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[00:00:44] Marcus Johnson: Hey, gang. It's Monday, August 10th. Minda, Max, and listeners, welcome to Behind the Numbers: An EMARKETER podcast, made possible by AWIN. I am Marcus, and joining me for today's conversation, we have two of our social media experts. Joining us from New York, senior analyst Minda Smiley.

[00:00:59] Minda Smiley: Hello. Good to [00:01:00] be back on the pod.

[00:01:00] Marcus Johnson: Welcome home. Uh, coming to us from Philly, principal analyst Max Willens.

[00:01:05] Max Willens: Yo.

[00:01:05] Marcus Johnson: Hello again. Today's fact

[00:01:10] Marcus Johnson: Saturn didn't always have rings around it. So the story goes, Saturn was formed about four and a half billion years ago, and the rings are [00:01:20] estimated to be roughly 100 to 400, that's quite a gap, million years old. The rings are made up of ice. Scientists think the rings were likely formed when an icy moon, comet, or other body ventured too close to Saturn and was torn apart by tidal forces.

[00:01:36] Marcus Johnson: The resulting debris spread into orbit and gradually [00:01:40] evolved into the ring system we see today.

[00:01:42] Minda Smiley: This just reminded me, this is a total tangent. I, I don't... This is random, but related. Here we go. So you know how, like, Pluto's not a planet anymore as of a few years ago, I believe? You kn- and you know when you, you learn in elementary school, like, my very educated mother just served us nine pizzas?

[00:01:58] Minda Smiley: That was how you remembered [00:02:00] the planets. Well, now what do, now what do we say? The Pluto's gone. I don't know why I was thinking about this- ... like, two days ago. This just reminded me of that.

[00:02:08] Marcus Johnson: When your guys' kids get to school, I guess you'll, you'll, you'll find out. I

[00:02:11] Minda Smiley: guess they'll have a new one that I can- Yeah

[00:02:12] Minda Smiley: learn, yeah. Cool. Give it a few years, I'll come back with an answer to this one.

[00:02:17] Marcus Johnson: Well, you shouldn't visit is the main [00:02:20] takeaway from this because, well, you can't stand on it, it's just gas. But the other reason you shouldn't visit is because the- uh, they can experience wind speeds of up to 1,100 miles per hour.

[00:02:32] Marcus Johnson: The average wind speed in America is about 6 to 12, so you don't wanna do that. Uh, it is, um, it's pretty cool though. If you do go, you'll get to [00:02:40] see one of 270 confirmed moons. I wish we had more than one moon, that would be cool, wouldn't it? And you can also, if you had a giant bathtub, you could put Saturn in it and it would float because its average density is lower than water.

[00:02:56] Marcus Johnson: I dunno why that's what you would do. If you had a giant bathtub, I dunno if that's the first thing you would be thinking [00:03:00] of. Get Saturn, let's see if it floats. Pop it in. But it's big as well. It's huge. 760 Earths-

[00:03:05] Minda Smiley: Wow ...

[00:03:06] Marcus Johnson: can fit inside of it by volume.

[00:03:07] Minda Smiley: I don't know. I kinda like just having one moon. Oh. Feel like it...

[00:03:10] Minda Smiley: It's, it's our moon. Just one moon.

[00:03:13] Marcus Johnson: Oh, I like that take actually. Yeah. Yeah, it wouldn't be- Yeah ... as special, would it?

[00:03:16] Minda Smiley: Yeah, it's special. There's only one.

[00:03:17] Marcus Johnson: Well played. So. All right. Yeah. Fair enough. Sold me. [00:03:20] Anyway, you can see how I spent my weekend. I have to get a life. Today's real topic- ... the big three questions surrounding meta

[00:03:31] Marcus Johnson: All right, let's set the table first. Q2 2026, Meta made $59 billion in total revenue. That's up a lot. It's pretty damn impressive, 27% year over year, [00:03:40] 21% last Q2, so better than the last Q2. North America makes up 44% of Meta's total and grew 31% in Q2, up from 21% last Q2. So from 21 to 31, that is of course better.

