Morning Brew Daily - AI Helps Meta Surge, Disney Sues DeSantis & Hawks Delay Janet Concert

Episode Date: April 27, 2023

Episode 48: Neal and Toby dive deep into Meta's strong sales quarter and break down why Zuck thinks AI deserves some of the credit. Meanwhile Disney is suing DeSantis claiming his political antics are bad for business. The guys also break down what Congress's latest bill means for the Debt Ceiling battle with President Biden and why you can finally iMessage from your PC! Plus Neal dazzles us with his crazy stats and why Janet Jackson may be beefing with Trae Young. Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Consider this comparison. PWC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PWC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like at

pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning, Brew Daily Show. I'm Neil Freyman. And I'm Toby Howell. Today on the show, Bob Eiger and Ron DeSantis, their showdown is exploding like an animatronic dragon. And we'll talk about the high school senior who secured more than nine million in college scholarships.

We'll also talk about how Zuck has once again righted the ship at Meta, then tell you why you'll be hearing the words debt ceiling, a whole lot more going forward. Neil, it's Thursday, April 27th. Let's ride. So if you're watching this on YouTube, then you already know the biggest news of the day, which is that Toby has dyed his hair, blonde. Not only that, but it actually looks good. Like, unironically, it works for you.

Thank you, Neil. Thank you. So I literally did this yesterday evening, and they put a toner in your hair, so to make sure it doesn't turn kind of that orangey color that you sometimes get if you bleach your hair. but it also makes my hair like really white and kind of gray right now. So it will settle down a little bit.

I look a little old. Right. It's like that Snapchat filter that makes you look 70. And walking to work this morning, I got a, what up, Slim Shady. Wait, really? Yeah. This happens so much. You've done this before.

I did it last year and you will not believe the amount of people who start calling me Slim Shady. How long are you going to be blonde for? The foreseeable future. As long as the temperature stays in the mid-60s to 70s, summer, Toby has been activated. All right. It means it's summer for the rest of us. There we go.

It's officially, it's like Groundhog Day for summer. Everyone check out YouTube to see what he looks like. Yes, exactly. Okay, Neil, let's jump into our stories. Neil, there are three constants in life, death, taxes, and never ever bet against suck when he's back against the wall. Yesterday, meta-earnings came out, and it was pretty much good from top to bottom.

After three straight quarters of falling revenue last year, Revenue actually jumped 3% year over year. Facebook also gained users after losses last year. And time spent on Reels jumped 20% thanks to a couple of tweaks to the algorithm powered by what else AI. And here's the crazy part. It's Metaverse Division was actually just kidding. I was about to like jump over there and tackle you.

It's Metaverse Division hemorrhaged money, reality labs, which is what put the meta in Metaverse, lost nearly $4 billion last quarter. So it wasn't all good, but that was to be expected. So overall, clearly a step in the right direction. And what do we say, Neil, don't bet against Zuck. Wow. He just like over, you know, he founded this in what, 2004. And there have been so many ups and downs and threats to the company. And he just keeps chugging along. It's pretty impressive, honestly. The year of efficiency is going great. That's been Zuck's kind of drumbeat and investors have kind of rallied behind this idea that we're going to trim down the company, make sure head count is not too high and just focus on the things that matter.

Yeah, the stock was up 12% after earnings to a 14-month high. Last year, they lost two-thirds of their value. And then this year, they were up 74% before this earnings report. So they're up another 12%. Right. So investors are 117 what Zuck is doing. Shares are up 164% from their November 2022. Yeah.

I feel like that's crazy that people. are kind of glossy on the fact like meta's a half a trillion dollar company more than that now and it's up a hundred and sixty four percent this year like it shrank a lot last year right i know well what do you want to talk about there's like the ad growth back there's reels maybe reels i do think i want to talk about reels because that has been they're very happy on the com how competitive it's been with with ticot so far because for a while people were kind of like yeah they were a little lukewarm on it, but like we said, time spent on Reels has jumped, and they are attributing it to this better algorithm powered by AI. Who knows how much that's actually true? I think they just want

to talk about AI powering some part of their platform, but it's clearly heading in the right direction. I mean, when I go on Reels, I forget whether it's Reels or TikTok. It has been better, for sure. It used to just be TikTok, like, copy and paste, but now we're seeing a little bit more original content for sure. So Reels is doing great for them. It's really competing with TikTok, and that's important to get users there because then they can sell ads against reels. Because advertisers can be like, should I put it on TikTok? Should I put my ad on Reels? And before it was, you know, I'd definitely go with TikTok.

