Are Google and Meta Screwed?
And does it make any sense?
Are Google and Meta Screwed?
When Meta paid $1bn for Instagram in 2012 I wrote a piece for TechCrunch called It's Not About Instagram, It's About Mobile. And when it acquired WhatAapp for $19 bn in 2014 I wrote Mobile Is From Mars, Facebook Is From Venus, And WhatsApp Is Ephemeral
Think about it. Would you give up 20 percent of your worth and 35 percent of your cash if you got to live on in the face of an otherwise certain demise. Of course you would! By this criteria Facebook is brave, bold and right. And it definitely didn't overpay[for WhatsApp]. Bravo, Facebook (really!).
Not to reminisce too much, but I also wrote about the threat mobile represented to Google and Facebook. In Mobile - Facebook And Google Can't Live With It And They Can't Live Without It, written in 2012, I said:
Facebook (and Google) will most likely, by building or buying, evolve their monetization strategies to better suit the mobile future. It may take time, it may be painful, they may even fail. But try they will and try they must. Facebook 2.0 will try to kill Facebook 1.0 and Google 2.0 will try to kill Google 1.0.
Twenty Three years later, and after Facebook and Google both survived the rise of mobile, and the relative decline of the desktop based web, the Government has caught up with them, calling illegal the tactics they used to survive and prosper.
Nobody can accuse the Government of being fast.
This week courts began to try Meta for its Instagram and WhatsApp acquisitions. And Google was found guilty of being a monopoly in the advertising tools market (responsible for 11% of Google's revenue).
This all happens in a context, where once again a platform shift is underway, and the market is challenging Meta and Google to stay relevant as OpenAI, Anthropic, Perplexity, and Grok capture users for AI based search and discovery.
The Government wants $30 billion in damages from Meta and some say it will have to spin off Instagram and WhatsApp. In the case of Google it is unclear what the punishment will be.
The 'Government Overreach' section this week chronicles the latest developments.
Following last week's editorial about 'the end of the West' the essays this week contain several relevant pieces. Frank Furedi's Spiked piece - 'The End of Globalism is Nigh' stands out as a balanced capture of the underlying inevitability of economic globalization alongside the undeniable growth of social and political nationalism, arguing that the former is good and the latter is a response to top down globalizing projects that are social and political (and undemocratic) in nature.
Tom Friedman's piece on China is a reminder of the real world as is Noah Smith's piece where he states:
Trump's current trade strategy will diminish American power and American technological capability, divide the U.S. from allies and partners, and give China an opening to become the world's preeminent nation.
The US cannot and will not re-industrialize. It cannot grow its GDP domestically without trading. It cannot reverse history. It can shrink the world's GDP and its own. It will not stop China's domestic market growing (5% last quarter). it also cannot stop globalization - but it can participate less and less in it.
None of this means the tariff policy is necessarily wrong if the goal is to slow down a decades long process and perhaps repatriate some manufacturing. That is not impossible, but neither is it forward thinking.
Elon Musk has built Giga factories in Germany, Shanghai and the US. It produces cars locally, for local markets, at great scale. This is economic globalization. It is rational and inevitable, that any successful business will want to do the same. As nations fragment, businesses will globalize if they want to remain competitive.
Humans are predictable. We want the best stuff, as cheap as possible, and we will support anybody who delivers it. But we also want to be 'ourselves'. That is how it is possible to reconcile social conservatism (small c) with globalism in economics.
AI is a major globalizer, and this week more was announced than any week so far. OpenAI jumped further ahead by launching o3 and o4 models in its API. And it now has a billion unique users per week.
Enjoy this week's best writing and thinking below.