[00:03:52] Marcus Johnson: Uh, but today we're here to talk less about the exact numbers, the financials, the earnings, more about the big three questions surrounding [00:04:00] the social media giant at the moment, and we'll start with Max. What's your first question for the company?

[00:04:06] Max Willens: The questions that I have are less about earnings because as you said, Marcus, the, uh, revenue picture for Meta could not possibly be any nicer.

[00:04:16] Max Willens: Uh, but my questions are more related to AI because, uh, [00:04:20] Meta's stock skidded, uh, after releasing these sterling business results because Wall Street remains kind of skeptical about AI and the role that it's playing, uh, in, uh, Meta with all the CapEx and everything. And so I guess my first question is related to agents.

[00:04:35] Max Willens: So at every conceivable opportunity, Mark Zuckerberg talks about how [00:04:40] AI is gonna be great for us, and it's gonna make so many things possible for us all, uh, in our daily lives. And during, uh, the Q2 earnings, he did his very best to make it sound like something very exciting was going to be released very soon, but he couldn't talk more about it.

[00:04:55] Max Willens: And he... It, it's already been reported that Meta is working on a shopping assistant, but it seems [00:05:00] from their comments like they have dreams of unleashing lots of different kinds of agents. So my question here is, what consumer agent is Meta gonna roll out after its shopping agent, right? So is this going to be something that helps people with personal productivity?

[00:05:14] Max Willens: Is it gonna be some sort of like health related thing that, you know, tells us all to eat more vegetables and stop, you know, taking [00:05:20] edibles and sleeping outside? Is it going to be something related to helping us with our personal finances? I just think it's gonna be a really interesting question because the reality is that, um, as nice as the, the growth numbers have been for, uh, ChatGPT and, uh, you know, the usage statistics that Google can point to for, [00:05:40] for Gemini are nice, Meta has, you know, as of this last quarter, over three and a half billion daily users of its products.

[00:05:48] Max Willens: And so to me it's kind of a fun parlor game to, to wonder about what other vertical it sees as kind of the, the richest opportunity for a, for an agent to unleash upon all of us.

[00:05:59] Marcus Johnson: This is a good one, [00:06:00] yeah. 3.6 billion, uh, daily active people in the Family of Apps. That had ticked down a fraction in Q1, uh, from Q4, and so has now ticked back up to that 3.6.

[00:06:10] Marcus Johnson: So is there something that comes to mind in terms of what might be next, what you think might be next?

[00:06:15] Max Willens: My guess is that it's going to be something related to- [00:06:20] personal productivity. I think that they have a lot of information about the kinds of things that fill our day-to-day lives, right? So like it would not take a great feat of, um, deduction to tell based on the Facebook groups that I'm in, the Instagram accounts I follow, the [00:06:40] messages that I send on WhatsApp to tell where I go and what I do, uh, week in and week out.

[00:06:45] Max Willens: And having all that information gives them a strong foundation to sort of be like, "We've built this agent who can help you, you know, get your shopping done faster, find stuff for your children."

[00:06:55] Minda Smiley: One thing that I- I'm sure we'll get into in a bit i- is just, like, Meta has so [00:07:00] many, like, branding and marketing challenges right now, like, as a company, and I...

[00:07:04] Minda Smiley: You know, to what extent that actually affects how people use its apps, I think is a different story. But I do think if, if they were trying to do something new a- and introduce a new agent into the market or a new use case, I, I do think they would have some challenges there. I just wonder what the adoption would look like.

[00:07:19] Marcus Johnson: Very [00:07:20] good. Minda, question from you.

