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Marcus Johnson (00:00):

Verve's global omnichannel advertising platform redefines what's possible beyond WhatsApp;;ed gardens. Verve illuminates, connects and activates high-fidelity signals that drive outcomes for brands, agencies and publishers at scale. Learn more at verve.com, V-E-R-V-E.com.

(00:19):

Hey, gang, it's Monday, April 13th. Max, Marisa, Oscar, and listeners, welcome to Behind the Numbers, an EMARKETER podcast made possible by Verve. I'm Marcus. And joining me for today's conversation, we have three people. We're joined by principal social media analysts living in Philly. It's Max Willens.

Max Willens (00:35):

Yo. Hello there.

Marcus Johnson (00:37):

We're also joined by a newsletter analyst living in New York City, Marisa Jones.

Marisa Jones (00:41):

Hi.

Marcus Johnson (00:42):

Hello. Hello. And also in the city, senior director of forecasting is, of course, Oscar Orozco.

Oscar Orozco (00:48):

Hello, listeners. Hey, Marcus.

Marcus Johnson (00:50):

Hey, fella, today's fact. All right, a bit of a test for you, the most visited, or pop quiz, the most visited state. Test was a bit intense. The most visited state in America by foreign tourists, and we're not counting Canada or Mexico, so they've... yeah, is what in 2024 according to the National Travel and Tourism Office?

Marisa Jones (01:22):

I was initially going to say New York, but I'm going to go with Florida, I think. It's got Disney.

Oscar Orozco (01:27):

California. California.

Max Willens (01:30):

I feel like I have to pick a third thing because those were my two choices. But, you know what, I'll say New York because that was also kind of my first instinct, but Marisa [inaudible 00:01:43]-

Marcus Johnson (01:43):

Marisa-

Max Willens (01:43):

... the two.

Marcus Johnson (01:43):

You should have gone with your gut, Marisa. It's New York.

Oscar Orozco (01:44):

New York.

Marcus Johnson (01:46):

10 million-

Oscar Orozco (01:47):

Nice.

Marcus Johnson (01:47):

... overseas visitors in 2024. But you said Florida? Florida...

Marisa Jones (01:54):

Yeah. New York seemed too obvious to me, so I figured I'd go with my second.

Marcus Johnson (01:58):

Florida is a good guess.

(02:00):

Oscar, yours as well. Just four states accounted for 57% of all international tourists. There was New York with 10 million, Florida with nine, Cali, with seven. And the fourth state, fourth most popular, what do we think? Where do we think people are going?

Max Willens (02:17):

Where does DC fit into this? Is this like Maryland? Maryland? Virginia?

Marcus Johnson (02:21):

D.C.? Nope.

Max Willens (02:22):

No?

Marisa Jones (02:22):

Illinois?

Marcus Johnson (02:24):

No. That was the only Midwest state with over a million to visit.

Oscar Orozco (02:28):

Arizona?

Marcus Johnson (02:30):

Nope. Where do you think people are coming in? What do you think they're coming into the country to do? They're going to a big city. They're going to theme parks. They're going to? Where else can people... Where else are those adults having fun?

Oscar Orozco (02:40):

Oh, Nevada.

Max Willens (02:41):

Las Vegas, Nevada.

Marcus Johnson (02:43):

Yeah, Nevada. But quite a drop from seven million in Cali to three million Nevada, which is in fourth place.

Oscar Orozco (02:49):

Interesting.

Max Willens (02:51):

We love you visitors. Come visit us in New York. That's all I was going to say. I love tourists, so that's good to hear.

Marcus Johnson (02:56):

It's 20% of the foreign tourists who aren't Canadian or Mexican. About 20% are going to New York. About 50 million visited from overseas in 2024. Gabriel Cohen, a visual capitalist pointing out that Hawaii is the rare state to have received more international visitors, two million than its entire population of 1.4. Yep. I haven't been there yet. Can't wait to get there. Anyway, today's real topic or conversation, we're going to be making some very specific, but perhaps somewhat unlikely predictions for 2026 shark Tank style. Completely ripped it off.

(03:35):

Okay. Here's how this episode works. Max goes first. He gets about 60 seconds to pitch a what-if prediction he thinks will come true in 2026 or things might happen in 2026. Then me, Marisa, and Oscar and everyone listening will decide if we're going to invest, if we believe in his prediction. Marisa goes next, so on and so forth. Let's do it.

