Meta's Maddening Messaging | Sharp Tech with Ben Thompson

Talk. And then we get to the AI thing. We're going to build AI right now is framed as productivity. I love AI as productivity. I've, by the way, I'm up to three vibe coded apps now. And I got, it's fantastic. There's a gazillion use cases occurring to me that I can spin stuff up. Super great. I'm not the normal person, okay? The part of the reason it took me a while to figure out what to build is because I so heavily optimized my compute environment 15 years ago that I have watched other people use their computers and my skin just crawls. It's like, how do you live this way? How are you so unoptimized? But most people are not me. They don't want to sit around and create a home inventory app or whatever the other apps that I'm working on, which I'll maybe talk about at some point. They want to be entertained. They want to sit back. So why are you justifying your spend on all this sort of thing that we're going to build? People assistance? We're going to help them be more productive? That's not what you do. What you do is you entertain people. You connect people. And by the way, in a world of AI where you're increasingly isolated because you're with you, you're just going back and forth with your chatbot. You know what's valuable? You have the most differentiated spot ever. You're so well positioned for the future. And you, how can you not convince investors about this?

because I see Zuckerberg tweeting today, his first tweet since 2023, by the way, pretty remarkable. We're releasing Muse Spark 1.1, a strong agentic encoding model at a very low price. It's available through our new Meta Model API and in Meta AI. I don't fully understand. No one cares. No one cares. No, so okay. No, it makes a ton of sense to have a coding model. Like all the coding stuff goes into these models when you're doing your advertising things. Like their new image generation is super interesting. It basically is agentic at its core. It does reasoning. It has tool use. So, what's the challenge when you're trying to generate an image? You say, 'Oh, make this image of Andrew Sharp.' I had one of my favorites, you know, your favorite player now, Trae Young. I made an image of him looking like Trae Young. Right. [laughter] Super complicated to pull together. What if I could just type that? It would go out, search the web, find the different images, put them together. It could iterate on it like reasoning. It's a really interesting model. And you can see how this is amazing for advertising, for doing these generative ads. That makes a ton of sense. Part of that is coding. Coding, by the way, Facebook writes a lot of code. They are reportedly Anthropic's biggest customer. They shovel billions of dollars a year to Anthropic. That's something they should probably do themselves. It's a core part of their business going forward. So, them building a coding model makes total sense. You framing yourself as a coding company is asinine. It's so dumb. Like, it's maddening. And it's a great point. The first time he decides to tweet is about a coding model. That's neat for your buddies in Silicon Valley. I'm sorry, Mark Zuckerberg. You're not a Y Combinator startup guy. You are the CEO of Meta. What you say matters. You deciding this is the one thing you're going to talk publicly about on X, to your point for the first time in years, just emphasizes my point. Your messaging, and again I think this is rooted in a deep-seated, this isn't a mistake, this is a mindset. Mark Zuckerberg has never, he's always, he's like the Sam Altman thing we talked, like vaguely embarrassed.

He's like vaguely embarrassed about it, right? Like Boz goes in and cleans everyone up and whips them into shape. Sheryl Sandberg gets on the earnings call and talks about the beautiful anecdotes of how advertisers are changing people's lives. Mark Zuckerberg wants to talk about anything else. And by the way, this is why Apple cleaned their clock in the debate about AT&T. AT&T was hilariously one of the most egregious antitrust actions a company has ever taken. And they completely got away with it because who was speaking up for Facebook other than me? Like, no. Like there is, and yet at the same end of the day, despite the fact he can't talk about it, can't seem to bring himself to express it, they are still spending billions of dollars in the face of the market telling them not to. That's his redeeming quality. Like he just vaguely goes in the right direction and he doesn't care what anyone says and it gets it done. And so Facebook is in, I think, a fine position. I think it looks like their models are really good. It looks like the last year of upheaval and pain has been worth it. They are moving in the right direction and people will figure this out. Their ad product's going to be amazing. Like all this stuff I want to happen is going to happen. It just doesn't need to be this difficult. You don't need to go through this massive stock drawdown. You could be out there paying this image. You could avoid all the internal morale issues of people feeling like my stock's down, I'm doing all this grunt work and so unfair. They're measuring me every day, every second. You know, this is the Mark Zuckerberg experience. His redeeming quality is that he doggedly goes in the right direction no matter the barriers that are in front of him. His weakness is that most of the barriers he put there himself. This could be much easier.

His weakness is that most of the barriers he put there himself. This could be much easier.