[00:07:22] Minda Smiley: One thing that's been really overshadowed, um, but kind of in the same vein of what we were just talking about, is, like, Meta's certainly trying to figure out what its next buzzy app is going to be. It's seeing some decent traction with Threads. Um, but, you know, now that it is seeing that traction, over the past few months it, it's rolled out a bunch of kind of what really [00:07:40] seem to be just experimental type apps.

[00:07:41] Minda Smiley: I mean, there, there was Instance, which from what I understand is kind of like a Snapchat adjacent type of app. Forum, which I think is supposed to be operate a little bit like Reddit. There was another one that's, uh, specifically for marketplace sellers. I can't remember what it was called. I think it might actually just be called Seller.

[00:07:57] Minda Smiley: It just kind of had me reflecting, like, we really haven't seen a [00:08:00] big buzzy app make a big mark in the way that TikTok did a few years ago. Uh, really, you know, TikTok was really the last app that I feel like was new and, and had a lot of buzz and grew very quickly. And, um, as we see time spent and usage in the US kind of hit, show signs of flattening, um, I think all of these social networks are trying to figure out what the next step [00:08:20] looks like.

[00:08:20] Minda Smiley: And it does beg the question, like, if that next app will come from Meta, if there, if there even will be a, a next one, which is kind of a whole different conversation. But my personal take is no, I, I think Meta's kind of, I don't think at this point, like, the next big social network. If there is one, I, I don't think it would come from, from Meta, personally.

[00:08:37] Minda Smiley: Mm-hmm.

[00:08:37] Max Willens: I, I love this question because I, it [00:08:40] is really interesting to me how they are looking to effectively begin swinging backwards on a pendulum that for them had only been going in one direction for years and years, which is to just keep cramming more stuff into their core apps, right? Like, you know, even WhatsApp now [00:09:00] has stories in it and, um, you know, Instagram has search and DMs, and Facebook has everything in it.

[00:09:09] Max Willens: And so the fact that they're now trying to break off the component parts, I, I think is really, really fascinating. Like you, I am dubious that any of these [00:09:20] is going to turn into, like, a breakout star. My answer to your question or my kind of speculation on it is, is that I think that Seller probably is the most important one, mainly because it's not gonna be a breakout consumer thing because it's not a consumer facing app, right?

[00:09:33] Max Willens: Like it's an app- Mm-hmm ... that's basically designed for, and what it does is it speaks to- The level of [00:09:40] professionalization that has kind of come to define Facebook Marketplace, which is something that I think a lot of people sort of forget, right? Like, a lot of people when they think of Marketplace, they think of Craigslist, right?

[00:09:51] Max Willens: Where it's like my next door neighbor is, uh, moving and, you know, is getting rid of their furniture, and they have posted this, [00:10:00] you know, their wares on Marketplace and in a bunch of groups. But the reality is that there is now actually, like, an entire population of people that has sort of professionalized selling on Marketplace.

[00:10:10] Marcus Johnson: Mm-hmm.

[00:10:11] Max Willens: And I think that by finally taking more seriously the needs of those people, we could start to see a lot of really interesting developments on the [00:10:20] e-com front when it comes to Facebook in particular. And so I think that that's kind of the, the most important one of the ones that's been launched.

[00:10:27] Minda Smiley: Yeah, has the most legs for sure. I would agree.

[00:10:29] Max Willens: 100%. And maybe that's just me drinking copium because I was aghast to see that they launched Forum, uh- ... because the idea of, of Meta killing Reddit, um- ... just [00:10:40] on a, on a personal level is, is very upsetting to me. But- ... um, you know, I've ... That's just ... That ... Those are my two cents.

[00:10:46] Marcus Johnson: Threads, about 500 million monthly users they say. I do wonder if in terms of them developing a new app, if it's gonna be more focused on smaller number of users but lucrative and not trying to reach the type [00:11:00] of scale that they've seen with some of the other ones like Facebook, like Instagram, like WhatsApp.

