Tech Brew Ride Home - Thu. 07/28 – Meta Goes Backwards For The First Time Ever

Episode Date: July 28, 2022

Meta has reported its first-ever YoY quarterly revenue decline. The FTC has moved to block a Meta acquisition, the first big regulatory move of the Lina Khan era. Google delays it’s cookie cleanup. Again. You’re not seeing things. There’s been a Gmail redesign. And DeepMind has solved one of the oldest problems in biology. Sponsors: StitchFix.com/ride for $20 off Storyblok.com/ridehome Links: Facebook Parent Meta Platforms Reports First Ever Revenue Drop (WSJ) F.T.C. Sues to Block Meta’s Virtual Reality Deal as It Confronts Big Tech (NYTimes) Jack Ma Plans to Cede Control of Ant Group (WSJ) Google delays when Chrome will phase out third-party cookies to 2024 (9to5Google) Gmail’s new look is now rolling out to everyone (The Verge) DeepMind's protein-folding AI cracks biology's biggest problem (NewScientist) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Thursday, July 28th, 2022. I'm Brian McCullough today. Meta has reported its first ever year-over-year quarterly revenue decline. The FTC has moved to block a meta-acquisition, the first big regulatory move of the Lena-Con era. Google delays its cookie cleanup. Again, you're not seeing things. There's been a Gmail redesign, and DeepMind has solved one of the oldest problems in biology. Here's what you miss today in the world of tech. Meta has reported its first, ever year-over-year quarterly revenue decline and issued a lowered Q3 forecast, citing a weak ad-demand environment and macroeconomic uncertainty. Meta reported Q2 revenue was down 1% year-over-year to

$28.8 billion. Net income was down 36% year-over-year to $6.69 billion, but its family of apps, daily active people number, was up 4% year-over-year to 2.8. 8 billion, quoting the journal. We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. Chief Executive Mark Zuckerberg said Wednesday, it's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago, he said on an earnings call. Meta is grappling with a digital advertising market in upheaval from surging inflation and other factors that are causing a slowdown in ad spending. Google Parent Alphabet on Tuesday reported the

lowest rate of growth since the second quarter of 2020 when the pandemic crimped demand for advertising in some areas. Rival Snap reported its weakest ever quarterly sales growth last week, while Twitter reported a decline in its revenue. The weak advertising demand was reflected in Mehta's average price per ad, which fell 14% in the quarter a year ago. The company reported an increase of 47% year over year for its average price per ad. The company said it continued to face challenges in targeting ads as a result of changes made by Apple to the iPhone's operating system. Chief operating officer Cheryl Sandberg, on her last earnings call before she departs meta after 14 years, said the company is adapting its business to do better ad targeting with less user data with products such as

click to message ads, which open a chat with a business whenever a user clicks on the ad. Such ads are already a multi-billion dollar business growing at double digits, she said. We are hugely optimistic about this area of our business, and I am very convinced it work, Ms. Sandberg said, end quote. Also on the earnings call, Mark Zuckerberg said that by the end of 2023, he expects more than 30% of Instagram and Facebook content recommendations to be served by meta's AI, double the 15% or so on Facebook that AI is serving up to folks now. But that's not the future, of course. The becoming TikTok faster than TikTok can become us is really the present and the past. The future, however, is the Metaverse, right? Well, Meadows Reality Labs Division posted a

$2.81 billion loss for Q2-2020 versus a $3.67 billion estimated loss on $452 million in revenue compared to a $2.96 billion loss for Q1 on $695 million in revenue. I guess the price raise on those VR headsets we talked about yesterday will help with this. Except, and I'm sorry, Mark Zuckerberg, if I single-handedly jinxed this yesterday by talking about it, but the FTC has filed to block META's acquisition of VR company within, saying META chose to buy instead of compete. In the first, antitrust lawsuit filed under Lena Kahn's tenure as head of that agency. Quoting the New York Times, Ms. Kahn has argued that regulators must stop competition and consumer protection violations when it comes to the bleeding edge of technology,

including virtual and augmented reality, and not just in areas where the companies have already become behemous. The FTC's request for an injunction puts Ms. Khan on a collision course with Mark Zuckerberg, Meta's chief executive, who was also named as a defendant in the request. He has poured billions of dollars into building products for virtual and augmented reality, betting that the immersive world of the metaverse is the next technology frontier. The lawsuit could crimp those ambitions. Meta could have chosen to try to try and to compete with within on the merits, the FTC said in its lawsuit, which was filed in the U.S. District Court for the Northern District of California. Instead, it chose to buy a top company

