Morning Brew Daily - Meta Launching Twitter Rival Threads & US and China’s Semiconductor War

Episode Date: July 5, 2023

Episode 96: Neal and Toby are back after a refreshing long weekend with lots of news to get to! Meta is coming for Twitter as it's set to launch Threads on Thursday but is it innovative enough to take down the already struggling social outlet? Plus, a judge ordered President Biden and his administration to limit contact with social media companies as the US is wrapped up in a tit-for-tat battle with China over semiconductors and solar panels. The guys also declare their winners of the long weekend and why they involve lots of EV's and hot dogs. And finally have you heard about the flying cars that are about to get a test flight? Don't worry we got you covered! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Many employees can't afford a hefty medical bill that pops up out of the blue. But it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, AFLAQ plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morning brewdaily. That's aflac.com slash morning brewdaily.

Good morning brew daily show. I'm Neil Freyman. And I'm Toby. On today's pod, why the FBI will have to cancel its three martini lunches with YouTube, and we'll do an in-depth recap of the Nathan's famous hot dog eating contest. Then we'll talk about how Mark Zuckerberg is busting out the copy and pace strategy once again. Plus, a new company is getting closer to getting their flying car off the ground, which is one small step for cars and one giant leap for people who love the Back to the Future movie franchise.

Neil, it's Wednesday, July 5th. Let's ride. All right, Toby, we're back. I'm so glad you said that it's Wednesday because I have no idea what day it is. I'm proposing a federal ban on July 4th happening on a Tuesday. Even if it happens on a Tuesday, we should not celebrate it on a Tuesday. Sleeping last night was brutal. This was my first 4th of July in New York City. I couldn't believe how late the fire was late. I felt like such an old man shaking my fist at the clouds, but yeah. What was the highlight of your little break here?

So, Neil, I actually calculated it. I played 189 holes of golf over the five-day period, which at a scoring average of 83, equated to 871 strokes in total. How so are you? My body's in shambles right now. It hurts so badly. How about yourself? Let's see. I made homemade pasta with my dad.

Oh, no way. Yes, a little ravioli and spaghetti. It does, it's not hard. It's not hard at all. Do you have one of those machines when you roll it out? Yeah. You're fancy. It's super cool.

And this is a bucket list item. I finished the New York Times Sunday Crossword in Penn. No way. Yeah. Very bold. I'm a pencil guy and I can't even finish it anyway. So good on you. All right, Neil, let's jump into our top story of the week where Mark Zuckerberg is going bird hunting.

Tomorrow, META is expected to release a text-based social media app called Threads that many are already crowning as a potential Twitter killer. Here's why Elon Musk might be shaking in his boots a little bit. One, you can connect your Instagram profile to your threads profile, meaning you can easily reach the audience you've already built up on IG. That's a super compelling pitch for an influencer like you or me, Neil, who already has a huge Instagram audience to try out the new app. Also, two, Twitter is on shaky footing right now. It's revenue.

It's expected to be down by at least $1.5 billion this year. And just this past weekend, Elon instituted a rate limit on Twitter, which limited the number of tweets people could see effectively neutering the platform for people consuming content on it, which at the risk of stating the obvious is not a good idea if you are a social media company. So Zuck is striking when Twitter is at its most vulnerable as he so commonly does. And Neil, if I was Elon, I would be a little scared because Zuck is a pro at doing this. He really is. I mean, if you look at the other copycat products, they've been pretty successful. You've had stories, which now accounts for more than 25% of Instagram's global ad revenue, and that is a complete Snapchat knockoff.

And then when TikTok came on the scene, Zuck was like, that is working really well. Let's do that. And so they launched Reels. And he said that back in February, that Reels playtime doubled in sixth months, thanks to its new AI Discovery Engine. And now, honestly, when I'm on Instagram Reels, I forget that I'm on Instagram, and I think I'm on TikTok, and then I'm like, this is pretty great. So Zuck always shows that you do not have to be first to this game to be super successful. And like you said, when you have an Instagram built-in audience, it's much easier to say, oh, I guess I'll use this rather than, oh, I have to go to Mastodon or Blue Sky and get an invite to all these other social media apps, then build my audience up from scratch, which is a huge barrier to entry.

