Today, Explained - Facebook’s Meta-morphosis

Episode Date: October 28, 2021

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Get groceries delivered across the GTA from Real Canadian Superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points. Visit superstore.ca to get started. Facebook changed its name today. It's now Bookface. JK, that's dumb. It's now Bookface. JK, that's dumb. It's Bad Place.

Okay, that's mean. It's Mark Space. That's just stupid. Okay, it's Meta. Not like the name is Meta. Facebook's new name is Meta. And we'll explain why shortly, but this isn't an ad for Facebook,

so let's first talk about the problems, shall we? They are legion. A few weeks ago, we brought you a story about the Facebook whistleblower, Francis Haugen's the name, providing internal Facebook documents to the Wall Street Journal's Jeff Horowitz was the game, and the journal went on to publish a series of damning stories using these documents. Instagram is bad for teens, Facebook isn't doing enough to stop human trafficking, and the algorithms on the platform are making people angrier. Skip ahead to this week, and there's another big round of stories about Facebook originating from those same leaked documents, this time from news outlets around the world.

Facebook struggled to prevent users from organizing around the January 6th insurrection. The platform's algorithm weighs angry reactions as five times more important than regular likes. And in one experiment, researchers created a test account for a fictional conservative user named Carol Smith from North Carolina. It took just two days, two days before it recommended Carol join Facebook groups for QAnon. Yikes. All these new revelations come from an unusual arrangement. A group of journalists, who are usually competing to be first on the story, actually kind of collaborated.

It's funny because we also were organizing on Slack. There was a Slack group with all these outlets called Apparently We're a Consortium Now. Alex Heath at The Verge was one of them. Somebody leaked those comments to The New York Times, and I think I was in there saying this is the weirdest thing I've been a part of reporting-wise. It's incredibly unique, and it's also coming as Francis Haugen is testifying to regulators around the world. Today we're pleased to welcome Francis Haugen to give evidence to the committee. Frances, we're delighted that you've been able to make this trip

to be in London and give evidence. She's kind of using the dump of these documents to fuel her appearances. Why is she taking this approach? Why didn't she just sort of tell Jeff where the juicy stuff was, let him do all the reporting? Why is she leaking all this information to another few dozen outlets? I don't want to speak for her, Jeff, but what's clear after

looking through a good chunk of them is that it's just a lot of information. Research presentations that are incredibly long. It would be a lot for any one reporter to work on, much less one newsroom. I think she has said since a lot of these initial stories hit that she wants to also share these with academics, with independent researchers who study the platform. So I think over the next several weeks and months, most of these are going to be in the public domain, regardless of whether they've been reported on or not. I want to focus on something you wrote about in particular because it has to do with the future of the company. What did you find in these documents about how Facebook has been doing among future generations of users, among younger users?

Yeah, so a lot of these documents and a lot of the coverage has been focused on the integrity stuff, on the content moderation stuff, how Facebook has kind of struggled to deal with hate speech and misinformation outside of the U.S. in particular. What I noticed going through these documents is that there's a sizable chunk of them that focus on the company's work on young adults and teens. And we've seen some stories about the research they did showing that a subset of teens say they have negative experiences on the platform. And here you go, 66% of teen girls on Instagram and 40% of teen boys experience negative social comparisons. How could your company know that, do research on it, and ignore it? First, that's not an accurate characterization. But what I saw, too, were a lot of pretty high-level internal presentations, pretty rich data showing that the company is having essentially an existential crisis with young people. And they think that if they can't correct course and if they can't get young people to care about Facebook and actually keep engaging with Instagram, that they'll go into this self-sustaining decay.

Facebook internally, they map their user base to United Nations population estimates and demographics. And what they started to notice is that their population is aging disproportionately to the UN data. And so what is happening is that the audience is getting older and fewer and fewer young people are coming on. And teens, Gen Z and younger, are basically not coming on at all. And for them, that's a huge problem because Facebook thinks very long term. And even though they have 3 billion users now, they think that they'll basically lose out on a generation if this continues. And Instagram, which is fully saturated, is what they call it when it maps the UN data with teens and all their key markets is still losing engagement, sometimes in a double digit percentage drop year over year. And teens are actually posting less in the app as well.