They are done. They want, investors want them to just sit there and like harvest all, like make all this money and I don't know, pay back a share buyback. Like they don't want them investing in or in AI companies. Any competition that they're not going to win with Anthropic and OpenAI on the frontier of AI would be... So, here's an analogy. I've talked to a lot of people that want to do what I do. They write about, you know, want to write a blog or a newsletter or whatever it might be. And the mistake everyone makes is they want to do exactly what I do. They want to write about the big tech companies in their basement. And the problem is I got here first and I'd like to think I do a decent job of it. So, if you want to replicate Stratechery, you're going to compete directly with Stratechery, which is fine. Um, I think that's tougher than it could be. Right. It's harder today than it was 15 years ago. Yeah, it's so you're diving into my pond. And this is a pretty big pond. Remember the big tech companies. So, you're diving into my very large lake. I just drove around, you know, drove past Lake Superior on this fishing trip. You're diving into Lake Superior. Good luck. You could be the biggest fish in Lake Superior, go for it. Or what you can do is instead of trying to be the biggest fish in a very large lake or the ocean, find your own pond. And that's just a much better route for you to take where you know, be the sole person writing about this specific thing and then charge way more money than I do because you have a very narrow number of people that want it, but if they want it they really want it and you can charge them a lot of money. And yeah, there's lots of people that make very good money charging very high prices for very niche content and it is absolutely a viable business model. The analogy here is Mark Zuckerberg is insistent on jumping in Anthropic and OpenAI's lake.

You have an entire ocean that's all you and by the way that ocean is the value of it is being enhanced by AI. It's being more attractive. The idea of, we just talked about it, connecting people. Like entertaining people. Getting out of the productivity obsession that is taking over everything. And even more dominant in the coming years. They're the biggest fish in the biggest lake that is becoming more attractive and they keep trying to flop onto land and like roll over to the other shark infested lake. Yeah. I mean it does not make a ton of sense to me and we're only a year removed from them spending literally billions of dollars on various AI research. That spending is fine. No, that spending is fine to be clear. Like all that, it's just that spending and I think it's going to end up going into their lake. They're, I think they're going to be fine. Totally, they will end up in the right spot at the end of all this but the theory and the messaging around the signings a year ago where we want to develop some of the leading models and...

Correct. Exactly. Stop it. And here's the thing, by the way. They could eventually do that. Like it might be the case they actually end up getting so much data about you. By the way, a great thing about a consumer tech company is you basically get all the data. Like you're not dealing with enterprises who are fighting with you about data retention agreements. It's just a fact you get all the data. Like, no, like that again for better or worse, that's just the reality of the consumer internet. That's why Facebook succeeds is because they collect so much data. So you're already in a great place in terms of doing that and you could in the long run back into, oh wow, turns out Facebook is a personal assistant for everyone. That is not the vision. You can't lay that out as the vision. You have a very tangible, very real way to apply this which is advertising. And by the way, they're doing this. Their ads have gotten way better and there's future technology on the horizon of using LLMs to instead of like sort of match ads, like predict the next ad and then it's just there and predict your content and it sort of gets all tied together. There's lots of complexity that goes into it, but the line for them making way more money because of AI is very clear. They just have to market it. Just talk about it. Be happy about it. Embrace it.

No, relax. Okay, stop it. No, I'm sorry. I disagree that Meta should not be investing. I, I, so, no, the technology...

So the idea of every pixel being monetizable is like already the distinction between an ad and content is kind of being erased. But all content could be ads, right? So you should, you could identify, like there's a picture of someone, say a celebrity at a fashion show, and you can identify the item like they're carrying a Birkin bag, right? And now Hermes is probably not doing advertising on Facebook, but whatever. You like it and it identifies that, makes it a biddable unit where someone could bid on that item so that you could click on it. It would identify, oh this is a Birkin bag. This is actually a limited edition from 2005, blah blah blah. It links to like the boutique site that sells these old bags.

Yeah, 50 grand you wish. So this is all theoretically possible. We know this could be done. Now to actually do it in practice and at scale for billions of people, we're not there. There's a lot of work to be done to optimize this. But the path to there is clear. Now to get there, they're going to need to invest. They're going to need to keep building all this sort of stuff up. And also in a world of like supply constraints in general, I'm fine with them overbuilding and just rent stuff out at spot. It's okay. And by the way, I like that as a forcing function. We're going to claw back this compute which will reduce our revenue because we can actually make more revenue somewhere else. It kind of is a forcing function. And stop wasting your time on stuff that doesn't make money because the money making opportunity is so massive. And as you develop all these capabilities...

Generating revenue. That's right. SpaceX is generating all this money, directed to Anthropic, right? They're a public company. If, now as we've discussed, Elon companies don't really follow the rules of physics, but at least in theory, if you're going to cut off that contract because actually, you know, our new 4.5 is amazing and everyone's using it, you need to have a valid story for the market that actually, our hurdle rate is whatever Anthropic was paying us. We believe we can have a better return by doing it internally. And that's real, it forces discipline. You don't just get to randomly create things.

So like, [laughter] that's...