The Meta Name Change Won’t Solve Facebook’s Problems..

Hey, everybody its Lon Seidman and it’s time once again for your weekly wrap up and this week, we’re going to take a look at the Facebook name change. They’re now calling themselves Metta after years of bad press and mark Zuckerberg wants you to live in his metaverse. No, thanks. Let’s take a look at what’s going on at Facebook right now. Yeah.

Before we take a look at all the bad things going on with the company, let’s look at what mark Zuckerberg, his vision is for this re-imagined Facebook now known as Metta. He published this founder’s letter on his own Facebook page on October 28th. Right when they were rolling this out.

And I’m going to pull out some of the key paragraphs here. Uh, now the first thing he says is that his brand is so tightly linked to one product, very negatively.

So. That it can’t possibly represent everything they’re doing today, let alone in the future. So what he wants to do is pivot the company to become a metaverse company and they want to anchor their work and identity on what they’re building towards. So what they’re going to be looking at here are two segments. One is going to be the family of apps like Facebook, Instagram, and WhatsApp.

Those names won’t change. But also some R and D efforts for this metaverse that he’s building. And what is that? Metaverse? Well, he says it’s going to be more immersive.

It’s going to be an embodied internet where you’re in the experience, not just looking at it. So how does Zuckerberg envision us attaching our bodies to his metaverse while he’s looking at some of the usual suspects here, augmented reality glasses and VR. Facebook has poured and lost a ton of money in this sector already.

They purchased Oculus and they have yet really defined profitability. I think they’re probably getting closer with the Oculus quest too, which is a great VR headset.

But it’s nowhere near the level of adoption that smartphones and PCs and other devices are at and to build a metaverse with billions of people in it, you’re going to need to get a lot more adoption than what they’ve currently been able to get. Even with a really good product, like the quest to additional. I don’t know if people are going to be all that comfortable walking around with these weird AR goggles or glasses on their head. I did try out the Google glass when it first came out, we all know how that went. And I think a lot of people out in public are a little freaked out by everybody walking around with cameras, attached to their heads, with little screens that are telling them information.

As they’re walking around. I just don’t see consumers, all that eager to adopt this technology and look like what I look like here, uh, with some contraption hanging off of my head, uh, mark Zuckerberg this morning posted something really creepy too, about how he’s developing some kind of robotic skin. That would bring us one step closer to realistic virtual objects and physical interactions in the metaverse. And I don’t know how that skin attaches to you or to whatever you’re interacting with, but it doesn’t sound all that appealing to me. But Zuckerberg thinks that they’re going to reach a billion people with this hardware that they plan on manufacturing.

And they’re going to try to sell it as close to cost as possible. And open it up. So you don’t need a Facebook or a Metta account to use it. And they’re already making some changes to how the Oculus quest operates here by no longer requiring Facebook accounts to use that headset, which was one of the major criticisms against it. Now, if you’re a Facebook shareholder, you might want to be asking yourself, is this the guy that can vision.

How this future is going to work and what consumers might want to adopt, especially if apple and Google are working on similar technologies with a much better track record of making products that people actually want to use. I don’t think Facebook has been able to crack that yet. And it’s because Zuckerberg has such a hold on this company and I think he’s so detached from reality that it’s going to be very hard to get this hardware to a place where people are going to be eager to adopt it.

Especially given the company’s reputation, a name change, isn’t a. But I think the timing of this is no accident.

And the reason they made this name change is because earlier this month or last month now, uh, a Facebook whistleblower by the name of Francis Haugen, uh, unleashed a lot of information and a lot of documents that she collected while working at the company. And she recently testified before Congress to talk about all the documents that she has in her possession, that she turned over to congressional. Investigators. And one of the things, if you’re Facebook, you have to be concerned about is headlines like this from NPR where Democrats and Republicans are both United on regulating the company during the hearing in which, uh, the whistleblower was testifying Republican Senator.

Jerry Moran of Kansas turn to Senator Richard Blumenthal of my state of Connecticut and said they should put aside their partisan differences to tackle a common goal reigning in Facebook and on such regulation.

Blumenthal said our differences are very minor, uh, in this environment to have that level of bipartisanship aimed at you is not a good place to be, especially if you’re mark Zuckerberg or one of the shareholders that, uh, he is trying to drive profits. But ultimately, I don’t think Congress will be successful in regulating Facebook’s content business, but there are some other vulnerabilities that the whistleblower has disclosed that I think might make them the subject of federal oversight and perhaps federal enforcement action.