in what the government called a vitally important category. In a statement, Meta said the FTC's case was, quote, based on ideology and speculation, not evidence, end quote. It added that the lawsuit was an attack on innovation and that the agency was, quote, sending a chilling message to anyone who wishes to innovate in VR, end quote. Meta had said it would acquire within, which produces the highly popular fitness app called Supernatural, last year for an undisclosed sum. The company has promoted its virtual reality headsets for fitness and health purposes. The FTC's lawsuit is highly unusual and pushes the boundaries of antitrust law. Regulators mostly focus on deals between large companies in large markets, rather than

their acquisitions of small startups in nascent tech areas. Courts have also been skeptical applying. anti-trust law to block merges based on the hypothetical that the two companies involved would later become competitors if the deal was blocked. But critics have said the government's inaction has allowed meta and other giants to vacuum up services that later became formidable. The agency approved Facebook's 2012 acquisition of Instagram, the photoshering app that has since grown to more than one billion regular users. Instagram has helped met up dominate the market on social photo sharing, though other startups have sprung up since. It's a riskier case,

but one they think is worth bringing because if they succeed, it'll help bring the frontier of enforcement outward, said William E. Kovachik, a former chairman of the FTC, I think this is a first of a kind, and quote. Sources are telling the Wall Street Journal that Jack Ma plans to relinquish control of Alibaba's ant group, potentially pushing back Ant's IPO for a year or more. Regulators have apparently approved of the change, so I guess de numal to this story that's been ongoing for a year or more. Quote,

The authorities halted Ant's $34 billion plus IPO in 2020 at the 11th hour and are forcing the technology firm to reorganize as a financial holding company regulated by China's central bank. As the overhaul progresses, Ant is taking the opportunity to reduce the company's reliance on Mr. Ma, who founded Alibaba. Mr. Ma, a 57-year-old former English teacher and one of China's most prominent entrepreneurs, has been the target of government action that appears designed to reduce his influence and the power of his companies. He has controlled Ants since he carved its precursor assets out of Alibaba more than a decade ago. Over time, he built it into a company that owns the Alipay

payments network with more than 1 billion users, an investing platform that houses what was once the world's largest money market fund and a large microlending business. Ant was expected to be valued at more than $300 billion had it gone public. Diminishing his ownership could put back a potential revival of Ant's IPO for a year or more. Chinese securities regulation, require a timeout on public listings for companies that have gone through a recent change in control. Mr. Ma doesn't hold an executive role at Ant or sit on its board, but is a larger-than-life figure at the company and currently controls 50.52% of its shares via an entity in which he holds the dominant position. He could relinquish his control by transferring some of his voting power to other Ant officials,

including Chief Executive Eric Jing, after which they would collectively control the company, some of the people said. Ant told regulators of Mr. Ma's intention to seed control as the company prepared to convert into a financial holding company, the people familiar with the matter said. Regulators didn't demand the change, but have given their blessing, the people said, and is required to map out its ownership structure when it applies to become a financial holding company, end quote. Another story with a long timeline that seems like it's just going to get longer. Once again, Google is delaying, phasing out third-party cookies in its Chrome browser to the second half of 2024, after deferring the plan from 2022 to 2020.

citing the need for more privacy sandbox tests. Quoting 9 to 5 Google. The Privacy Sandbox is Google's initiative to replace third-party cookies, as well as cross-site tracking identifiers, fingerprinting, and other covert techniques, once privacy-conscious alternatives are in place. Since then, Google has been working on new technologies for the past few years and more recently released trials in Chrome for developers to test,

citing consistent feedback from partners. Google is, quote, expanding the testing windows for the Privacy Sandbox APIs before we disable third-party cookies in Chrome, with that phase-out now set to begin in the second half of 2024. In the short term, quote, privacy sandbox trials will expand to millions of users globally in August as Google gradually increases the trial population throughout the rest of the year and into 2023, end quote. Nothing really major here, but you might have noticed that Google has rolled out a new Gmail UI, moving the mail meet spaces and chat buttons onto a rail in the top left, all while teasing a tablet update for later in 2022, quoting The Verge.

We've been tracking the progress of Google's interface refresh for Gmail since February, and as promised, the company says it's now becoming available for all Gmail users. The rework pulls meet, chat, and spaces closer together as part of the overall experience and includes elements from Google's Material Design 3. It's not stopping there and says that later this year, we should see improvements to Gmail for tablet users, better emoji support, and more accessibility features among other upgrades. If you use Gmail for work, it may have already rolled out to your account.

