 

 

 

[MrB]

I was in banking for 30 years. I just had another conversation with one of my kids about not using credit karma ( the free credit check service)

She looked at me like I had 3 heads (she's a 25 year old teacher with a masters). She said that all of her friends would be toast then too....

My point is that this privacy issue is a non event among most people. Nothing is verified on FB or Instagram when you sign up and you could use your dogs information for the account.

I have been telling people for years not to put their birthday on it because that can be a unique identifier for credit card fraud.

No one (hardly) listens.

 

Now think about the very real privacy breaches that happened at Target, BJ's wholesale, TJX, etc....

This is all white noise by the political class and the media.

[mcliu]

Can people really quit FB when the rest of the world is using it?

I'm not using it and I'm doing just fine. I have the odd person that wants to message me on facebook and gets upset that they can't but they'll just have to live with that. As if sending an email is so hard.  ::)

 

I deleted my account 8 years ago and haven't thought twice about signing up again. I rarely used it when I had it anyway.

 

Are you sure you're not the outliers?

I know maybe 2 or 3 people that don't have either FB, Instagram or Whatsapp.

Most use all 3... But I'm also in the under 30 age group so maybe demographics play a role too.

[Mungerish]

I have 4 adult kids between the age of 23-35.

They all have FB accounts and would say they hardly ever use it and they post very rarely.

They use Instagram and messenger way more they say.

The perception among their peers is that FB is uncool ever since your parents and grandmother went on and ruined it.

 

But when you mention something that was said or posted, they will all answer: "yeah, I saw that."

 

So they're watching and they are probably all "daily active users" by definition....even if its on the down low.

 

I've been harping to them about the problems with social media and smart phones on their attention span and brain chemistry for years.

My conclusion is that it's very much like the early days of tv perhaps.... just because you have one and enjoy it, doesn't mean you're about to sit home on the couch all day eating junk food. We all have to set limits personal limits.

 

How many employers actually limit smart phone or personal internet use during business hours? Most don't and rely on employees to be grown ups or suffer the consequences during annual reviews because they don't want to alienate other employees who do not abuse the privilege...It would be taboo to have FB or Instagram up on your screen during business hours and rightly so.

Until something new comes along that is equally or more compelling, advertisers will keep bidding up the value of the limited number of ads FB will allowe to be placed in the news feed or story. It's all very reminiscent to the extremely expensive ( and short) help wanted ads I use to have to run in the Boston Globe back in the day if I wanted to hire people.

I think the problems and glitches will all get worked out

[Packer16]

The biggest issue beyond anti-trust I have with FB is you cannot op out unless all your friends agree to opt you out.  FB collects data on you if you have friends on FB which I think crosses a line of who owns the social network.  FB acts like they do when they do not.  The social network is yours & they are providing a communications platform not the network itself & should only have access to data you explicitly let them access to versus the approach that they have access to all your data except what data you do not provide.  FB IMO takes what is not theirs (your data & social network) & monetizes it.  Just my 2 cents.

 

Packer

[MrB]

The big picture is a better indicator than anocdotal evidence

http://www.visualcapitalist.com/wp-content/uploads/2018/08/sm-universe.html (see bottom of page)

 

Also, 4 out of the top 5 most downloaded apps on the Apple & Google stores in Q3 were Facebook properties, so still going strong.

 

https://www.quora.com/How-can-I-find-the-top-100-most-downloaded-apps-on-iOS-and-Android-outside-of-the-US 

[BG2008]

Mid to late 30s here

 

I was one of the first guys back in 10th grade to order a book for my AP European history class and I was one of the first guys to be invited to use FB as a senior in college at one of the ten schools back then.  "What? Girls just post photos of them on this thing called FB?  I'm going to create an account!"

 

14 years later, I own shares in FB (I should've bought some Amazon as well).  Back in the days of the newspaper classified, Craiglist, etc.  These are some random thoughts on the FB properties

 

1) Since the 2016 election, I have noticed that politics really started ruining my personal experience of using FB.  Frankly, it's a lot of Trump haters who post a ton of memes.  The hatred is rather strong. I grew up on Long Island, so it is not surprising to see a lot of hate towards Trump.  I consider myself socially liberal and fiscally conservative.  I don't like being beholden to a specific party.  I just think that we should work together to solve issues.

