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Meta confronts its existential crisis...
July 28, 2022 View Online | Sign Up | Shop

Morning Brew

CardCritics

Good morning. The Mega Millions jackpot has now topped $1 billion after no one won the top prize in Tuesday night's drawing.

Question for the audience: Is this a "cool boss" move or just a waste of money? Raising Cane's founder, Todd Graves, purchased $100,000 worth of Mega Millions tickets for his 50,000 employees earlier this week, and when the jackpot wasn't hit, the company said they'd do it again for Friday night's drawing.

Jamie Wilde, Joe Abrams, Matty Merritt, Neal Freyman

MARKETS

Nasdaq

12,032.42

S&P

4,023.61

Dow

32,197.59

10-Year

2.790%

Bitcoin

$22,786.02

Alphabet

$113.06

*Stock data as of market close, cryptocurrency data as of 8:00pm ET. Here's what these numbers mean.

  • Markets: Stocks soared yesterday after the Fed said it was hiking interest rates by 75 basis points (its fourth rate hike this year) in order to stamp out inflation. Another meaty rate increase could be on its way this fall, Fed Chair Jerome Powell said, depending on the economic data. Powell also rejected claims that the US was currently in a recession.
  • Government: In a DC shocker, key Democratic Senator Joe Manchin said he reached a deal with Dem leadership on a package that intends to curb carbon emissions, install a 15% corporate minimum tax, and reform prescription drug prices. It's quite the U-turn: Less than two weeks ago, Manchin said he couldn't support this legislation; next week, it'll head to the Senate floor.

SOCIAL MEDIA

Meta's existential crisis

Mark Zuckerberg with a cloud above his head Illustration: Francis Scialabba, Photo: Anadolu Agency/Getty Images

While Zuck foil-surfs toward the metaverse—an immersive internet that could be built over the next 10+ years—Meta's losing its balance in the here and now. Revenue fell year over year for the first time in the company's history last quarter, Meta revealed in yesterday's earnings report.

One major pain point for Zuck is competition from TikTok. Anyone who's spent their Friday night watching "What's inside that rock?" knows that TikTok is taking up an increasingly large portion of users' screen time—and with it, advertising dollars.

And if you can't beat 'em, join 'em: Instagram CEO Adam Mosseri confirmed on Tuesday that Instagram is testing updates that prioritize short-form videos from people you don't follow over your little cousin's prom pics. "I do believe that more and more of Instagram is going to become video over time," he said.

Mosseri's comments were basically his way of saying "sorry, not sorry" to complaints that Instagram was abandoning the photo-sharing features that made it so beloved in the first place. A post that went megaviral this week read: "MAKE INSTAGRAM INSTAGRAM AGAIN. (Stop trying to be TikTok I just want to see cute photos of my friends)," and was shared by major Instagram influencers like Kylie Jenner and Kim Kardashian.

But TikTok isn't Meta's only thorn. An Apple privacy update that allows iPhone users to opt out of targeted advertising has cost Meta $10 billion in ad revenue since Apple rolled it out last year.

So, as it tries to fight through these headwinds in the present…

Meta's shifting its resources from meatspace → metaverse

Zuckerberg's taking what metaverse guru Matthew Ball calls "an existential bet" on the future of social media, and he's putting a lot of chips down.

You already know Zuckerberg changed Facebook's name to Meta last year, but since then he's also shaken up its workforce from the top down. Sources told the NYT that Sheryl Sandberg stepped down as COO after 14 years in June because she wasn't interested in building the metaverse, and thousands of employees throughout the company have been moved into metaverse-related roles.

But so far, the metaverse is just a moonshot for Meta. In yesterday's earnings call, Zuck revealed Meta's virtual reality division lost $2.8 billion last quarter. His justification from last quarter's call: "This is laying the groundwork for a very successful 2030s."—JW

        

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WORLD

Tour de headlines

Brittney Griner arrives to a hearing at the Khimki Court, outside Moscow Kirill Kudryavtsev/AFP via Getty Images

Blinken wants to trade for Griner. US Secretary of State Antony Blinken has offered a prisoner exchange with Russia—convicted arms dealer Viktor Bout for WNBA player Brittney Griner and fellow American Paul Whelan. The move runs counter to unofficial Department of Justice precedent, which is largely against prisoner swaps, but comes after months of public pressure to bring Griner home. Griner was detained by Russia in February for drug possession, while Whelan was charged with alleged espionage in 2018.

Senate passes chip bill. If Democrats and Republicans can agree on one thing, it's that the US needs to make more semiconductor chips to counter China's growing economic influence. With bipartisan support, the Senate approved a $280 billion chip bill that will incentivize more domestic production of semiconductors, which are the key components of phones, cars, and military equipment. If passed by the House (and it's expected to) the chip bill will represent the most significant government investment in American industrial policy in decades, per the NYT.

The Jeopardy! host circus is over. Ken Jennings and Mayim Bialik have signed deals to split hosting duties of the game show, finally answering the question of who would replace the GOAT Alex Trebek, who died in November 2020. The 38th season, which featured incredible runs by Amy Schneider, Matt Amodio, and Mattea Roach, ends this week, and Jennings will be at the lectern when the show returns for season 39 in the fall.

AVIATION

Frontier's bid gets Spirited away

Spirit airplanes Brandon Bell/Getty Images

After a vote by Spirit shareholders was delayed four times (we've heard all the jokes), they finally got together yesterday and officially terminated the airline's $2.7 billion deal to merge with Frontier.