[00:11:05] Marcus Johnson: Uh, a report from NPR, Meta planning to launch its own prediction market app to compete with companies like Kalshi and Polymarket. There were some reports they might wanna buy Kalshi. Um, some analysts say that that could be a trillion dollar industry within a couple of years. And [00:11:20] so even though the number of people who use Kalshi or Polymarket is in the kind of low, in the kind of single millions, it's not anything crazy, but I wonder if they still go for something, um, like that because of the potential market that is there dollars-wise.

[00:11:35] Max Willens: I do think it's important to sort of linger on the intense [00:11:40] component of this, right? Like, one of the problems of creating an app where you can talk to your grandma, see what your cousins are up to, buy, uh, you know, a fish tank from someone who lives down the street, watch a bunch of AI-generated shrimp Jesus slop.

[00:11:55] Max Willens: On the one hand, there's convenience there, but on the other, it does [00:12:00] probably make it a little bit harder for those systems to tell, like, what kind of mindset is, is Max in right now, right? Like-

[00:12:08] Marcus Johnson: Yeah ...

[00:12:08] Max Willens: did he open Marketplace- Hmm ... because he's bored or because he literally needs to find something and buy it, and so we're gonna use that signal to sort of improve the targeting that we need to do to make sure these ads are performant?[00:12:20]

[00:12:20] Max Willens: And so I think that that is something that is definitely worth kind of thinking about a little bit in addition to the sort of, you know, question of what's the next app we're all gonna be obsessing over. Mm-hmm. Um, because I-

[00:12:33] Minda Smiley: Yeah ...

[00:12:33] Max Willens: it, it all kind of does fit together a little bit.

[00:12:35] Minda Smiley: That's a good point. I feel like going on Facebook these days can be very chaotic, as [00:12:40] you as you described.

[00:12:41] Marcus Johnson: Mm-hmm. Max, next question.

[00:12:42] Max Willens: In the call, they talked about how there's sort of two pools of, of content that they can draw from, right? Where there's, you know, content from advertisers, content from users, and then they talked about a third pool of content that is, you know, endlessly customizable and personalizable, which will [00:13:00] effectively create a limitless supply of, of content that, uh, Meta's systems can train on, and learn from, and use to deliver an optimally personalized experience to all of its billions of users.

[00:13:13] Max Willens: So my question is- You know, where is this third pool of content going to come from, and how are people gonna respond to it, [00:13:20] right? Because we've seen now Meta and a few other platforms have to struggle with a bit of blowback from, from the press and from users around AI-generated content, right? Like, I made that lame shrimp Jesus joke a moment ago, but there's a lot of evidence mounting that people don't like [00:13:40] AI-generated content, right?

[00:13:40] Max Willens: They're sort of suspicious of it. They're dismissive of it. In some cases, people are literally hostile to it. And even though people aren't that great right now at telling what's AI and what isn't, I do think that the platforms are gonna have to be, and this is, doesn't apply only to Meta, but all the platforms are gonna have to be really careful about [00:14:00] pumping so much AI-generated stuff into their platforms that maybe one day some of their users wake up and go, "All of this is fake," and just wanna, like, throw their phones in the ocean.

[00:14:09] Max Willens: Because that is, you know, if enough people do that, then that, that causes actually kind of a huge problem for them. And so my question is just kind of, you know, w- what their plan is for sort of introducing [00:14:20] another wave of AI-generated content into their platforms.

[00:14:23] Marcus Johnson: Minda, next question.

[00:14:24] Minda Smiley: My next question, uh, is will, will people really want to watch Instagram on TV?

[00:14:29] Minda Smiley: And we know that- Mm ... you know, there's been reports over the past few months, and we just know that, um, Instagram is certainly trying to find a way onto TV screens. Um, and again, this kind [00:14:40] of just goes back to the bigger themes I've been mentioning around the fact that these social networks, you know, they see the writing on the wall.