And honestly, you kind of touched on it a little bit. The thing that makes this such a formidable competitor is just the sheer size of meta in its group of apps. Over 3 billion people use some form of meta app like Facebook, Instagram or WhatsApp. And so all that Zuck needs to do is convert 18% of Instagram users to threads and it'll already create a new app the same size of Twitter. So again, it's just scale always wins in these cases. And 18% is not that tough to do, honestly. Maybe. It just can't.

Twitter has shown such. A cockroach. It is a cockroach. You know, you can't kill it. And everyone who says, Twitter's dying. We've heard this for six to seven months now where Elon came and did all these destructive policies. And you can't argue that he has been, he has been lighting this $44 billion on fire.

But these people are so annoying. And they're like, geez, like Twitter's dead. Twitter's dead. Like you're posting on Twitter and Twitter's still alive every single time. You can't kill it. So maybe Meta's version will, coexist alongside Elon Musk's Twitter, but it is tremendous to see the longevity of Twitter. Yeah.

Just in its zombie state, but people still continue to post and go on it. Just to run down some of the people who have come at the king and kind of missed is, I mean, you had Trump who launched true social, and no one really uses that. It's reported that it has 510,000 daily active users, which compared to Twitter has 217 million. So a fraction of the size. You have Blue Sky, which is Twitter founder Jack Dorsey's kind of contender, which is a decentralized version of Twitter. Also very small audience, like 50,000 daily active users. Same goes for Macedon, which was another kind of decentralized take on it.

It's just got this magic to it. Like, it's very, very difficult to kill. It really is. Not to say that this threads is guaranteed to succeed because Facebook definitely has a lot of, you know, sketchy history with data privacy and Jack Dorsey and Elon Musk kind of hit at that on Twitter. So we will see it. Plus, Instagram's also this visual app and to ask people to start posting text. You know, when they're used to just taking a picture of themselves might not be an easy parallel. So we'll see. But either way, it looks like the more important thing here is that the Musk-Zuck fight.

Cage match seems to be progressing. Dana White of UFC is organizing it. So there are battles along many fronts between these tech moguls right now. All right. Well, we're going to stay in this world of social media for our second story. We're going to talk about. a legal case with major implications for the First Amendment and tech companies. Yesterday, a judge blocked parts of the Biden administration, including the FBI and the Department of Health and Human Services, from communicating with social media platforms over content containing protected free speech. This is not a final ruling yet, just an injunction, but it signals that the judge believes that these agencies violated free speech rights by coordinating with social media firms

to limit what it considers disinformation on social media. The backstory here is that over the past decade, the government has begun to work closely with Twitter, Facebook, YouTube, other platforms to curb fake news on things like COVID vaccines and elections. Two Republican attorneys general from Missouri and Louisiana sued, calling this coordination a federal censorship enterprise. They and other Republicans argued that the Biden administration was using COVID and election misinformation as an excuse to bully social media.

companies to take down content and didn't like, such as criticisms of mask mandates or the Chinese lab leak theory. Yeah, I mean, this judge was not holding back at all, too. He said that the government, the U.S. government has assumed a similar role to an Orwellian Ministry of Truth. So basically saying that, yeah, the government was way overstepping its boundaries, meddling in these private companies, how they regulate social media. So it's definitely one of those things that hits at the center of, like, one of the

core tenants of America, which is free speech. So I can see why this case is kind of symbolic of like this one conversation. This fight has been going for a while. Meanwhile, the response from the DOJ is like, and the Biden administration is like, this was a very dangerous time where we have, you know, other countries meddling in the election and we have, you know, a dangerous pandemic that's killing millions of people. And we're just doing the role of government, which is promoting public health. And we don't want to see, you know, some people spewing complete nonsense and conspiracy theories on social media platforms when they should be regulating it. So that's why we've been working closely with them. We're helping them, you know, take down content and promote stuff