 

Anyways, I have noticed that the news feed is not as fun since 2016.  Obviously, the feed is a lot of baby photos and random kids updates these days.  But there is a lot more engagement in groups lately.  I bought an instant pot and found out that there is a robust Viet group who post recipes like Pho on the Viet Instant Pot group.  The American Instant Pot is fairly gross as all the recipes calls for processed food, ranch dressing powder, and cheese, in all their recipes.  But people post and there is a sense of community.  Frankly, I use it to stay engaged quite a bit.  Then I got myself a Peloton.  It's fairly entertaining.  Once in a while someone will post something fairly motivating because they lose 50 pounds or dug herself out of depression through exercise.  It's all really good stuff.  I should probably look into other groups as well.  I have noticed market place.  I think buying stuff from people who you know is much better alternative than Craigslist.  I once bought a bed from CL and drove to Brooklyn.  I picked up the bed from a warehouse, it felt weird. 

 

2) Instagram - I didn't use it for a long time.  But I started because I noticed world class amateur wrestlers use it to stay connected with their fan base.  It's fun to follow Kyle Dale, David Taylor, and Kyle Synder prepare for tournaments or just do silly stuff.  This feels weird typing it out as I am about 10 years older than these guys.  A lot of amateur athlete never had a platform to connect with their fans.  Imagine if you are a 4x NCAA champion in wrestling and you can't make a living.  Instagram allows these athletes to gain exposure and sell t-Shirt, protein powders, etc.  But the engagement is more genuine in my opinion rather than a movie start who shuns publicity 364 days out of the year and then goes on Jimmy Fallon to promote their upcoming movie.  Actors like The Rock and Kevin Hart have been extremely resourceful in using this.  As much as I hate to admit it, the Kardashians and Kanye are great at using Instagram. 

 

Restaurants and food personalities - Per Se, Le Bernardin, WildHarbour Seafood, Luxeat, Chef Dan Barber - They simply post very well curated photos and videos.  The stuff they post are almost pornographic from a food perspective.  Think A-5 Kobe Beef, tuna belly sushi, pasta cooked in flaming Parmagianno wheel topped with shaved truffles.  It's extremely entertaining and frankly, I have developed a list of top restaurants and chefs that I would've never been able to learn or understand through their personalities and dishes.  My wife and I had only one three Michelin star experience in our life and it was at Jean George when I propose to her.  She wanted to take photos and I told her "hon, let's not be that weird Asian couple."  That was seven years ago.  Now they almost encourage it.  It's free advertising for the restaurants and frankly the restaurants take it very seriously. 

 

Workout personalities - I follow them, but they are kind of boring. 

Crossfit athletes - Some of the female competitors tend to produce more fun content.  Mat Fraser just want to workout I think.

 

Ad targeting - For a while, I was looking at men's shorts (yes, it's finally socially acceptable for guys to wear 7" inseams rather than the ankle high shorts in the 90s.)  I founds the birddog and Chubbies ads to be highly entertaining and relevant. I had a few chuckles and kept watching the ads.  I never bought anything.  Who wants to pay $60 for men's short shorts, I bought some Bear Bottoms instead. 

 

Overall, I find Instagram to be very entertaining and somewhat educational (especially the food contents).  It's fun to learn about how World class wrestlers prepare and live their lives.  On the food side, I find out about ingredients, restaurants, cooking techniques etc that I would've never discover on my own. 

 

The best part about Instagram is that it is mostly devoid of the toxic political back and forth.  Hence, I view Instagram as the tool for fun and exploration.  Yes, I know it's a time sink. 

 

3) To summarize everything, I think FB is now used mostly to stay on top of the social network.  For groups.  It is no longer fun or cool, but it still has important functions such as "The wrestling alumni night is x date, be there"  Peloton, Instant Pot recipes, etc.  The social is more interest based today rather than with people that I know. 

 

Instagram is cool, hip, and fun.  It is a combination of the old FB, Snap, and Twitter.  Yes, there are pretty things to look at. 

[Spekulatius]

I use FB to keep in touch with friend and acquaintances far away. there isn’t really anything out there with a reach similar to FB, IMO.  I agree with Marketplace gaining traction relative to craigslist.

 

I also noticed the increased political angle. I typically “mute” those that keep pointing stuff I am not interested in and it seems to help. there are also decent value investing groups on FB. I joined a few, as well as some local groups.