(03:53):

Max, what do you have for us?

Max Willens (03:54):

So I would like you all to imagine a world where Meta, after what I would say is close to 15 years of just basically nonstop winning in the court of public opinion in attracting more advertisers and growing its user base, what if the two lawsuits that they just lost in California and New Mexico are the start of a long losing streak and Meta just keeps losing these lawsuits that it is like slated to face in court over the next several months? There are over 2,400 lawsuits that have been piled together in a multi-district litigation with judgments that could pile up into the billions, the question of remedies that could include stricter age verifications, the end of infinite scroll, even changes to their algorithms that recommend content to people.

(04:59):

I'm here to ask what happens if Meta keeps losing, and I think that the answer is that we are going to have the first national ban of social media for children under the age of 16 and a change to the way that its apps function.

Marcus Johnson (05:23):

Yeah. I really like this one. We covered it in an episode last week on Monday, so check that one out. But Max wasn't with us for that one, so I'm glad that we're getting his take on this today. The context behind it, Max just mentioned most of it, but the California jury found Meta and Google negligent for contributing to a women's childhood social media addiction resulting to mental health issues. She got $6 million. While this is a small amount of money for these trillion-dollar companies, the ruling significantly could be a significant threat to social media as a defective product harming young people. A day earlier, another jury in New Mexico ordered Meta to pay nearly 400 million for failing to protect young users from predators. That's the background here.

(06:04):

Marisa, what do you think?

Marisa Jones (06:06):

I think this is a pretty likely scenario to some extent. I guess we don't know how it's going to play out with how strict these new protocols around social media are going to be, but this is something we are seeing is actually happening in other places outside of the US. And we're seeing complete bans for people under a certain age in Australia, and really, since that, just a ton of other countries now looking into these social media platforms and what harms they present to younger users. So I do think this is a very real threat to Meta. And I think, obviously, the negligence lawsuit they lost, while it was a very small sum they had to pay, is just kind of a tipping point in what is to possibly come.

Marcus Johnson (06:50):

I'm wondering, Max, is this going to be the case where Meta or these other social platforms on their own decide, all right, we're going to get rid of these features so we can't get sued anymore or where a law gets put in place saying you can't add infinite scroll, you can't add autoplay, et cetera?

Max Willens (07:06):

That's a really good question. I think the answer is probably going to depend on what happens in the second phase of the New Mexico case that you mentioned, Marcus. The thing that got most of the headlines was the sum of 300... I think it was $375 million that Meta was ordered to pay. But the thing that struck me as more important was the fact that the case is now going to move to its second phase in May where the judge is going to decide what structural remedies if any Meta will be required to undertake to sort of make this right. And one of the things that is on the table there are some of the things that I alluded to earlier, where infinite scroll could basically be banned, algorithmic changes, although the details there are very light, so it's sort of hard to say what that would look like.

(08:04):

But it's all to say that if Meta... And Meta is obviously going to appeal this and deploy an armada of lawyers to try to keep this from going against it, but if Meta winds up losing its appeal on not just the financial damages, but also on the material changes that are required of it, they may wind up having no choice but to make a really drastic set of changes on its own just to, as you say, like sort of stop the bleeding and keep things from getting any worse because there's already... One of the things that's been discussed quite a bit is the extent to which these lawsuit judgments that have rolled out in the last couple of weeks sort of affect the prospect in the future litigations. Right? Like if enough people sort of see, oh, you know what, it is okay for us to really thwack these companies for doing something that seems to be having a really negative effect on the mental health of young people in the United States, then that could make for a really, really tough situation for Meta when that comes to pass.

Marcus Johnson (09:25):

Just to quickly jump in, Oscar, before you go, on the young people thing, and Ethan made this point in last week's episode, he was saying that a lot of this, the conversation, the cases are about young people, and do we think, Max, in this, eventually, the legislation's going to spill over into, okay, these are the rules for everybody because right now we're just talking about young people? I can imagine a world where they say, "All right, these are the things that we can't have. The structural changes, we have to make. You can't have infinite scroll." They can't also play all these things for anyone under this age, but, once you're an adult, gloves are off. Like we can add all... Do you think that they're eventually going to say, "Here's the sweeping changes across all ages?"