that will save lives. And so that's their argument. Yeah. Yeah. The legal scholars, they're kind of skeptical that the government can be held responsible for content moderation decisions because ultimately does come down to the private companies itself. But yeah, it's definitely, like the topics themselves too are so, such hot, hot and topics. So this is, yeah, it's Biden versus. This was like the Twitter file stuff. A little bit, yeah. Going back to peeling back the layers of did like the government say,

let's get Trump off of social media, they come off of Twitter. So yeah, definitely some behind the scenes like shady stuff. This feels like peeling back the layers to that as well. Yeah, it's been a longfire. Republicans say that, you know, the government is doing too much censorship of social media companies. and then Democrats saying, you're not doing enough. You're letting all this fake news proliferate on your platforms and you're not doing anything.

So they are just not speaking to each other at all. So we'll see what happens. This is, remember, just like an injunction and the judge will have to have a final ruling on it. We'll have a lot of big implications for social media regulation. We'll see when that happens. We're going to move on away from social media to actual physical commodities. So remember the trade war between the U.S. and China from a few years ago? It's actually still boiling, and China just turned the heat up a notch.

On Monday, Beijing said it would restrict exports of two minerals, gallium and germanium. I know everyone knows what those are. They're used for high-end semiconductors that go into products like electric vehicles, solar panels, and others. The U.S. deems important to national security. These are rare minerals, critical components for making this stuff you use every day. And China is saying the world's manufacturers can't have access to them like they, used to. This is the tat in the tit for tat trade war that's been brewing between the U.S. and China for years, but I just want to highlight this. The nature of the war has changed a little bit.

What began in the Trump years as steep tariffs on Chinese products like washing machines has turned into a series of export restrictions intended to deny the other side of intermediary materials necessary to make the most advanced tech products, most notably weapons. So essentially, the thought process is, since we're the only country that produces X and you need X to make Y, we're going to withhold X or threaten to withhold X until you start to play nice with us. And both sides are doing this. Yeah. First of all, I definitely had the tit for tat line written down.

Everybody has a tip for tat. I mean, every article I read was like, this is the tat in the tip for tat. There's no other way to describe a trade war. Yeah, absolutely. But this is definitely a little nerve-racking for America because China produces 60% of the world's germanium and 80% of the words gallium so it knew that before going in right oh absolutely so it's definitely one of those things where like if china is throttling the production of this that's something that the u.s needs to kind of reevaluate and say like all right this is this is kind of a big deal

although there were some analysts that say it's not that scary because an analyst from idc senior research center said that there's no major global shortage of gallium or germanium and both are quite widely produced. And so while there is some risk, he thinks that by constricting the global supply, others would simply start producing more of those two, and it would become economically viable for them to do so. So again, you can see, when you see those 80% and 60% numbers, it seems really scary, but some think that others will pick up the slack.

Yeah, it could backfire, actually. They're saying that China, by restricting exports of this, first of all, hope hurts their own domestic manufacturers of these products, because you're just limiting your own sales to hurt, you know, the rest of the world. Plus, the U.S. and China, or U.S. and Japan and Europe are like, well, listen, we are already trying to move our supply chains away from China. They're not selling us stuff anymore. Let's just start finding gallium and germanium in our own backyard. So let's do that. Yeah. On that point, the U.S. and the EU were reportedly considering the formation of a critical minerals club earlier this year,

which, by the way, it's just an awesome name for a club. Like, hey. You were in, I was a I was president of the critical minerals. Yeah, exactly. So look forward to that because, yeah, you're right. Diversifying the supply chain away from China has been a major, major theme of like the last couple of years. Right. So while this thing, while this germanium and gallium stuff, I've said that so often, is not, maybe not necessary. It is like spooky for the chip industry, but it's more of a threat of what could come because China does own a lot of the rare earths minerals that go into EVs and these other high-tech products and saying, look, we can do it with these too.

things. So who's to say we can't do it with these other far more important materials that you can't get your hands on. But it's just crazy how these things we've never heard of are so important to build the thing, you know, solar panels and weaponry and, you know, the most important things and the most important products in daily life. And when they're like, we're going to curb exports on some thing in the periodic table you've never heard of. And it turns out to be super important. Nealium and Tobium, let's hope that they keep those going. wrong. 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 3-burner gas grill, or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Exclusion supplies See homebiboy.com slash price match for details. Study and play.

Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College deal, everything you need to study and play with select Windows 11 PCs. Eligible students get a year

of Microsoft 365 premium and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. supplies last, ends June 30th, terms at AKA.m.MS slash college PC. All right, Neil, right before we ducked out of here for the long weekend, the Supreme Court was making news once again, this time for striking down one of Biden's big pinky promises

from the campaign trail that he'd cancel student loan debt for Americans. We've been talking about this ruling for a long time, and it did not go Biden's way, with the court viewing the plan to cancel up to $400 billion in debt as him overstepping his authority. This is, this one definitely hurts for a lot of people, Neil. Forty-three million Americans have some form of student loan debt, and up to 20 million could have, could have had their debt completely wiped out, had the plan been allowed to stand. Biden says that he does have a plan B in the works. One he says is legally sound. But in the meantime, Neil, this is going to be a rough few months for people who are kind of out of the habit of making this monthly payment. Right, because

there's been this freeze since March 2020, so it's been three years that you've been able to save money that you would have been shelling out for student loan repayments. And now all of a sudden, it's going to come as a huge shock in October, I think, is when they start again. And you're going to have to start paying hundreds of dollars a month to start repaying, you know, loans that you haven't paid in a while. Also, there's been three years of people going to college and accruing debt that haven't even had to pay student loans in the first place.

So there's whole three years of people who are getting it for the first time. And, you know, there's this $1.6 trillion debt bomb on people's balance books now. Yeah, absolutely. There's, according to data, actually, there's 7 million student loan borrowers who are 24 years or younger, who have never had to make a payment. So, yeah, that little, when that starts hitting, it's going to be a real, not even just annoying thing, but it's going to affect the wider economy as well. So economists have been debated. We've talked about this, I think, a couple weeks ago. but like how is the student loan debt repayment going to affect the economy?

Because instead of, you know, saving up a couple hundred dollars each month, they're spending that on something else, you have to pay it back to the government. And so there's a question of how much this is going to impact consumer spending, which accounts for almost 70% of all economic output in the U.S. And I remember when we were talking, it was about, you know, retailers taking a big hit. Oh, was Kyle here? No, no.

You know, it was retail. All right. It was especially Target because that is a favorite of Gen X and Millennials. So I didn't see whether Target stock moved or something, but it seems like these retailers are going to take somewhat of a hit. There's a question about what is the extent of the damage. Some economists say it's going to be pretty big. Some economists say it's not going to be big. Yeah, it's also one of those things where this was definitely split down the conservative versus the liberal block of the Supreme Court.

And the fact that a lot of Republicans were celebrating this as a win because they see this as student loans were something that was requiring the 87% of Americans to pay for what the 13% of Americans do, kind of getting at the fact that if you are going to college, you are probably one of the on the higher end of the income spectrum. And so they're saying that this plan would have bailed out some of the wealthier Americans at the expense of not wealthy Americans. And so that's why this went to the Supreme Court and why it kind of panned out the way that it did. And then it's also, there's this thing called the major questions doctrine, which has been a real theme in the Supreme Court in the last few years, which is basically under the theory, it's saying that federal agencies cannot institute these new policies that have significant economic impact without having the express authorization of Congress. And some of the other examples are Biden's COVID vaccination, test requirement for large businesses, as well as the EPA using its authority to curb emissions from power plants. And so there's like this big legal precedent that the court keeps referencing, referencing, called the major questions doctrine.