And it backs up a lot of the research and the data that I saw that was frankly pretty damning saying that young people see the company as having all these privacy issues. They see a lot of social comparison and pressure to be the perfect versions of themselves. And so it's leading them to post less. And then you also have platforms like Snap and TikTok that are eating into the time spent that Facebook normally has with young people. They internally estimate that TikTok has two to three X daily time spent than Instagram with teens. And they know internally that Snapchat is the preferred method of communication between close friends for teens. And so, you know, for a company this big and this powerful, you wouldn't think that this would necessarily be that big of a deal for them. But then we saw on their most recent earnings call, Mark Zuckerberg say,

Our services have gotten dialed to be the best for the most people who use them rather than specifically for young adults. And during this period, competition has also gotten a lot more intense. So we are retooling our team to make serving young adults their North Star, rather than optimizing for the larger number of older people. Because they recognize that this is such a big threat for them. And this is, of course, got to be extra painful for an app that literally started with entirely young adults, right? Yeah. I mean, that's the irony of all of this is that Facebook started on college campuses.

We have something that we've been working on for a while and we think it's great. It's called the Harvard Connection. You create your own page, interest, bio, friends, pics. And then people can go online and see your bio request. Yeah. How is that different from MySpace or Friendster? Harvard.edu.

And they've totally lost that ground. And what they've identified is the they call it brand permission where they have brand permission still is around careers and causes those are the two things they think that people 20 to 30 will still maybe use facebook for so i think what you're going to see in the product over the next couple of years is facebook's going to start looking a lot like linkedin they're working on resume tools, career tabs, tools, job finding, and they want to use the causes thing, helping people find causes that they care about, whether it's BLM or what have you, to eventually extend into areas like mental health products, which also presents a huge can of worms given Facebook's track record. What if your cause is like being an oath keeper? Are they into that still?

No comment. But I think on Instagram, what they've realized is they have the teen audience, but the teen audience is not as engaged. So they're trying to lean into things that they know teens like, which is pseudo anonymity, having multiple accounts. We heard Blumenthal, Senator Blumenthal,

ask if they could pledge to end the Finsta recently in a Senate hearing. Will you commit to ending Finsta? Senator, again, the meek thing, we don't actually do Finsta. They're leaning into Finsta. They see young people increasingly using Finsta, which is a private account where you can be your more authentic self versus a public one. finsta they're leaning into finsta they see young people increasingly using finsta which is you know a private account where you can be your more authentic self versus a public one and you can see it in younger platforms like discord where this is already how young people are interacting and in roblox for example which is this wildly popular gaming app for young people that is

essentially like fortnite but anyone can build their own world and their own game and their own virtual objects and sell them to people. You're a 3D avatar that doesn't even need to look or sound like you at all. And so they know that these are the more kind of compelling ways that young people are using the internet. I think it might be hard for people to wrap their heads around how a company this successful and this dominant, I mean, something like 3 billion users, I mean, could be struggling, could be thinking about its existential future. But that's where we're at. That is where we're at. I like to think about China and population control as an analogy here. So China recently realized we have a very aging population because we had a rule where people

couldn't have a lot of kids. And so they recently changed that. And it's a long-term kind of thing. And it's something that you think about in a macro sense. And I think Facebook looks at it the same way. They say, yeah, we have a lot of users now. The older ones are very engaged. The problem is, is they're going to die faster than the younger ones. And the younger ones are increasingly turning to Snapchat, TikTok, Roblox, Fortnite, Discord as a place where they want to hang out online. And those young people will grow up never using Facebook. And that's the first time in Facebook's 17 years that that's starting to happen. And they're recognizing a whole cohort of younger people that are just completely ignoring the service. And so it's why you see Instagram wanting to do an app for kids,

for preteens, because they think maybe if we can get them early enough before they start to go to the platforms that we know they like, and we know that their older siblings will tell them. It's interesting. They've also done research showing that teens on Instagram persuade their household on what to use. They're kind of the culture makers for social media. So they tell their younger siblings what's cool. They tell their parents what's cool. And so getting this demographic is existential for them. And I think that's a big reason why the company is completely rebranding to focus on the metaverse. We've learned a lot from struggling with social issues and living under closed platforms. And now it is time to take everything that we have learned and help build the next chapter. The future is going to be beyond anything we can imagine. Thank you. pocket. Ramp says they give finance teams unprecedented control and insight into company