Max Willens (10:01):

I think that that's definitely possible, although that again is something that they will fight tooth and nail because one of the things that they have spent so much time and energy and resources on over the last few years is really, really obsessively refining the ways that their systems optimize or personalize the content that people get and make sure that what you see is instantly appealing right away. And if there's even a hint that they are going to be forced to either wind down or undo some of that stuff or change it, they may feel really compelled to sort of come up with a more palatable version of those changes rather than have an outside company take a hatchet to this system that they have poured hundreds of millions, if not billions, of dollars into developing over the last couple of years.

Marcus Johnson (11:01):

Yeah. Oscar, what do you think?

Oscar Orozco (11:03):

Max, I was wondering what do you think the more immediate impact... Where will it be felt? So do you think Meta will feel it more from like an engagement standpoint? Will it be the usage? Do you think like we'll see an immediate drop in usage right away, or is it on the monetization side? I'm wondering how you see that playing out first. Maybe you can even speak about like, long-term, what'll be the biggest impact?

Max Willens (11:28):

Yeah, I mean, it's tough because what I've presented you, and I'm arguing against myself here, is this kind of like turducken of hypotheticals, but like if it's all... If what we're talking about is kind of worst case scenario where there's no more infinite scroll, there's no more autoplaying video, there are age verification tools that have real teeth, I think that what you're going to see first is a sort of just decline in engagement. And that fundamentally is going to be the thing that affects ad prices because it's just going to start affecting inventory. Right? I mean advertisers have proven themselves over and over again to be pretty indifferent to the kind of negative PR that Meta has faced over the years and for not insignificant things. Right?

(12:15):

I mean, like lots of credible evidence that they have knowingly built their systems in ways that negatively affect the mental health of teenage girls that they earn literally billions of dollars a years from ads that are basically sold by or purchased by scammers to sort of dupe people out of money, the idea that they have been... Their systems have helped facilitate ethnic cleansing in parts of the global South. Like these are very serious, very sobering charges that they have faced, and advertisers have just gone, "Oh, that's too bad," and kept spending. It has had zero effect on their business as a whole. But if all of a sudden the amount of inventory available for them to buy drops by 16% and the amount of time people spend on there drops a double-digit percentage, then, all of a sudden, that inventory gets more expensive. It probably starts performing a little bit less effectively, and so it really, I think, the sort of first domino that falls that way as far as a business effect. It's just a negative effect on the supply of inventory for advertisers to buy.

Marcus Johnson (13:32):

Marisa, you had a great quote. We actually cited you in last week's episode. You were basically talking about implications for marketers on this. And you said, "The decision doesn't mean Meta and YouTube are less viable ad channels given their scale, but it does raise questions on how marketers will approach youth-centric media plans in the future. The risk of being associated with platforms causing measurable harm to minors presents reputational governance concerns. Marketers will likely have to exercise increase caution with what content they promote platforms with large youth audiences."

(14:02):

I thought that was an excellent point, so two things I wanted to say quickly on this. One of them, Marisa, you kind of touched on people overseas definitely starting to do things. And a lot of the time, when it comes to legislation, you have to just kind of look across the water and have a peek at what Europe and other countries are doing. The Economist was noting that, in February, a preliminary ruling from the European Commission found TikTok in breach of its Digital Services Act owing to its addictive, it's been a keyword in this one, this case, addictive features.

(14:35):

TikTok was told to change the design of its app or risk a fine of up to 6% of global revenues for its parent company, ByteDance, and then, finally, Cornell Law Professor James Grimmelmann calling this a brick and a potential wall, and The Atlantic article by Kaitlyn Tiffany noting that following the verdict's announcement, Matthew Bergman, one of the plaintiff's lawyers and founding attorney of the Social Media Victims Law Center, said to reporters, "The verdict carries implications far beyond this courtroom, establishes a framework for how similar cases across the country will be evaluated and demonstrates that juries are willing to hold tech companies accountable when the evidence shows foreseeable harm." I'm in. I think this feels like a tipping point, so I'm going to give this one full point.

(15:22):

Marisa?

Max Willens (15:23):

I have a lot to write about.

Marisa Jones (15:25):

I'm also going to give it a full point.

Marcus Johnson (15:27):

Full point. Oscar?

Oscar Orozco (15:29):

I'm going to give it a half a point.

Marcus Johnson (15:30):

Half a point?

Oscar Orozco (15:30):

A half a point.

Marcus Johnson (15:32):

Thank God, because he would've won already. It would've been almost impossible to get three for one, so I appreciate that for the sake of competition. Go on, Oscar, sorry.