 

The benefit and problem with FB and other new media is that you can post/publish anything at any time, virtually without effort. it’s not like in th old days, whet you had to pay to place and add or sent a letter to a newspaper that may or may not get published some time later. It’s instantly on and available and of course it creates problems when this is a Abused. But so can be any other communication device like cellphone, the WWW, or even the traditional media.

[DanielGMask]

Barron’s take on FB. Facebook Trades Like a Value Stock Amid the Tech Turmoil. Under assault by regulators and critics in the U.S. and Europe, the social network’s stock is cheaper than McDonald’s or Walmart. https://www.barrons.com/articles/facebook-stock-looks-like-a-bargain-amid-the-tech-turmoil-1543016989?emailToken=0e9e639a6bb8afc86799517893779b94GMdB3Fym+J+37FkAd8jLqyviY9hXdYyYELgF1S8JvgNJ18sBjA2/zbxpdO/NOktlgvcgxeWYRhkTzH0Iy9YzNlAEF9kxT9GsTrWuzjE0clf0V6QsoQtsWs9aQZW86pvM

[Guest Schwab711]

I think the data concerns around FB are misunderstood and any increased regulation (anti-trust or data/privacy) is likely to benefit FB and AAPL more than any other tech companies. The reason is FB and AAPL probably 'know' their users more than any other tech companies. This should be a much longer and more detailed post but one could write several volumes on anti-trust and data privacy ideas right now (I don't know enough about the topics to but [some]one could).

 

First, data privacy. The stories around FB collecting data from non-core FB users applies to GOOGL (through email logins on non-GOOGL sites, Uber, Disqus, and every other site that allows login with another site's credentials). Data wholesaling to aggregate targeted ads allows companies like RAMP or TTD to target individuals that have no relation with the company. If data privacy becomes a political legislation issue (such as GDPR-like anonymous ID ads) then companies that do not receive data directly from their users will have a harder time aggregating unique data. Unique value-add data is where the high profit margins come from. For the data earned through non-users using a FB/GOOGL account to login to other sites (but not using core sites), I'm not sure there's anyway to prevent/regulate this data collection.

 

Second, anti-trust. AMZN and GOOGL are the obvious abusers based on prior cases, imo. They acquire dozens of companies a year and act in an increasingly anti-competitive manner. AMZN has Prime, which seems fairly anti-competitive for other e-commerce sites. I don't know as much about AWS but that also creates a conflict of interest through anti-competitive cross-selling. I think we are seeing some pushback from retailers going to Azure but AMZN could feasibly be forced to spin-off AWS and lose some advantage. I'm not sure if you can force AMZN to change how they offer Prime (since it's very similar to a club membership a la COST) but they could be forced to change certain sales tactics (such as giving away cheap or free gift cards, Prime, Alexa, ect). GOOGL offers numerous free applications bundled in to Android that have been scrutinized. These free applications (think Gmail, Google Maps, search widgets featuring "best answering", sports scores/info, bios of people searched, airline tickets, subway directions, and so on) are often subsidized by other business lines and used to acquire data/eliminate competition are essentially the anti-competitive behavior that brought about modern anti-trust laws. I could see GOOGL being forced to change practices and/or spin-off various properties that have led to a very large semi-permeable system (that, at times, has the feel of a closed system with a majority of users - thus, anti-competitive).

 

Unlike AMZN, FB doesn't control the price of their goods that are under scrutiny. Like GOOGL, it's an auction. I could see an argument that they shouldn't be allowed to control the auction (exchange). It's a similar argument to not letting investment banks own the NYSE/NASDAQ, but the financial market looks a lot different than the digital ad market so I'm not sure how much traction this will get. Either way, I think AMZN is much more likely to be looked at for anti-trust violations than any other company at the moment. I don't see a clear line of reasoning to label FB as an anti-trust violator in the same vein as AMZN/GOOGL, but I'd love to hear an argument or articles making the argument.

 

I agree with Packer that I don't like how data is collected and used right now, but under current laws and precedent I don't see any change on the horizon. Especially as long as the PATRIOT Act and FISA remain reasonably similar to their present form. Current data collection and usage favors incumbent politicians to an extent similar to early broadcast TV and radio. That is a strong undercurrent and will likely dictate how US rules on data/privacy evolve.