And now they might see higher engagement in Reels and say, okay, maybe I'll put it there. We should also talk about AI. And so Zuck was like, AI will impact every single aspect of our business and our apps and services. And he wants to introduce what he calls AI agents to billions of people in ways that will be useful and meaningful. Some examples of that could be customer service chat bots for businesses on Messenger or WhatsApp, creating ads that are more effective, which is, I'm sure he's very keen on that. And then also creating games for the metaverse and virtual reality. So he's pretty bullish.

It makes sense. There are synergies. There are synergies. But I do want to put just a couple of, there weren't, it wasn't all, all good news. So one of the big things that stood out to me was that people are posting less on Instagram and less on Facebook. So creation of Instagram stories, we're running about 10% below company expectations, which I feel like anecdotally makes sense. Like for a while now, we've kind of knowing that people are using these legacy social media platforms

a little less, especially young people. So seeing that stories number go down, which is typically the big engagement driver on all of Meadows platforms, is kind of a little concerned. And then also we have to talk about the fact that Facebook is still just absolutely the workhorse. It generates the lion's share of revenue still. And the fact that Facebook engagement is going down a little bit makes,

Zach a little bit nervous. Definitely not out of the woods. So they're still betting on the metaverse. And Zuck was like, I've been hearing all of you guys talk about us focusing on AI instead of the metaverse. And he goes, a narrative has developed that we're somehow moving away from focusing on the metaverse vision. And I just want to say up front that that's not accurate. We've been focusing on AI and the Metaverse for years now.

So it seems like they're shoring up their core apps and still plowing untold billions into the Metaverse. And he's still very optimistic that they can build the Metaverse even though it's a huge money sink right now. They lost $4 billion in three months. I can't do that. Let's just remember our advice. Do not bet again suck. He'll probably figure it out. He tends to do so.

He tends to do that. All right, let's move on to Disney. So Disney and Florida Governor Ron DeSantis have been feuding for a while now. But yesterday, the company said, enough was enough and went completely nuclear. They sued DeSantis accusing him of a targeted campaign of government retaliation that violated its First Amendment rights to say anything it wants. So Disney said, in America, the government cannot punish you for speaking your mind. And the company also said that DeSantis' campaign against it has harmed its business. operations, its economic future in central Florida, and was also unconstitutional.

So how did he get here? What is Disney even talking about? Well, it all started last year when Disney came out against DeSantis' so-called don't-say gay law that barred discussion of gender identity and sexual orientation in the elementary school. That ticked off DeSantis, who revoked Disney's special status that allowed it to self-govern the area around Disney World that it's had since 1967. But then Disney also had a few trucks up up its sleeve, and with without DeSantis knowing at the last minute, it made this legal maneuver that essentially helped it keep power in the district. Then DeSantis moved to undo that legal maneuver and then Disney sued.

So that's kind of how we got here. It's been a little crazy, but this is a dramatic escalation by taking DeSantis to court. It is wild. There is so much drama going on. It reminds me of the Sydney-Sweeney Glenn Powell drama that's currently going on. If you understand that reference, then... I got a big education in that this morning. Congrats. You're terminally online.

But yeah, Neil, there's been so many back and forth. Like, you just explained it all. Like, it's been tit for tat and going back and forth. And this actually does, it's not just a petty few. Like, there's obviously wider implications on the line, especially presidential race implications, because the worst kept secret is that DeSantis is gearing up for a presidential run. So you had Trump weighing in on true social saying,

he literally said, this is all so unnecessary, a political stunt, stunt in all capital. Right. Classic Trump. Because Disney, the fact that Florida and Disney are feuding right now would blow anybody's mind who's lived over the past 50 and 60 years. Because Disney is the nation's largest single site employer. They like run Florida's economy. Right.

So the fact that you're going to war against this company that's employing like 75,000 people work at Disney World? Cast members. And they get 50 million visitors globally who come to Disney World. It's been perplexing to even DeSangis' Alice. and other Republicans, why he's attacking this company over something that they, you know, mildly criticized him over. Right. Because, again, Florida is supposed to be pro business.

DeSantis is supposed to be pro business. And here's the biggest business in Florida that you're going toe to toe with. So it does feel like maybe at the beginning, it was this rallying cry for supporters. Like, Desantis doesn't back down from anyone. But now everyone's like, all right, Ron, like, what are we doing here? And then you have Bob Iger, the CEO of Disney, who's saying, look, you're. threatening future investment in the state. We're planning on spending $13 billion to build more hotels and another theme park. And look, like, why would I want to do this in Florida if I'm just

going to, you know, you're basically working with your mortal enemy. Yeah, Disney is great for Florida. And here's the thing that I thought was so interesting that I didn't know is that the special district has been at the heart of this, like DeSantis revoked its special district privileges. There are hundreds of special districts in Florida. Some of the ones, I'm from Florida, so I know some All right, you can talk about this. Yeah, thank you. I'm qualified. But one covers the villages, which is this gigantic senior living facility that sprawls in the northwest of Orlando.