Oscar Orozco (15:39):

And the reason being, I think, Meta is just too big to fail. Right? And so I think, structurally, it will impact how they operate a bit moving forward. But I think it'll be a bit of posturing kind of like a strong PR game to sort of let the greater industry know that things are changing for the better. They'll pay some fines. I think they have over 80 billion in cash sitting in the bank, so it'll be a drop in the bucket. But, ultimately, I just think they're a bit too big to fail. They won't be allowed to. Half a point.

Max Willens (16:11):

Yeah. Now that I-

Oscar Orozco (16:12):

Sad to say.

Marcus Johnson (16:16):

Go on, Max.

Max Willens (16:17):

I was going to say, now that I have a commanding lead in the game, I can say that I think that, broadly, there's just a lot of reason to support that idea, Oscar. Like where will all that money, all that time, all that energy go, right? We're not all going to go back to the bowling alley. It's a great question, but it's why I wanted to bring it up because it's a really fascinating question.

Oscar Orozco (16:44):

Yeah.

Marcus Johnson (16:45):

It really is. Yeah. Unfortunately, you guys have talked me down to just half a point. So, Max, you got two full points.

Oscar Orozco (16:49):

It's too late to put it in.

Max Willens (16:50):

I don't know how that works. I'm so sorry.

Marcus Johnson (16:52):

As the referee and also participant in the game, I'm allowed to do whatever I want. So, yeah, unfortunately, two points for Max.

Max Willens (17:00):

I'm calling by lawyers.

Oscar Orozco (17:02):

Sorry, Max.

Marcus Johnson (17:02):

It's Oscar's fault.

Marisa Jones (17:02):

I'll keep mine.

Marcus Johnson (17:05):

And then you jumped in as well. Thank you, Marisa. Thank God. All right, Marisa, you're up. What've you got for us?

Marisa Jones (17:10):

Yeah, so my scenario is what if Meta bought Roku? Or this could really be kind of any similar CTV platform with as much scale. But if Meta were to want to branch out into TV, it needs to buy something where people are deciding to watch. Beyond offering ads, Roku captures the home screen. It captures the remote button, the ad layer, of course, and it is the gateway to CTV. So Meta as we know really dominates attention on phones and on social media, but CTV we're seeing become almost as important to advertisers as these mobile feeds. Buying Roku would allow Meta to really extend its dominance into the living room to own discovery across screens and on the biggest screen in the home.

(17:58):

I think what makes this particularly interesting is that, in this scenario, if Meta were to buy Roku or a CTV platform, it would also be positioning itself more closely with its major competitors, Google and Amazon. So, obviously, we know Amazon has Prime Video and Fire TV. Google has YouTube and Android, which are huge CTV competitors. So Meta does have the attention to extend into this. But it doesn't have the TV distribution that its competitors do, so buying Roku would be maybe a way to close that gap in a single move. So, yeah, Meta has won attention on the phone, but buying Roku would be its next step to capture attention on a different screen.

Marcus Johnson (18:41):

This one's really interesting. I like it because CTV, according to our forecasts, which Oscar will know very, very well, is the only time-spent category that's growing. We've got about 13 hours a day with media at this point-

Oscar Orozco (18:57):

Really much, yeah.

Marcus Johnson (18:57):

... in terms of time spent. And, any extra minutes that are being added, we're saying there's like a couple being added, but kind of barely. Some are going down. The only one that's growing is CTV.

Oscar Orozco (19:10):

Exactly.

Marcus Johnson (19:10):

And so social's flat. There's no extra minutes that they can squeeze out there, and so this fight, this battle for the living room, the social players trying to pivot and get... I mean, YouTube's done a fantastic job of, obviously, making CTV kind of central to its core offering and being a place where people are consuming a ton of its content. So, yeah, I think this is a really interesting move, a potential move for Meta. Oscar, do you think?

Oscar Orozco (19:35):

Yeah, I mean, I think it's a super fascinating one, a perfect example for the game we're playing. I mean, I did have a question, Marisa. When you think of Meta buying Roku, I mean, what do you think the most valuable asset would be for them, right? Would it be like the Roku channel? Is it the operating system itself on the CTV? Is it more about the ad stack and sort of that type of technology that helps build out its ad business? I'm curious what you have in mind there.