[00:14:45] Minda Smiley: They see that even though they are seeing growth, it's not going to be endless. We are seeing signs of saturation, and so they're trying to find whether it's new apps or new avenues or new screens, like, they're just trying to find new ways of growth. And this one isn't necessarily [00:15:00] specific to Instagram.

[00:15:01] Minda Smiley: I mean, we're also, I mean, you could also make the same argument for Shorts. This idea of watching your Instagram Reels feed on your TV screen with, like, your husband or your friends or your family, I mean, I certainly have more questions than answers at this point. Mm-hmm. Not only just from a user perspective, like will users want this?

[00:15:18] Minda Smiley: What kind of weirdness could crop [00:15:20] up from that? But also, like, will the experience feel markedly different? Um, are they going to try to, you know, will it just be simply watching Reels on, on your TV, or will they try to make it feel markedly different than the, the mobile experience?

[00:15:33] Max Willens: I love this question, uh, for a lot of reasons, but I, I think that probably their best hope- And this, again, I think [00:15:40] this answer is probably shaped by my own generational preferences.

[00:15:43] Max Willens: Like, I would, I would sooner die than watch short-form mobile content on a television, and I would sooner die a slow and painful death than do it with, you know, friends of mine watching- ... you know, the, the garbage that Instagram knows that I want. But I do wonder whether there's a chance for them to sort of square the [00:16:00] circle with micro dramas, right?

[00:16:01] Max Willens: Like-

[00:16:01] Minda Smiley: Mm-hmm. Mm-hmm ...

[00:16:02] Max Willens: you know, those are definitely a, a kind of media format that is optimized for mobile, but it's also in some ways got its roots in, in the televisual media, like in the telenovela- Mm-hmm ... or soap operas. And so I could see the, the m- the micro drama as it sort of grows into something that we watch in [00:16:20] the US becoming something that kind of sits right in enough in the middle that you could watch them on television or you watch them on your phone.

[00:16:27] Max Willens: And so I think that it's gonna be really, really interesting to see how much and how much longer and what kind of investment and, and kind of care Meta puts into nurturing those things because that to me is the big thing. 'Cause a- as far as, like, whether people are [00:16:40] actually doing this, like, there's a, a wide array of data around, uh, sh- vertical video consumption on televisions, and none of it, as far as I can tell, paints a coherent picture.

[00:16:51] Max Willens: Oh, and none at

[00:16:52] Minda Smiley: all.

[00:16:52] Max Willens: Yeah. Some of it, some of it says one thing, some of it says something else. And so I, I think that absent a more coherent data picture forming, we're, we're left kind of wondering about [00:17:00] formats, and I think that micro dramas are an interesting thing to watch for that reason.

[00:17:03] Minda Smiley: I mean, something I've been paying more attention to lately is, like, this idea of social becoming more gamified, and partly that's because of- Mm

[00:17:09] Minda Smiley: Gen Alpha, and they're already kind of thinking about the next generation. We know Gen Alpha is, um, heavily into gaming, as are other generations of course. But, um, I do wonder if the, if that's a [00:17:20] direction they could go in, too.

[00:17:20] Marcus Johnson: And I think people, they might enjoy watching that content on a bigger screen.

[00:17:26] Marcus Johnson: Um, the problem is that your algorithm is so personal that it, the idea of watching it with a bunch of people, 'cause a lot of the time that, that bigger screen is in a, a shared space. Max, you have one more for us?

[00:17:36] Max Willens: Yeah, and this is definitely the most [00:17:40] speculative of the three, but i- in light of the kind of, you know, losing streak, I guess, M- Meta has been on, uh, legislatively and judicially, uh, it just felt like a good question.

[00:17:52] Max Willens: Um, and it's basically just what, what if Meta loses all of these lawsuits that are, um, you know, kind of on the horizon for them in the United States, right? Mm-hmm. [00:18:00] I think if the four kind of... They're not class action, but the, you know, if those four suits are s- all suits that they lose and they, the, the maximum penalty that all these, um, plaintiffs are seeking is awarded, it's a, an amount of money that exceeds a trillion dollars, right?