And then also Daytona International Speedway in the surrounding area is a special district. So it's, Desanches was like, we need to revoke this, like, it's been a kingdom within the middle of New York. There's kingdoms all over New York, not just at Disney World. Oh, sorry, Florida. Thank you, thank you for catching me. And then also the personalities here are wild. You have DeSandis who probably running for president. And then Bob Eager, who's this like king, he's this like corporate king.

And he's a stone cone killer. I know. He wakes about 4.15 a.m. every morning. Does the Versa climber. That is like the hardest workout. I do not want to mess with anyone who does something like that. So petty feud, but tons of headlines. Yeah, billions of dollars at stake.

Absolutely. All right, Neil. Let's talk about those two words that I mentioned at the beginning of the show, which is go nix. I mean, just kidding, it's debt ceiling. You really are embracing your New Yorkness for the last 30 seconds. It's New York, baby. So yesterday, House Speaker Kevin McCarthy rounded up just enough votes from his GOP colleagues to pass a bill through the House to raise the debt ceiling.

Unfortunately, before McCarthy, there's pretty much no chance that this bill will actually make it through the Democrat-controlled Senate. And if it somehow did, President Biden has pretty much promised to veto it. But just because it won't pass, doesn't. mean the bill addressing the debt ceiling isn't significant. It's pretty much all we'll be talking about, or at least all Congress will be discussing over the next few months, because if lawmakers don't figure out a way to raise the debt ceiling, the U.S. government could default on its debts, which would be pretty catastrophic. But, Neil, take us through exactly what the debt ceiling actually is.

I mean, it's pretty literal. It is the cap on the amount of the, that the federal government can borrow to meet its existing obligations. It's been around since 1916. It's been around since 1916. 17 near the end of World War I when Congress passed a law that said it and every so often every couple of years we do the same exact thing where we're like all right We're we're borrowing a little bit more you know the economy is growing we need to borrow a little bit more we're running at a deficit Let's raise the debt ceiling and it's always this like political brawl and we went through this in the Obama years We went through this in the Trump years and now we're doing this in the Biden years It's a little more complicated now because we have the divided Congress and they they need to figure something out together which is never a good An easy thing, yeah.

Yeah, this is definitely like a political football that gets passed back and forth because what you can do when you have this bill that needs to be passed, both sides want to stuff it with things that advance their agenda. So Republicans are definitely trying to pack it. This current iteration of the bill is packed with stuff that reduces spending. Yeah, like rescinds the energy tax credits of the Inflation Reduction Act removes that, you know, $80 billion in funding that we gave the IRS and puts me. restrictions on food stamps and Democrats are like, I absolutely won't do this. But it's a total

staring contest. It's like a total game of chicken. Somebody's got to blink or our economy's going to implode. I know. That is the thing. So I actually did some research and the U.S. has never reached the point of a default where the Treasury was incapable of paying U.S. debt obligations. It was very close one time and there was one exception. And that was during the war of 1812 when parts of Washington, D.C. And the Treasury were burned. So this truly goes to show, like, the U.S. does not default on its debt. It pretty much cannot because the entire world economy runs on the idea that U.S. debt is this A-plus-plus, like, risk-free collateral. So, yes, you're totally right. The stakes are very high. But anyone who's defaulted knows that once you default, it's really bad because they jack up interest rates for you. They downgrade your credit rating, and then it raises the cost of borrowing in perpetuity. And that's exactly what Janet Yellen said. She said a default on our debt would produce an economic and financial catastrophe and

raising the cost of borrowing for the U.S. into perpetuity. So, yeah, just like we don't want to default on our credit card bill, the U.S. can't do it, but the stakes are in the trillions of dollars. Much higher. All right, Neil, before we jump into our next story, we're going to take a quick break. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills, starting at 179. like the next grill three burner gas grill

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Book on Hilton.com or the Hilton app and save up to 20% to get the stay you expected. When you want savings, not surprises. It matters where you stay. Hilton for the stay. So we know that Disney and DeSantis are feuding hard as are Republicans and Democrats over the debt ceiling. but two other former adversaries are now in their enemies to lover arc.