And this one also falls under that umbrella. There was this also of Supreme Court ruling that touched businesses on Friday that we didn't talk about, which was that it ruled that the Colorado graphic designer, Lori Smith is within her First Amendment rights to refuse to create websites for same-sex marriages. Proponents say that's a big win for free speech. And opponents say that's a blow to gay rights that have been hard won in recent years. The most interesting part, well, not the most interesting, but one weird quirk of that story is that one of the requests that was cited in court papers for the graphic designer's services was not real. Right. It was completely made up.

It was a hypothetical, like, it was a crazy thing that, yeah, how is that a legal precedent. But yeah, yeah, it's interesting. Like the court's been super busy recently. Like, you have that ruling. And then we talked about affirmative action also on Friday before we left. So it's been a wild week in the last two weeks of Supreme Court news. Now they're on vacation. Right. Exactly. So we're not going to get any more Supreme Court news for a while, but it has been incredibly consequential, just like last year. Let's move on to our winners of the weekend. And there was a lot to choose from because it was like a five-day weekend or something. I will go first with my

winner of the weekend. And it's time we crown another sports goat, Toby. Joey Chestnut inhaled 62 hot dogs and buns in 10 minutes to capture yet another mustard bell at the Nathan's famous hot dog eating contest in Coney Island. Chestnut

has now won the competition every year since 2007 except one and he made it look easy. But it was anything but easy. As lightning crackled in Brooklyn and the rain poured down, the contest would appear to be canceled, but Joey would not be denied his title. Not on this day. Not on Independence Day. So he rallied the troops and said, I'm going to get the rest of the guys out and

we're going to do this effort. And sure enough, after a two-hour weather delay, the competition was restarted and Joey did his thing. He came up 14 dogs short of his personal record, but I can't imagine how much his routine was disrupted by the delay. So I'm going to cut him some slack. I can't believe you say it's time to crown a goat. He has been the goat. He is in the cantheon of goats for sure. I'm just saying maybe in your small world of sports, but I just want to explain to our broader audience, just how incredible these achievements are. I was looking to, I saw a tweet about his training routine in the lead up to this because I am generally interested in how a human body can do this. And he says that during training, he wakes up and drinks a gallon

of water every day and see how few amount of gulps it takes to get it down. And so when he's out of shape in quotation marks, it takes him 20 gulps to get a gallon of water down. And then when he's in shape, he gets it down to 11 gulps. Okay. So that's kind of how he's training his esophagus muscles to gulp faster and his stomach to, like, expand to accommodate that volume. That doesn't sound that badly drinking water. I thought it was going to be worse. Yeah, he does it in like a minute and a half.

Like, can you imagine putting a gallon of water in your stomach? I wouldn't be able to move for the rest of the day. How many, the big question here is how many hot dogs can you eat in 10 minutes? I legitimately think three or something. No. Because I tell you why. You can do six. I can't get over the fact that you have to dunk it in water to make the bun go down easier.

That is so gross to me that I would have to eat them just straight up. And if I'm being them straight up, I'm not getting a lot down very quickly. You could get more than three, though. Maybe. It's gross. What's funny is that this competition is actually awful to watch. Oh, I only watched the intro with George Shea doing these amazing introductions. You did quite well, but then once it starts, I just turn it off.

It's horrific. I'm like, I can't watch this. Imagine the sounds too, if you're there. Oh, gross. All right, Neil, let's move on to my winner of the weekend. And we've talked a lot about how poorly Elon's $44 billion Twitter side hustle is going. But his main gig at Tesla is working out just fine. So my winner of the weekend is actually Tesla because we got some delivery numbers.

And holy moly, cream and canoles, they are bonkers. Tesla deliveries were up 83% worldwide in the second quarter. that corresponds to 466,000 vehicles delivered to customers, which unsurprisingly is the best quarter for Tesla ever in terms of deliveries. So a couple of things that may have contributed to those numbers is the fact that Tesla has just kept chopping prices of its most popular cars. Certain models have dropped between 14% and 28% in the year since January. So, Neil, I think it's only fair that we toss Elon a bone every once in a while and say, job well done. you did well, you won the weekend, and maybe the quarter as well. I think China accounted for a lot of the growth, which was huge.