With Frontier now out of the picture, Spirit will continue talks with JetBlue for an acquisition that would transform the US budget airline industry.

There has never been such a big fight over so little leg room. Budget airlines Frontier and Spirit announced plans to merge all the way back in February, before JetBlue entered the chat with a higher offer and the promise of free wi-fi. Then, JetBlue and Frontier started tussling like they were passengers on a Spirit flight, while everyone around them took out their phones to document the industry's biggest M&A fight in years.

What's the prize? Well, American, United, Delta, and Southwest have a stranglehold on the top four spots in the US airline industry—but fifth place is up for grabs. By tacking on Spirit's routes and resources, JetBlue thinks it could solidify its spot at No. 5 and eventually make a play for the big leagues.

Looking ahead…there's still no guarantee that Spirit will ink a deal with JetBlue, and even if it does, it would likely be scrutinized by antitrust regulators.—NF

        

ENTERTAINMENT

Is Springsteen worth $5k?

Bruce Springsteen in front of ticket and money pile. Photos: Getty Images

A lot of people think Ticketmaster has lost its dang mind. This month, Bruce Springsteen fans who were given early ticket access to the Boss's 2023 tour were shocked to find prices as high as $5,000 apiece—not exactly consistent with Bruce's working-class musical themes.

While Ticketmaster claims the average ticket price for Springsteen shows is much lower, concertgoers have still complained that the site's "dynamic pricing" structure is making concerts more inaccessible.

What is dynamic pricing? A mechanism that raises the price of certain "platinum tickets" to what it believes hardcore fans would pay to resellers, and it determined Springsteen fans would pay a lot. Ticketmaster says the goal is to ensure that artists will receive the markups on in-demand tickets instead of scalpers and resellers.

  • In response to the outcry over Bruce Springsteen tickets, Ticketmaster revealed that only 1.3% of users paid over $1,000 per ticket, and 88.2% of tickets were "sold at set prices."
  • Springsteen's manager, Jon Landau, told the NYT that their team looked to other artists' concert prices to gauge ticket cost and that ultimately, their prices are pretty fair considering they're for "someone universally regarded as among the very greatest artists of his generation."

Big picture: Dynamic pricing or not, Ticketmaster can pretty much charge whatever it wants for concert tickets—as of 2018, the company ticketed 80 of the country's top 100 arenas.—MM

        

GRAB BAG

Key performance indicators

Crates of avocados Jan Sochor/Getty Images

Stat: Facing a massive supply glut, farmers in Australia are begging people to eat avocados so they don't go to waste, per ABC News. Rabobank says that Australian growers are going to produce 22 avocados per Australian this year, 26% more than last year. Somehow, this is still millennials' fault.

Quote: "They are so smart, and they tend to sneak up and attack from behind, often grabbing at your legs."

A city official in Yamaguchi, Japan, described the tactics of a horde of monkeys that has been terrorizing residents this month, with 58 attacks reported (mostly on children and the elderly). The nuisance has gotten to the point where the city hired a hit squad to go after the monkeys—yesterday they killed one believed to be a perpetrator of many attacks.

Read: How Hot Topic defined a generation of emo kids. (The Ringer)

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WHAT ELSE IS BREWING

  • A Berkshire Hathaway-owned mortgage company settled with the DOJ over allegations that it discriminated against minority homebuyers in the metro Philadelphia area. The DOJ says the $24 million agreement is the second-biggest redlining settlement in history.
  • Hulu will start accepting ads for political issues—such as guns and abortion—after being criticized by Democratic organizations for rejecting them.
  • Lufthansa has canceled more than 1,000 flights this week due to staff strikes, affecting over 130,000 passengers.
  • President Biden has tested negative for Covid-19 twice and has ended his isolation.
  • The space jacket Buzz Aldrin wore during his trip to the moon sold for $2.8 million at auction.

BREW'S BETS

How to hang eucalyptus in the shower: You'll learn how to do that, plus literally anything else you can imagine, at wikiHow. (Seriously, it's a shockingly good resource.)

Day in the life: Revisit this classic Bob's Burgers clip for a hilarious riff on the mundaneness of office life.

Nourish your brain: Farnam Street's Sunday Brain Food newsletter is exactly what it sounds like—actionable insights and ideas to become the best version of yourself. Check it out.

GAMES

The puzzle section

Brew Mini: Your sample clue for today's Mini is "Benjamin of Law & Order and Miss Congeniality" (five letters). Play it here.

Three headlines and a lie

Three of these headlines are real and one is faker than the rock on 19th Street we hide the office's spare key in. Can you guess the odd one out?

  1. A high-profile pastor was robbed during a livestreamed service in NYC
  2. Martha Stewart says six of her pet peacocks were eaten by coyotes
  3. Meet the 14-year-old who will co-direct the next Avengers movie
  4. Existence of Loch Ness monster "plausible," scientists say after fossil discovery

Can you find love if you're drowning in debt?

Can you find love if you're drowning in debt?

They say that before you make an investment you should evaluate the risk. Why should it be any different when it comes to dating? Watch our dating show to find out more.

For more from the Brew:

‍♀️ On her latest podcast episode, Katie shares the granular details of how much her wedding ceremony cost. Listen or watch here.

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ANSWER

We made up the 14-year-old director.

         

Written by Neal Freyman, Matty Merritt, Jamie Wilde, and Joseph Abrams

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