 

To Mungerish's post on FB usage. I think this is why the talk about FB usage/engagement doesn't match the data. Engagement on FB may be down a bit (broadcast TV in the 40's through 70's had multiple multi-year periods of declining engagement, which is surprising in hindsight) but I think your observation of everyone is at least a lurker is quite true. It's amazing how many people I talk to that don't seem to participate at all on FB mention they saw something there. I think as the excitement of 2016 wanes, most online destinations will become less tense again.

 

Finally, it was fun reading your post, BG. I bought Christmas presents on AMZN in 1999, I've been a member of EBAY for 19 years, and I was one of the first few people in my HS to sign up for FB. I remember using Google and never going back. Blast of nostalgia and what a long, strange trip this internet has been.

 

Girls just post photos of them on this thing called FB?  I'm going to create an account!

Nailed it.

[johnny]

Really quite close to pulling the trigger on this, but I'm sort of stuck on USA ARPUs.

 

In my feed, the vast majority of the ads I get are from obviously cash-flow negative companies. I doubt this is representative of the entire platform, but it does make me wish I had some sort of analysis that gave me an idea of how much the auctions would move if all of those weak bidders got shaken out.

 

It seems counterintuitive to me that US ARPUs have actually been the fastest growing over the past 2 or 3 years. Not just in absolute terms: Asian/Other ARPUs have about doubled in 2 years, while US has roughly tripled.

 

$104 per user for USA+C over the past 12 months. That's really incredible, and if all of that spend is, in aggregate, economic/rational, then I think this is basically a no-brainer, even with all of the weird political/regulatory issues.

 

Has anybody done any thinking on this?

[benhacker]

Really quite close to pulling the trigger on this, but I'm sort of stuck on USA ARPUs.

 

In my feed, the vast majority of the ads I get are from obviously cash-flow negative companies. I doubt this is representative of the entire platform, but it does make me wish I had some sort of analysis that gave me an idea of how much the auctions would move if all of those weak bidders got shaken out.

 

It seems counterintuitive to me that US ARPUs have actually been the fastest growing over the past 2 or 3 years. Not just in absolute terms: Asian/Other ARPUs have about doubled in 2 years, while US has roughly tripled.

 

$104 per user for USA+C over the past 12 months. That's really incredible, and if all of that spend is, in aggregate, economic/rational, then I think this is basically a no-brainer, even with all of the weird political/regulatory issues.

 

Has anybody done any thinking on this?

 

This is the right thinking... I don't quite get it.

[Jerry Capital]

Chamath Palihapitiya discusses this in his recent annual letter, dispute the criticisms of him I thought the letter was well thought out.

 

"Nicholas Sibley has a great quote about banking: “Giving capital to a bank is like giving a gallon of beer to a drunk. You know what will come of it; you just don’t know which wall he will choose.” We’ve reached a point today with ad spend in tech that feels metaphorically similar. Startups spend almost 40 cents of every VC dollar on Google, Facebook, and Amazon."

 

https://techcrunch.com/2018/10/31/social-capitals-chamath-palihapitiya-says-we-need-to-return-to-the-roots-of-venture-investing/

[MrB]

Really quite close to pulling the trigger on this, but I'm sort of stuck on USA ARPUs.

 

In my feed, the vast majority of the ads I get are from obviously cash-flow negative companies. I doubt this is representative of the entire platform, but it does make me wish I had some sort of analysis that gave me an idea of how much the auctions would move if all of those weak bidders got shaken out.

 

It seems counterintuitive to me that US ARPUs have actually been the fastest growing over the past 2 or 3 years. Not just in absolute terms: Asian/Other ARPUs have about doubled in 2 years, while US has roughly tripled.

 

$104 per user for USA+C over the past 12 months. That's really incredible, and if all of that spend is, in aggregate, economic/rational, then I think this is basically a no-brainer, even with all of the weird political/regulatory issues.

 

Has anybody done any thinking on this?

Possibly one way to look at it is to ask why FB ARPU should not at least be able to match TV Advertising's? If that seems plausible then it can still double from here.

http://www.nscreenmedia.com/rise-rise-social-video-advertising/

[MrB]

Needham Insights

The Future of Media: An Epic Battle

https://www.allaccess.com/assets/img/content/pollack-media/2018/010618-FOM-AEP.pdf