And a bunch of other EV companies also reported very strong deliveries in the past few days. So if you're looking at your portfolio and you have, you know, Rivian stock or Lucid stock or B.D, which is the Chinese company. And you see them kind of pop. It's because I think Rivian posted really good deliveries as well. And rising tide lifts all boats. So EV adoption is just kind of ahead of the curve of where everyone thought it would be. and all these companies are raking it in. You're totally right.

Except Lordstown. All right, P. Speaking of cars, Neil, let's go into our final story, where we are finally living in the year 3,000, as the Jonas Brothers predicted. And flying cars are finally maybe coming to a sky near you. That's right. A company called a Leif or Aeronautics

has received FAA approval for test flights of its $300,000 flying car, and the appetite for the road in the sky is there. The company said that it's booked over $250 million in pre-orders for its vehicle, which equates to 834 cars. The company says that the Model A, which is the name of the car, is fully electric, has a driving range of 200 miles, and a flight range of 110 miles.

Neil, do you think that we're going to see one of these puppies taking it to exit ramp and soaring over traffic anytime soon? This sounds like a logistical nightmare. What was funny to me is not only doesn't need approval from the FAA, but it also needs approval from like the National Highway Traffic Administration. So getting both of those, it just seems there's no way this is going to happen. We do not have the regulatory framework to encompass what you just said for a car to, you know, go off an exit ramp and just fly over everything else.

It's not going to happen. That's what they're imagining, by the way. They're imagining this as a decongestion. tool because you can fly, literally fly over traffic. They're also, it's a fully electric vehicle, but they're also saying that there's a hydrogen option coming at a higher price. It feels like they're just speed running every futuristic term that we have, flying car, hydrogen powered.

This is not going to happen anytime soon, but it is kind of fun how it flies. Did you see that? It rotates, so you take, when you're stuck in traffic, you take off, and then it rotates 90 degrees so that the front and back of the car now become the two wings. And you rotate 90 degrees as well because you're kind of suspended in the quote unquote cockpit. Yeah. And so it turns. It looks awesome in terms of design.

And then I also do, there's one final note I want to do is that the founders of the company were inspired to create a flying car back in 2015 because that's the same year that Martin McFly drove one and back to the future too. So everything sounds like kind of an ad lip and in a joke for this company. Whenever you're inspired to build your product because you were inspired by a movie, that sounds a little sketchy. I like it. I applaud it.

I don't think that we're going to have cars as planes anytime soon, but it's pretty awesome to think about. Maybe it'll become the Disney World or something. 250 million in pre-orders, though. Like, that's a lot of money right there. Yeah. So to Titan. Okay.

We'll have to end it there. Thanks for listening on this July 4. Forth, wishing you a very unproductive day and week. If you want to reach us, reach out to us to kill some time. Our email address is Morning Brew Daily at Morningbrew.com. Huge shout out to our crew who put the show together. Bryce Belloff makes his grand return to the control room. He's our editor and producer.

Samantha Bellas and Raymond Lou are the associate producers. Yuchinawa Ogu is our technical director, and he says Joey Chestnut is the nicest guy ever, so I love to hear that. Billy Menino is on audio. Hair and makeup tried to see how many hot dogs they could eat. in 10 minutes and it did not go well. 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. All. Pay off your home, travel for life. Drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot Machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package.

The biggest prize in Yamava's history. Club Serrano members can earn daily instant prizes and secure a spot in the finale May 29th. Don't pass go and own it all. at Yamava, celebrating its 40th anniversary. UN. Details at Yamava.com must be 21-20. Please gamble responsibly. Monopoly is a trademark of Hasbro.

Hasbro is not a sponsor of this promotion.