Hello readers, and welcome back to Week in Review!
I talked about Apple last week. This week, we are talking about Apple and Meta.
After sending out hundreds of these newsletters, next week will sadly be my last time sending out Week in Review, but more excitingly it will also be my first time sending out Chain Reaction, so if you like my musings, please follow me on social media.
Meta is the image credit.
If any of my musings in this newsletter have taught you anything, it's that a coherent view of the metaverse doesn't really exist. The most pure form of it is the jealousy Facebook holds for Meta and Roblox's desire to recreate that empire and bring billions of users to it.
We got a glimpse of how Facebook hopes to make money.
Meta hopes to grow into a multitrillion-dollar empire by allowing goods to be sold in its latest social virtual reality app. It doesn't sound like a big deal until you learn that the goods that are sold on the platform will be taxed separately from the goods that are sold on the store. It means that virtual goods will come with a hefty tax attached to them.
If you were hoping that the virtual economy would mean an escape from taxes, you will be disappointed that Uncle Zuck will be taking a bigger cut than Uncle Sam ever did.
Nevertheless, as expected, there was a fair bit of blowback on Facebook for this outsized figure, the most biting of which came from Apple.
“Meta has repeatedly taken aim at Apple for charging developers a 30% commission for in-app purchases in the App Store — and have used small businesses and creators as a scapegoat at every turn,” Apple spokesman Fred Sainz stated in an email to MarketWatch. “Now — Meta seeks to charge those same creators significantly more than any other platform. [Meta’s] announcement lays bare Meta’s hypocrisy. It goes to show that while they seek to use Apple’s platform for free, they happily take from the creators and small businesses that use their own.”
The words from Apple's team are harsh and self-serving, but there is some truth in them. Meta's CTO responded to the quote with some fairly cautious commentary on how Apple makes significant margins on hardware and software while Meta subsidizes its virtual reality hardware and thus should charge more for it. It isn't a bulletproof defense, largely because Facebook tried to sell a higher premium, but no one wanted to buy it, so selling discounted headsets isn't some nicety on their part.
The problem for Facebook is that this all plays into it. For the last six or seven years, it has been an awful time for them to start making money from their virtual reality play. Their audience seems to resist monetization shifts every step of the way, and the goal has always been to get consumer traction, which has been hard to achieve over the years. A few billion dollars and the company is beginning to move more headsets by selling them at a loss, but that doesn't mean that the company is any safer than it was years ago.
Content creators on Roblox are used to paying a 47.5% cut, but that money is generally being paid to account for multiple platform stakeholders rather than one company. I don't see it being a terribly convincing recipe for bringing creators to an emerging platform, but Meta/ Facebook's balance sheet subsidization of the metaverse will have to find revenues somewhere, especially when Meta is.
I think you should take a closer look at these stories.
The billionaire offered to buy the micro-messaging service for $43 billion.
There’s no if, and or but about it — the biggest news of the week was that Tesla CEO and richest-man-on-the-planet Elon Musk offered $43 billion to buy social networking site Twitter this week in an unsolicited deal that had Twitter’s board scrambling and everyone in Silicon Valley chattering. It seems to be an uphill road for Musk, but knowing him, even if this bid gets scuttled, he’s probably not going to give up on shaking things up at Twitter.