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Thanks, Mark. Alex, Meta Mark today announced he no longer runs Facebook, but instead runs something called Meta? Yeah, I think Facebook realizes that its brand, the Facebook app, is not the future, as we've been talking about. The audience is literally dying, and there's just so much negative PR and brand baggage around it right now. I think what this does is it helps position them as a company that's innovative with employees and future employees,

which is a thing that I think we in the media don't really fully appreciate how much these companies obsess with recruiting because talent is incredibly competitive in Silicon Valley. And if you're going to work for this futuristic metaverse company instead of the Facebook app, as we know it, maybe you would take the job that you otherwise wouldn't. I also think it's about trying to be relevant with younger people and just be seen as a company that is future-leaning, building future platforms, and not just kind of stuck in the current social media world and all the ills that that entails. And they will be escaping that world to enter the metaverse. Yeah. What the hell is it, right? What the hell is it, right?

Well, it's kind of ironic because, I don't know, what is the definition of irony, actually? Don't ask Alanis Morissette. Well, it's interesting they're using this word metaverse so much because it originates from a dystopian sci-fi novel in the 90s where people were literally fleeing the real world to a virtual world to escape a crumbling society. Perfect. So there's a lot of analogies, yeah, that you could draw to the current, you know, world we find ourselves in that partly Facebook has wrought. I think it's pretty interesting that Zuckerberg, who, you know, fully controls Facebook, is pretty much singularly focused on something that's not going to materialize for at least

five to 10 years. And we don't really see him talking that much about kind of the effects of Facebook on society right now. And I think that kind of shows where his head is at. And that's, you know, I've been covering Silicon Valley for a while and a lot of these big tech CEO founders, they like to think that far ahead for better or worse. And Mark is definitely one of those people that's thinking a decade out. And what exactly is his vision for this metaverse? It's what you see in movies like Ready Player One. Go anywhere. Like the vacation planet. Surf a 50-foot monster wave in Hawaii.

You can ski down the pyramids. You can climb Mount Everest with Batman. Their virtual world is going to become so compelling and so immersive that it's going to draw people out of the real one for a good part of their day. That it will replace things like our desktop computers, our laptops, and our phones to a degree. And that there's going to be this hybrid mixed reality world too with AR glasses where I can see a teleported version of you in front of me in my living room. Or I could go with you into an underwater sea chamber and we could like play chess down there. We believe the metaverse will be the successor to the mobile internet. We'll be able to feel present, like we're right there with people no matter how far apart we actually are.

We'll be able to express ourselves in new, joyful, completely immersive ways. And that's going to unlock a lot of amazing new experiences. Haunting. The technology is progressing to the rate where I do think this kind of world will happen. And if you look at the history of technology, it started as these very impersonal, large, detached from the human body things. We had mainframes, we had large server racks, then we had these bulky desktop computers, then we had laptops, then we had phones, then we had wearables. Now we're getting things on our face. Now there's brain technology that Facebook is working on where they're literally be able to discern how you want to control this interface

with your mind. Terrifying. So over time, technology just becomes more personal and more immersive for better or worse. And I think that's what Facebook sees as inevitable here. Screens just can't convey the full range of human expression and connection. They can't deliver that deep feeling of presence. But the next version of the internet can. Mark Zuckerberg is serious that this is the future of his company. Oh, they're very serious. They just said in their recent earnings call that they're spending at least $10 billion on this in this year alone. $10 billion. $10 billion.

And I expect this investment to grow even further for each of the next several years. Which to put in perspective, they paid $1 billion for Instagram. And they're going to spend even more in the years to come. They're actually spinning it up as its own division with its own, you know, they're going to report it separately in earnings. And yeah, I think this is the future that Mark is staking the company on, no doubt. Have they put out any metaverse-ish products yet? There is this thing called Horizon, which is this kind of metaverse-y platform of apps and experiences.

Right now on the Oculus Quest, their VR headset, they want to extend it to other devices. But it's a little bit like Fortnite meets Roblox meets Minecraft. There's a work version, there's a play version, hang out with your friends version, gaming version, build virtual worlds that people can come visit. It's very early, and they've had it in beta for quite some time.