Microsoft and Apple are once again playing nice in the sandbox. And by that, I mean yesterday, the two companies worked out a deal that allows Apple users to access iMessage on Windows computers. So now if you own a Microsoft PC and an iPhone, you'll finally be able to text people off of that computer and receive and make phone calls and FaceTime from your computer. So, Neil, this seems like a classic win-win for both companies, but I'm curious to hear who you think this benefits the most. Oh, God.

I don't know. Windows? Here's what I think. Yeah, you clearly have an opinion. It's the biggest deal for workers, corporate workers, who clearly have an iPhone. Oh, I was going to say. But they want to text off their work computers. And so finally they have the ability, they don't have to pull their iPhone out during a meeting.

They can text. No, totally. Oh, I was going to say, like, people with Windows. Yeah. Like iPhone users, that's the biggest one. I mean, everyone I know texts with their computer now. Right. Exactly.

Like I do. I actually have the opposite because I have an Android phone and a Mac computer. And so my texting is really janky, which it also seems like this, this link. What's this program called? Like Windows Link or Apple Link or something. Yeah. Something. It's going to be very basic.

Right. There's no photo sharing. It's bare bones. Yeah. No group chats. No photos or videos. And the conversation history does not extend beyond the current chat session. So you cannot go back through your messages.

You can only live in the moment, which might be a good thing. Also, here's the funny part. All messages appear as gray bubbles in the phone link app, meaning that you won't be able to know if the people texting you are weird green bubble people or blue bubble people. So maybe it's good for you because you're a green bubble guy. But yeah, I think that's so funny that Microsoft's like, listen, we're not waiting into the blue versus green bubble debate. Everything's gray.

Yeah, but this is great for people at work. Right. Because who's going to, you know, you're looking, you know, you're texting. on your phone, it looks really bad. But if you're just hard at work or your computer typing away, you could be either texting or you could be working, but probably you're texting. Yeah. But there's a really interesting history of Apple and Microsoft.

They've been kind of like oscillating between friends and enemies. The most interesting thing was in 1997, Apple was in a really bad spot. Steve Jobs just came back to the company. And Microsoft kind of helped it out. And Jobs announced this partnership at the Macworld Expo, which was their big keynote address. And everyone booed him. And then Microsoft made office for Mac, obviously. And then it actually invested $150 million into Apple.

And Bill Gates was like, I'm super pumped about, like, this ecosystem that we're building. And then recently Tim Cook said Apple and Microsoft still compete today. But frankly, Apple and Microsoft can partner on more things than we could compete on. And that's what the customer wants. And I feel like that's exactly what this link thing is doing. For sure. And honestly, I do think they aren't necessarily like the biggest competitor now. Like Microsoft's probably more of a competitor with like Google and Amazon at this point from the cloud infrastructure perspective.

They've gone after totally different. Like Microsoft's obviously gone after businesses and corporate. Apple is more towards general consumers. So yeah, they're their enemies to lovers to enemies to lovers. But I think they're more of lovers right now. And this is one where the consumer wins. Let's go to Neal's numbers, the segment where I share three interesting. numbers that I read from the week's news. The first one is, in addition to being one of the

best front man in music history, I think that is without a doubt. Freddie Mercury of Queen was a prolific art collector, and his friend has begun the process of auctioning off the 1,500 items he hoarded at Southby's set in the fall. They're expected to bring in at least $7.4 million. Here are a few of the items I'm excited about, the original handwritten lyrics to We Are the Champions. $250,000 starting price. Feels like a bargain. We should save up. Feels total bargain. There's the red crown and cloak he wore during the finale of God Save the Queen during the last queen tour in, or his last tour with the band in 1986.

And then there's this tiny little Tiffany mustache comb, which I didn't know existed before this. But if you're Freddie Mercury, you absolutely need a mustache comb. That is going for just $500. I don't think I'm going to be bidding on that, unfortunately. No, you have no facial hair. I can't get the mustache. So while this is, apparently he was an amazing art collector, had incredible. taste, which is not a surprise.

But to compare it to other estate sales by, you know, British rock legends, this is kind of a small one. So David Bowies in 2016 went for $41.1 million. And then Elton John way back in 1986 or something went for $8.2 million. I, yeah, my initial reaction was these numbers feel low because Freddie Mercury's state is supposed to be at least 7.4. I do think, though, the language is at least. So I think it will grow because those items seem. awesome and like people love queen like we just had that movie come out a couple years ago like he's back in like the collective public eye so i think those lyrics are going to sell for a lot

more than 250,000. Yeah there's one for an unseen one of killer queen too. Oh, epic song. All right. Second number more women now run companies in the S&P 500 than men named John do. And that may seem like a very low bar or weird comparison, but it has been used since 2015 when the New York Times discovered that fewer women ran big companies than men named John. So Bloomberg ran another analysis to see if this was still true. And fortunately, it is not. So score one small point for gender equality, I guess. But in general, there is a little less overlap in names in general among the S&P 500 CEOs. Not only are there more women now, but there are fewer Johns. 186 CEOs of S&P 500 companies have unique names.