Marisa Jones (20:10):

I would say it's probably a combination between just owning such a dominant CTV operating system. I'm not really positive, but I believe Roku is kind of the leader in this. I mean, I have a Roku. So maybe I'm just speaking from personal experience, but I do think it is a super valuable operating system to have. But, beyond that, it has the Roku channel, so it has a leading FAST platform. And we are seeing really strong adoption in FAST, a pretty strong ad results from FAST. So that would give it another layer and also, as social engagement declines, this is another reason that withdrawn advertisers who are looking for something to capture that engagement in a format that's consistently innovating and coming out with new ways to draw attention.

Marcus Johnson (20:59):

It's also, for context, really quickly, Max, it's... According to Nielsen's gauge in terms of they track where people spend their time on TV, in terms of, across the digital platforms, YouTube is first with 12.5%, Netflix with, call it, nine, Disney with five, Prime Video, four, then Roku channel with three. That's more than Paramount 2B, Peacock or Warner Bros. Discovery. If Peacock and Warner Bros. Discovery got together, they would just be the Roku channel. So it's a knot. It's a big audience. Sorry, Max.

Max Willens (21:24):

Yeah. No. I have a question that's kind of a different flavor of the one that Oscar asked, which is one of the things that has sort of defined the evolution of Meta's kind of ad business is that it's basically sought more places to kind of put the ad units that you find everywhere. Right? So, I guess, maybe a slight exception to this would be stories ads, but like the ads that you see in Instagram or the ads you see in Facebook are the ads you see in Threads, the ads that we are starting to see in WhatsApp.

(22:00):

In this scenario, are we basically expecting that we're going to start seeing like Instagram ads during ad breaks on the Roku channel or inside like... Or is this more going to be like what Pinterest has done with or seems to be doing with tvScientific where they're basically going to be kind of harvesting intense signal and using that for targeting of different kinds of creative that the advertisers will be piping into this CTV environment.

Marisa Jones (22:32):

Well, I think, expanding to CTV really does give Meta more of these signals that I think it might not be identical to the ads that you would see on Instagram, but there is that connection they can make between the phone and the TV screen that helps them improve the relevance of these ads that they're serving. I feel that connected TV ads, maybe something like a home screen ad might look similar to like an ad you scroll by on Instagram, but the ads that are within, say, the Roku channel and all the apps are on Roku would be probably a bit new for Meta, a bit something different that they haven't really explored before.

Max Willens (23:11):

Interesting.

Marcus Johnson (23:11):

I'm half in.

Marisa Jones (23:11):

Okay. I'll take that.

Max Willens (23:15):

I'm also half in. I think it's a very interesting idea to what we were just talking about like, if Meta swallows Roku, it's going to take a long time for them to digest it, I guess is how I would put it, and so, for that reason, I'm half in. It doesn't seem like a layup, but it's definitely intriguing, so you get half points from me.

Marisa Jones (23:36):

Okay.

Marcus Johnson (23:36):

Yeah. Oscar?

Oscar Orozco (23:36):

Yeah. I've been tough today, but I'm going to give it a half point.

Marisa Jones (23:39):

Okay.

Oscar Orozco (23:39):

I do think it's... I guess, it's fascinating. I love the comparisons you made to Google and Amazon. It feels like it makes sense. But it does feel a little bit more like the type of move that would be more of like a partnership, like a tie-in, ad tech publisher tie-in than necessarily like a complete acquisition. But I think there's something more to it. I also question if Mark Zuckerberg would think this is a bold-enough idea. It feels like his mind is in other places. But, no, no, yeah, half point, which I think is great.

Marisa Jones (24:09):

Okay.

Marcus Johnson (24:10):

Yeah, they lose this. Yeah, if they keep losing all these lawsuits, they might have to make a move like this to keep the app business going.

Marisa Jones (24:17):

Yeah. So, if they lose all their young users, they can go to the kid TVs.

Marcus Johnson (24:25):

One and a half points, a strong performance. Oscar, to go last up but not least, what you got for us?

Oscar Orozco (24:30):

Last but not least. Okay, so, full disclosure, my idea does not come entirely from nowhere. I mean, a bit like Max's as well, but it has to do with Amazon. There's been rumors about Amazon working on a smartphone, on developing a smartphone. And the likelihood, and from what I'm reading and hearing, is that it likely won't happen. But what I'm playing here is what if Amazon's second shot at a smartphone... Remember, they did have like the Amazon Fire phone about 10, 12, 15 years ago, so it'd be their second shot at it. What if it's a success? They're calling it the Transformer phone. So what if it does really well and it starts to eat into the OS market share that we know is entirely made up by Android and iOS? So, keeping in mind that, again, a bit unlikely, but I think that there's real potential here for Amazon.

