Meta Platforms Connect – Land Grab

Meta moves first to take unclaimed territory.

• Meta showcased the results of billions of dollars of investment and at the same time was not shy of taking shots at its competitors as it staked its claim to the next generation of the digital ecosystem.
• Connect is Meta’s showcase for developers where the focus this year was all about AI and The Metaverse (something most people have completely forgotten about).
• In my opinion, ignoring The Metaverse is not a smart move as one day, the technology is going to be ready by which time those who have chucked it on the scrap heap will be too late.
• This is why Apple has the best VR device with the best reality detection system that hardly anyone has purchased because if Meta stumbles upon the formula that popularises The Metaverse, it will be ready to compete.
• There were three main announcements:
  • First, Orion: which is a pair of augmented reality spectacles that are far from ready for the market, but make a number of key advances.
  • Orion has a 70-degree field of view which is pretty good as well as a bright display and all of the compute onboard the device.
  • The demonstration of the device is pretty good but most of the functionality makes use of AI to identify objects and situations in the real world and make suggestions based on that.
  • How much of that was happening on the glasses themselves, remains to be seen.
  • It will also prioritise voice, but gestures and neural impulses are also being worked on.
  • The demonstrations were slightly glitchy but by and large, Orion is a good step forward but remains far from anything that a consumer is going to use on a daily basis.
  • Meta has shown its progress, and the results show that if The Metaverse takes off, it will be in pole position to be a major player and not have to remain dependent on Apple or Google.
  • This has been one of Mr Zuckerberg’s gripes for many years and ever since Apple messed around with his business model, he has been adamant that this will not be repeated.
  • Orion is a step along that journey but the road yet to be travelled remains long.
  • Second, AI: where Llama 3.2 was released in its 11bn and 90bn parameter sizes but not the really big 405bn variant.
  • Llama 3.2 is multimodal for the first time and catches up with the latest versions of Gemini and OpenAI in terms of capabilities.
  • Here, Mr Zuckerberg could not resist taking a swipe at his competitors stating that Open Source is the way to go and that his competitors are already slashing prices to stay competitive with Llama.
  • I have seen no hard evidence of this but if it is true, it is a sign that the bubble is beginning to burst.
  • Llama 3.2 11bn and 90bn will not be available in EU and Mr Zuckerberg once again could not resist taking a shot at the EU for its excessive regulation.
  • I continue to think that with its flagship 405bn Llama 3.1 model available for free to anyone that wants it, Meta is rapidly commoditising generative AI and its foundation models meaning that differentiation will increasingly be in the services that are built on top (see here).
  • Third, VR: which is where the volume of The Metaverse exists today.
  • A new, cheaper device Quest 3S was launched which starts at $299 which is clearly a subsidised price.
  • This device is all about a land grab and ensuring that all early moves in The Metaverse are made using Meta’s platform and with its independent competitors having largely given up, the road ahead is clear.
  • This will light no fires under Metaverse adoption but crucially it will ensure that Meta dominates the fledgling market positioning it well for a take-off if it comes.
• These launches are all about positioning Meta well in the growing market for AI services and The Metaverse when / if it takes off.
• Meta was not shy in calling out the shortcomings of its competitors and regulators and, to be fair to Mr Zuckerberg, he is putting his money where his mouth is and delivering progress.
• Llama is already a thorn in the side of Google, OpenAI, Microsoft and Amazon and is building a barrier to entry for Apple in both AI and The Metaverse.
• 5 years ago, Meta Platforms was a laggard in AI and while it has spent a fortune, it has gone up significantly in my rankings and is now challenging the leaders.
• However, it may also be the cause of the bubble bursting and so while there is AI upside priced into Meta’s shares, I would be wary of investing.
• The cheapest AI investment available remains Baidu which along with its peers is having a bounce as China has finally decided that it needs to do something about its moribund economy.
• It is still risky, but this could be the beginning of the long-awaited rerating of Chinese technology.