For those who just can't stand the change, you can opt out and switch back to the old look, at least for now. If you don't have chat enabled, you'll still get the new look, but only in a Gmail-only view by default. And if you don't use some or any of those apps, you can disable or enable them from the Quick Settings menu. If you want to switch back, Google's instructions are pretty easy to follow. At the top right, click Settings. Under quick settings, click Go Back to the original Gmail view. In the new window, click reload. The updated UI moves mail, meet, spaces, and chat buttons into one list at the top left rail instead of showing several conversations from each one in a list.

They're still easily accessible without having everything on the screen at once, and you can quickly jump into a conversation in any one section, as a list will pop out when you hover over its icon. The changes are part of Google's overall new approach to the workspace suite, including docs, sheets, etc., that's supposed to provide. a more unified style and new AI-powered features like the Gmail search improvements that were just announced, end quote. Finally today, Deep Mind says AlphaFold has predicted the structure of almost every protein cataloged by science, over 200 million proteins in total, which was a problem in biology for decades, apparently, quoting new scientists. Deep Mind has predicted the structure of almost every protein so far cataloged by science, cracking one of the grand challenges of biology in just 18 months, thanks to an artificial intelligence called Alpha Fold. Researchers say that the work has already led to advances in combating malaria,

antibiotic resistance, and plastic waste, and could speed up the discovery of new drugs. Determining the crumpled shapes of proteins based on their sequences of constituent amino acids has been a persistent problem for decades in biology. Some of these amino acids are attracted to others, some are repelled by water, and the chains form intricate shapes that are hard to accurately determine. U.K.-based AI company DeepMind first announced it had developed a method to accurately predict the structure of folded proteins in late 2020, and by the middle of 2021, it had revealed that it had mapped 98 and a half percent of proteins used within the human body. Today, the company announced that it is publishing the structures of more than 200 million proteins,

nearly all those catalogued on the globally recognized repository of protein research Uniprot. DeepMind has worked with the European Molecular Biology Laboratory's European Bioinformatics, Institute to create a searchable store of all of this information that can be easily and freely accessed by researchers around the world. U.N. Bernie at Emble Ebby calls the AlphaFold Protein Structured Database a gift to humanity. As someone who's been in genomics and computational biology since the 1990s, I've seen many of these moments come where you can sense the landscape shifting under you and the provision of new resources, and this has been one of the fastest, he says.

I mean, two years ago, we just simply did not realize that this was feasible, end quote. Demise Hasebis, CEO of DeepMind, says that the database makes finding a protein structure, which previously often took years, quote, almost as easy as doing a Google search. DeepMind is owned by Alphabet, Google's parent company. The archive has already been used by scientists to advance research in a number of areas. Matt Higgins at the University of Oxford and his colleagues were researching a protein that they believed was key to interrupting the life cycle of the malaria parasite, but we're struggling to map its structure. One of the experimental methods that we use is x-ray crystallography, says Higgins.

We cause the proteins to form into lattices, fire x-rays at them, and get information from those x-ray diffraction patterns to see what the molecule looks like. But we were never able, despite many years of work, to see in sufficient detail what this molecule looks like, end quote. But when AlphaFold was released, it gave a clear prediction of the structure of the protein that matched the information the researchers had been able to glean. They have now been able to design new proteins that they hope could serve as an effective malarial vaccine. Burley says that using x-ray crystallography to map the structure of a protein is expensive and

time-consuming. That means that experimentalists have to make choices about what they do, and AlphaFold hasn't had to make choices, he says. I think we can be confident that there are new experiments and new insights coming through due to AlphaFold, which will impact how does this particular parasite work, or why does this particular disease happen in humans, for example, end quote. Researchers have also used AlphaFold to engineer new enzymes to break down plastic waste and to learn more about the proteins that make bacteria resistant to antibiotics, end quote.

Twitter space, tomorrow. We're going to be talking to Jason Delray about how Amazon has been doing in the post-Jeph Bezos era, and I'm sure we'll bat around some things after that. But note the time. We're going to be doing the space at noon-eastern. 9 a.m. Pacific again tomorrow. So the earliest we've ever done a space, depending on how the morning goes tomorrow. I might not even have tomorrow's show done and out yet at the time that we go live with the space. We shall see. Talk to you tomorrow.