But that's the big bet is that this virtual world, which is essentially just a 3d version of Facebook, you know, without the newsfeed, but the same people building it. And so you know, feel about that how you will, but that's what they're building. So what might sound sort of like a VR video game world to a lot of people will actually be potentially where we socialize, where we work, where we conduct our daily affairs. That's what they're betting on here, essentially? That's the bet. And that we'll want to go fully into that virtual world sometimes, maybe when the real world isn't as compelling as that virtual world, which sounds kind of dystopian, but I think there's a little bit of truth to that.

If you're sitting in your house looking at your living room, why would you not want to be in some fantastical place with your friends who live across the world? Personally, because I'm like a big reality guy, but I can see it for other people. Well, that's fair. I was going to say that also a part of this is also bringing it into the real world, the AR component of it. That's augmented reality? That's augmented reality. That's graphics overlaid onto the real world around you. And I think it'll be a hybrid of both. I think we'll go into these virtual worlds sometimes, maybe when we're working or when we're socializing remotely or playing a game. And then we'll have these AR glasses that augment what our phone does, that show us directions when we're walking around, that show us text without needing to look at a screen. And it's going to be a mix of both of those worlds. But what's important to note here is that Facebook doesn't really care if you or I

are into this idea. They care that the kids are. I mean, I think kids have shown that they do love these 3d worlds like roblox's user base is heavily teen focused even pre-teen and same thing with fortnight where people are already hanging out as these you know disembodied avatars that aren't really them and socializing there's concerts travis scott performing in fortnight it's already not just a game. And so this is already happening in our 2D screens, and the tech is being built to make it fully immersive in 3D. You mentioned that this all was sort of inspired from a plot point in a dystopian novel. And this is the company that's currently in trouble for bringing the world a whole host of problematic

alternative facts. And now they're saying, well, what have we brought you a whole alternative reality? It's wild. Do you think anyone in the company is aware how that might not be the best look? I do think they're trying to approach it in a way that they didn't with the original version of Facebook. When Facebook was first built, they didn't think about any of this stuff. They didn't think about that it could potentially be used to help organize the insurrection. It was all about just let's try to get as many people on the service as we can and get them broadcasting to as many people as possible. So if this metaverse world is built in a similar way where you're able to communicate to millions of people instantly that you don't know and be

introduced to them through algorithms that you have no control over, then yeah, we probably are in for a problem. I hope that they design it differently. It's pretty early. We don't really know exactly how all this is going to work. I would hope that the last five years have taught them that they cannot build this in the way that they built Facebook. Is there any chance that all of this attention on the company right now could impede this pivot to the metaverse? Well, it's interesting because what the regulatory attention has done already has kept them from being able to buy the next Instagram or the next WhatsApp in the current social media world. I think if Facebook would have had its way, they would own Snap, they would own TikTok, they would own Discord. They used to just buy anything that young people thought was cool. They can't do that anymore.

I don't know if our lawmakers understand the metaverse enough or kind of how big this could become to preemptively legislate what Facebook can do. And our laws aren't set up to just impede a company from buying things in a nascent space just because the company has wreaked havoc in parts of civic society. It's an antitrust debate, but it's very complicated. So I'm not sure. They're buying a lot of VR companies. They spent about a half billion dollars on a company building an armband that can read your thoughts. And at the same time, regulators are saying we have antitrust concerns. Meanwhile, they're buying mind reading technology.

So they seem to think they can get away with this. So what you're saying is we got to get Blumenthal reading about the metaverse. Well, first, he's got to ban Finstas. You got to keep that in. And while all of this is happening, Facebook still is the most dominant social media company in the universe, in our reality. They are. They have a population larger than I think any country on earth. They're growing slower than they used to, but they're still growing. So while the company pivots to an alternate future reality, we should remain concerned about how they are managing our present day reality. I mean, sure. I think that's

what the reporting on the Facebook papers is trying to do. I think lawmakers are trying to figure out how they can legislate big tech. The problem is, is that a lot of the issues with Facebook have to do with free speech. They have to do with the constitution. They have to do what the government can and can't tell a private company to regulate with regards to speech. But based on my read of a lot of these hearings and talking to lawmakers and just hearing what they have to say,

I think we're a long way off from any kind of meaningful legislation that impacts Facebook. Well, I imagine we'll be in touch, Alex. In the metaverse. I fucking hope not. Alex Heath, senior reporter at The Verge, Will Reed, producer, Today Explained,

Sean Ramos-Furham, Meadoworld Peace. Thank you.