And that will be through the securities and exchange commission. So one of the packages of documents that the whistleblower turned over, went to the securities and exchange commission. And she’s alleging that Facebook has been misleading investors in advertisers about a shrinking user base and important demographics.

And what she’s saying here is that she’s got internal documents that show that teen and adult daily active use has been in decline for almost a decade. They say data science findings indicate that only users twenty-five and above are increasing their use of Facebook. And she also turned over a slide. From internal Facebook discussions about how even during COVID, where there was a significant increase in Facebook usage, people under 23 years of age, had a decline in usage.

And she says that Facebook did not disclose this fact to shareholders.

And why is that a big deal? Well, it’s a big deal because Facebook stock valuation is based almost entirely on predictions of future advertising revenue. And I would say the equivalent here is that there is an iceberg out there that Facebook is headed for, and the investors need to know that that iceberg is out there and it might rip a hole in the ship. And if they’re not disclosing that, that danger is out there, that’s an issue that the sec might take. For a criminal action, perhaps, but also an action that shareholders might Sue Facebook over.

Now, in addition to investors, the whistleblower is alleging that advertisers are being misled too.

She says that Facebook’s algorithms cannot account for single users with multiple accounts. In other words, people that are one person, but control multiple Facebook and Instagram accounts. And she says that when advertising. Pull up their analytics and see how many times they’re reaching individuals.

That that information is just not valid because their algorithms can not separate a user with multiple accounts from a single user.

And she says, advertisers might be spending too much. Because the system is not properly telling them exactly how many people they are reaching. And finally, the whistleblower alleges that there is a lack of content coming from young adults on the platform. And remember Facebook depends on all of us, providing them content free of charge that they can run advertisements next to and profit from.

And there is a significant decline that whistleblower claims from young adults, those that have not already. Left Facebook’s platforms and Facebook has been notoriously bad at compensating creators. I have tried to put content up on Facebook. I am monetized table on the platform, but I earned fractions of a penny on the dollar. Versus the same number of views that I get from that same content on YouTube.

And so I just stopped putting my content up here because it doesn’t make financial sense to do so. Now Facebook claims they are trying to right this wrong and they pledged a billion dollar.

To content creators to get more content on the platform, but this pales in comparison to what YouTube pays out every year. Uh, so Susan, the CEO of YouTube, some of you may not like her, but there are some things here to like about YouTube, especially if you’re a content creator, a YouTube in the CEO’s most recent email says they’ve paid. $30 billion to creators artists and media companies over the last three years that we don’t know exactly how much they’ve paid each year, but I can guarantee you it’s likely more than a billion dollars a year.

And that’s why YouTube is getting so much more content from independent creators versus facing. Because Facebook simply doesn’t pay. And YouTube does. Now, in addition to all of this stuff that the whistleblower brought up about Facebook’s present the future for Facebook is also looking uncertain, especially as I think the trend on the internet is going to be moving away. From centralized platforms into a more decentralized environment.

We’re seeing that of course, with cryptocurrencies right now, and the core technology of cryptocurrencies, those blockchains, I think have a lot of uses beyond just finance and as that technology matures and gets applied in different. I think all of these big platforms are going to face some headwinds here, if not displacement. So ultimately I think Facebook is in real trouble here. Right now. Things look healthy and fine, but there are some significant issues in the present with this whistleblower complaint to the sec, but also in the future with all this decentralization going on and this name change is likely due to all the current PR.

But the pivot I think, has been in the works for much longer. The problem I have here is that I have no idea what this metaverse, he’s trying to sell us is and how he’s going to sell it to over a billion people, to keep the scale of his company, where it needs to be, to remain profitable. And that ultimately is the problem here. And I think for Facebook’s investors, their advertisers and their users, you have to ask yourself, is this the guy who’s going to steer this company through? Biggest challenge ever.

And I don’t think so because what he’s got in his head is not what the general population is looking for. I might be wrong, but I don’t see a future here beyond what Facebook currently is. And it’s going to take a lot more than mark Zuckerberg to pull them out of the mess. That’s ahead of them. Let me know what you think though, down in the comments below.

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Well, over a thousand of you are Facebook users because you’re on my Facebook group, but I’d love to hear your opinions of the company and whether or not you agree that they are in trouble. So let’s have at it respectfully down in the comments section and that’ll do it for. Until next time. This is Lon Simon. Thanks for watching.

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