[00:18:17] Max Willens: Mm-hmm. And, you know, w- we've all kind of [00:18:20] been covering this space in, in, in the professional world long enough to know that that's probably not how this is going to shake out. But if it lands even, you know, at half of that amount, right, like, what are we left with, you know? Like, i- is it possible that we are...

[00:18:34] Max Willens: W- what happens in a future where, you know, the US judicial system, like, mortally wounds one of the [00:18:40] most valuable companies, uh, in the history of, of planet Earth? Like, where do we- Yeah ... all go from here? Or rather if the, the financial penalty isn't that significant, but- You know, Marcus, you and I did a, an episode about this a couple weeks ago.

[00:18:52] Max Willens: But like, you know, what if the judges say, "By the way, you have to get rid of infinite scroll." Mm-hmm. And, you know- Mm-hmm ... nobody under the age of 18 can use your apps. [00:19:00] And, you know, after an hour, no matter what, uh, the apps just like lock up or so- something. Mm-hmm. And so there's enough of this stuff kind of on the horizon that it's worth kind of, in a setting like this at least, batting around the question of like w- w- then what?

[00:19:13] Max Willens: Like what happens then? Yeah. Yeah. It opens up one of the most fascinating like vacuums in, in media.

[00:19:17] Marcus Johnson: Yeah. What happens if they have to get rid of addictive [00:19:20] design, autoplay, algorithm, algorithmic feeds? What does that do to the, to the business? It is, yeah, the que- it's a good question. Is Meta too big to fail at this point?

[00:19:27] Marcus Johnson: Like which, what you just said- Yeah ... 3.5 billion people on the planet rely on it for some form of communication. And if you just took, take into, that's basically almost half of people. If you just take internet users, then it's close to [00:19:40] three-quarters of people. And so what happens if, yeah, to a company like that when the fines, to what Max is saying, so it's, y- California, New Jersey, Colorado, and Kentucky, uh, and they're seeking $1.4 trillion in youth safety lawsuit penalties after accusations that the company designed Facebook and Instagram, uh, to, to addict young users and mislead the public about the [00:20:00] safety.

[00:20:00] Marcus Johnson: It's a company that's valued at about 1.5 trillion, that's the cap. So if you pay all this money, you basically wipe out Meta. Now, the idea of that happening, to Max's point, unlikely. However, they said that they spent two and a half billion on charges related to legal proceedings just in Q2 alone. So is it, you know, death by a thousand fines or paper cuts, however you wanna look at it?

[00:20:18] Minda Smiley: Yeah. And [00:20:20] I think like a re- a related question is kind of like if or when will Meta like change its, its strategy- Right ... for all this because of this? Like it doesn't really feel like they, um, you know, it, that's kinda, like it's funny to even see them roll out these like ad campaigns that are just like painting this rosy picture of AI.

[00:20:35] Minda Smiley: It's like, do you know what's going on with your company? Mm-hmm. It almost feels like, [00:20:40] uh, like you're going crazy or something, just because it's like they have, yeah, they have a, a massive issue on their hands, and it doesn't really feel like they're taking... It feels like they're just kind of playing defense, um, and not really think- I mean, I don't know what's going on behind closed doors.

[00:20:53] Minda Smiley: Uh, but from what we see, like it doesn't seem like it's an issue they're really trying to figure out in any substantial way. And, um, [00:21:00] it could get to a point where, yeah, like they just lose all these suits, and then what? So I find the whole topic to be fascinating.

[00:21:06] Marcus Johnson: Yeah. They are, uh, they're certainly- On the back foot on a, on a few fronts, Mike, uh, I think it's Proulx, that's how you pronounce it, VP of Research Director at Forrester, was saying that Meta's major growth lanes now carries a trust toll.