So up from 133 in 2015, people say that's because there's fewer biblical names like John and Matthew. And there's a rise in number of immigrants who have come to lead the U.S.'s biggest companies. I love data, man. Like that is such a good stat that there's less Johns. And I also love that they delineated between J.O.N. and J.O.8. They did combine the two, but I love that. They broke down the data a little bit between those two. Just an absurd stat that that was ever true at all, but glad it's changed.

Yeah, I don't think it'll go back to the way it was. In general, though, women make up 8% of S&P 500 CEOs, so very low share. Long way to go. Compared to their overall population of more than half the United States. All right, our final number, I am ready to hand out the award for the overachiever of the century. I don't think this can be matched. He's a 16-year-old college or high school student in Louisiana named Dennis Barnes. And he's been applying to a lot of colleges, like any senior in high school.

But by a lot of colleges, I mean 200. And he's been accepted to 125 and received scholarships totaling more than 9 million. That would be a new record if he hits his goal of 10 million, and I'm sure he will. His resume, honestly, pretty solid, pretty solid. GPA of 4.98, we like that. Holds leadership positions in the National Honor Society and is fluent in Spanish. Wait, first of all, 4.98, I swear we're going through great inflation. Well, if you take like an honors class or an AP class, I think it could go up to five.

Wow. Okay, 200 applications to colleges. He's got to be using some sort of AI, right, to help with the college, the essay process because, holy moly. But, I mean, good for him. He said it wasn't even that hard. He's like, I just did it over a long period of time. Right. So it is hard because you have to have stamina.

So he'll figure out where he's going on May 2nd, like a national. sign. Yeah, I hope he picks a hat, but he has 125 of them laid out and then picks a hat. Good for you, Dennis. Our final story, so I kind of called this, but with all the NBA playoffs, NHL playoffs, and concerts going on right now, I was worried about arena schedulers

and how they were going to manage it, and it looks like they haven't. So a Janet Jackson concert scheduled for tonight, and Atlanta had to be moved after State Farm Arena double-booked itself with that concert in the Hawk Celtics game tonight. Actually, it would have been fine if Trey Young hadn't hit that miracle

three to extend the series and move it back to Atlanta. Billy Joel also had to push his concert at Madison Square Garden because of the Knicks and Rangers games. Anyway, this all speaks to the crazy logistics that are going on of transforming arenas that are home to multiple playoff teams at once. Yeah. Well, first of all, I think it's hilarious that Atlanta double-booked it because it just goes to show how much, how little faith they had.

Same with the Knicks. But yeah, obviously the crown jewel of this arena switching is the former Staples Center, which is now crypto.com arena, which is home. to the Clippers, the Lakers, and the Kings, which is the hockey team. So just an absolutely absurd logistics puzzle that they do constantly. Yeah. They've done 251 midday conversion in the history of the arena. And the most recent one was on Saturday where they had, well, last weekend was crazy,

that 36 hours because they had a Kings game at 7. They had the Clippers game in the afternoon and then a Lakers game later that night. And then they had to go back to the Kings. And then they had to go back to the Kings. Crazy, yeah. So really impressive job by all of the arena switchers over there. And I think as we move on to the second round of the playoffs, it'll calm down a little bit.

But we have to talk about tomorrow night in Atlanta. I'm ready to book my ticket because there's Janet Jackson and Taylor Swift is coming to town. Taylor Swift is going to Mercedes-Benz Stadium, which is the football and the soccer stadium, Neil. But the traffic in Atlanta is going to be a disaster because the concerts are starting around the same time. At least 90,000 people are going to be converging on the stadiums at the same time. I don't know what the public transport system in Atlanta is like. I don't think it's going to stand up pretty well to that, but prayers up for Atlanta traffic right now.

All right, Toby, that is our show. Great job on your first day of blondeness. It's going to be a vibe going forward. It's going to be a vibe. You're going to be getting summer vibes from us going forward. You can always read us at Morning Brew Daily at Morningbrew.com. Thanks to everyone in our control room who helped the show happen. The show's producer and editor is Emily Milliron.

Our technical director is Euchenawa Ogu, Sam Veles, and Raymond Lou are our APs. Billy Minino is on audio. Hair and makeup took one look at Toby this morning and then quit. Devin Emery is our chief content officer. Our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. It all.

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