[00:21:19] Marcus Johnson: [00:21:20] AI-generated ads raise new brand control concerns, smart glasses create new privacy questions, youth safety remains under intense scrutiny, and employee tracking initiatives spark data collection backlash. So there's, there's a lot that they're having to, to, to sort through- Yeah ... as well as trying to run a successful business.

[00:21:35] Marcus Johnson: I have one more for you guys, and it's related to, um, their AI spend. [00:21:40] Basically, they raised the floor of their 2026 CapEx spend by $5 billion, so now their range is 130 to 145, and similar to, to Google, similar to any of the big, uh, giants, um, who are spending, Microsoft are spending, like, a ton of money on AI.

[00:21:55] Marcus Johnson: There are con- uh, questions about when are we gonna see a return on this investment, [00:22:00] and there was ... That's why the, the stock got hit quite a lot. Johanna, uh, Burjan of the British newspaper, The Guardian, was saying Meta's struggled to make an AI model to rival OpenAI and Anthropic, still has, but it plans to start a cloud business to sell AI compute, uh, monetizing some of its immense AI investments, uh, reported [00:22:20] from, from Bloomberg.

[00:22:20] Marcus Johnson: So, uh, my question for them is, uh, how much can they continue to spend on AI before they cross that, that line, and, and investors start to turn on them?

[00:22:31] Max Willens: Honestly, I mean, to me, uh, and maybe this is just, you know, uh, someone who's more aware of the kind of macro investing [00:22:40] picture would have a, a, an interesting opinion on this, but I, I just find myself scratching my head at a lot of the sort of, um, you know, investor responses to all of this stuff, right?

[00:22:49] Max Willens: Like, I, I look at OpenAI burning through tens of billions of dollars, uh, every quarter and, you know, being [00:23:00] wildly, wildly unprofitable and go, "This seems bad." And then I look at Meta, which again is spending tens of billions of dollars, but can and did, and Mark Zuckerberg again took real pains to sort of make his case this past, um, you know, quarter by saying, "This is driving improvements in our recommendation [00:23:20] algorithms.

[00:23:20] Max Willens: This is speeding the time to market that we have with the apps that we've launched, like Celler, like Forum. This is opening up a kind of incremental compute leasing business," which to me is just kind of like a, a, a sop that they, they threw out to, to, I guess, get the investors to stop bellyaching about this.

[00:23:38] Max Willens: But Meta has proven that [00:23:40] they, they have a use for all of these microchips and all of this, you know, computing capacity. And, you know, even Susan Li was saying on this call that, like, you know, the, the massive improvements that they made to the efficacy of their ad targeting and delivery systems, they have runway to kind of keep milking or wringing, uh, improvements out of their systems for at least the [00:24:00] next 18 months.

[00:24:01] Max Willens: And so I just find the, the, the, the Street's re- re- reaction to this, you know, runaway spending A, a little strange, honestly. Like, if, you know, if, if this had all... I, I, now, you know, Meta is definitely piling up debt at a, at a rate that, you know, they are gonna have to answer for at some point. But like, it's not like they're lighting the [00:24:20] money on fire.

[00:24:20] Max Willens: Like, they are, they are putting it toward Proven businesses that have, you know, proven to be wildly profitable in the past. So-

[00:24:28] Marcus Johnson: Yeah ...

[00:24:29] Max Willens: that's one thing that I, I find a little head-scratching about all this.

[00:24:31] Marcus Johnson: Yeah. And Nate said a similar thing about Google as well in terms of investors' response, saying, "Well, if you don't know where the money's going, then maybe they just weren't [00:24:40] paying enough attention to it."

[00:24:41] Marcus Johnson: Uh, and I do wonder if that's because, uh, Meta's business, it does rely on advertising so much, and they're saying all of this AI is just, "Trust us, it's helping to grow that business," as opposed to, "All this money being spent on AI, look at Cloud. Look at how we're... All this money being spent on AI, look, we developed Gemini."

[00:24:59] Marcus Johnson: There's nothing to, like, [00:25:00] point to directly and say, "This is a direct outcome." It's more we're using this in- to infuse, uh, infusing this into the advertising part of our business. Trust us, it's going well.

[00:25:10] Max Willens: Maybe the, the answer truly is in the debt. I mean, they, Meta has done a lot of stuff to sort of, like, hide the ball on the debt that they are taking on, like their, their deal with BlackRock and their deal with, um, I [00:25:20] think they were called, like, Blue Owl Capital, um, on their data center construction, where it's like, "Oh, we don't have debt.

[00:25:25] Max Willens: We're just entering a business partnership with this other company that's taking on all of the debt." And I guess investors are sophisticated enough to go, "Yeah, that's funny business. But we know, you know, what's really happening to your cash reserves and so on." So maybe- Yes ... maybe that's part of it, but-

[00:25:38] Marcus Johnson: Free cashflow does seem to be, [00:25:40] yeah, the, the kind of red flag for d- for Meta and for Google as well when that starts to go down.

[00:25:44] Marcus Johnson: Um-

[00:25:45] Minda Smiley: Yeah. I was gonna say, the free... I mean, it's funny. I feel like for a while it was the CapEx was the number, and now we're like, oh, the free... I, I forget what, what it was, but I think, like, Meta hit its lowest free cashflow in, like- Yeah ... four years this quarter. So that's, you know, that's- Yeah ... the new number, uh- It was 800 million

[00:25:58] Minda Smiley: everyone's focusing on, so. Mm-hmm.

[00:25:59] Marcus Johnson: [00:26:00] Mm-hmm.

[00:26:00] Minda Smiley: Something around that. Which is

[00:26:01] Marcus Johnson: low. Um-

[00:26:03] Max Willens: Yeah. Not to me, it's not.

[00:26:06] Marcus Johnson: Uh, all right, gang, let's pick a top three then. Um, Minda, I'll start with you. Of all the questions we've mentioned, which one do you think is the most important?

[00:26:12] Minda Smiley: I think what's gonna happen with all of these child safety lawsuits.

[00:26:16] Minda Smiley: I mean, I- Mm-hmm ... I think the, that's probably the most abstract at the moment, but [00:26:20] also probably the most consequential if it does not go Meta's way.

[00:26:24] Marcus Johnson: Yeah. Yeah, very good. Max?

[00:26:25] Max Willens: I really like, you know, which of these new apps, uh, that Meta's rolled out is going to be the next star, which one is going to pop. Um, so that's, that's my, uh, nomination.

[00:26:35] Marcus Johnson: Okay, very nice. Uh, I'm gonna go with, [00:26:40] I, I really like the Instagram on TV one. It's a really big question, and no one's quite figured out how that's supposed to look, similar to advertising on AI, on LLM. Like, no one knows what that's supposed to look like. It's such a huge question. And so I think the, the social platform to figure that out, uh, first is gonna have a huge leg up.

[00:26:59] Marcus Johnson: So I think that's a [00:27:00] fascinating one. Will people really watch Instagram on TV?

[00:27:02] Minda Smiley: You both picked my questions. I'm so honored, so flattered.

[00:27:06] Marcus Johnson: No one picked mine. Thanks, guys. Uh, that's all we've got time for today's episode. Thank you so much to my guests. Thank you first to Minda-

[00:27:11] Minda Smiley: Thanks ...

[00:27:12] Marcus Johnson: and to Max.

[00:27:13] Max Willens: Always a pleasure, Marcus.

[00:27:13] Max Willens: Thank you.

[00:27:14] Marcus Johnson: Yes, indeed, and to Lance on the production crew, and to everyone for listening in to Behind the Numbers: An EMARKETER Podcast made possible by Awin. [00:27:20] Suzy will be here on Wednesday Talking to shoe nonprofit Soles4Souls and apparel brand Bombas. And I'll be back on Friday discussing the three big questions surrounding Amazon.