(25:29):

My bet is that it can work. This second attempt can come together. I think it's trying to turn Alexa+, which there's been a lot of news around Alexa+ recently turning into this full-fledged AI agent product. So what if it can turn into this proper OS system that layers what we know Amazon has, its shopping, entertainment, streaming and doing all of this, of course, surrounded by everything AI which I think is at the core of what they're trying to build there. I think they've learned from their mistakes from the original Fire phone. They have a strong ecosystem as well. I didn't mention Fire TV, which Marisa mentioned earlier about Ring and the Kindle. So I think it could really compete with Apple again, Android and all these hardware device companies that make the smartphones, so slowly carving out a niche in the market and gaining over the years. That's my prediction.

Marcus Johnson (26:36):

I think this is a really interesting one. I have a question about when you say hit. Are you imagining this is a hit as a premium product or is it sort of more cost-effective lower end of the income scale hit?

Oscar Orozco (26:51):

That's a great question. Now, I mean, the way I'm envisioning it, I mean, I'm thinking of it because, from what I've read, it's supposed to be unlike existing phones. It's more of like not using the traditional App Store system, so I think it would have to be kind of at a lower cost point. I think there'd have to be a big partnership with a lot of the telecom players that would offer the phone at a lower cost. Of course, also thinking of all the Amazon services, anyone who would have a Prime membership, for example, would get some sort of discount and, for the services, once you have the phone, you'd get discounts on that, so, ultimately, lower price point to start. And I think it has a lot to do with just the fact that the toughest thing to get over for new users would be the fact that it would look unlike what we know of now with an iPhone and an Android phone.

Marcus Johnson (27:47):

Yeah.

Oscar Orozco (27:47):

Yep.

Marcus Johnson (27:47):

I think, when you first said this, it's very easy to dismiss this, to kind of laugh it off and say, "Ha, ha, ha, they tried the Fire phone. What a joke. It didn't work." But this was 2014. This was when Pharrell Williams' Happy was top of the chart. This was a long time ago.

Oscar Orozco (28:04):

Great song. Great tune.

Max Willens (28:06):

It's still relevant.

Marcus Johnson (28:08):

So, to that point, it does feel like that was a different moment in time. It does feel like maybe people want less from a phone. And, if there's a phone, apparently, they're drawing inspiration from this light phone, this $700 minimalist smartphone, camera, map, calendar, not much else. And if Amazon just says they basically want to help you buy with Prime, watch Prime video and listen to Prime Music, that, plus the maps app, maybe that's all you need. Costs are going up. People already are struggling to buy smartphones. So, something smaller and something that does less, consumes less of your attention, maybe that's quite an appealing proposition.

(28:44):

Also, a Yahoo Finance article, I thought this was a good point, noting that a differentiated mobile experience that reduces reliance on third-party app stores may help Amazon defend its retail and Prime economics if AI agents start to intermediate shopping on iOS and Android devices, which I thought was interesting.

Max Willens (29:01):

Yeah. I think the Rufus piece, that was another part I didn't mention, but the integration of Rufus, which has been apparently doing really well, very high engagement, I think they reported over 250 million people worldwide have been using it. But, yes, I think I didn't mention it at the beginning, although I alluded to it, but, yeah, it would be sort of an alternative where, yeah, it's a little bit more about use-case specific use of the phone, less of this like browsing, time-wasting second screening perhaps. But we know the Amazon ecosystem has so many users. Right? There's so many people that are, again, shopping, streaming. I mean, there's been recently the Grubhub integration, too, so like getting meals delivered to the home. There's a lot there that would keep people kind of loyal to this new phone and Amazon overall.

Marcus Johnson (29:54):

Yeah. Marisa, what do you think?

Marisa Jones (29:55):

I think there is a market of people who probably would prefer a phone that's a bit simpler, that takes up less of your attention and your time scrolling. But I wonder how many people are just saying that and how many people would actually want an alternative, because as much as to me like a cheaper phone that is maybe less distracting sounds good, if I was given an iPhone or an Amazon device, I would probably stick with my iPhone.

Marcus Johnson (30:25):

It's also an interesting point in time to get into a smartphone world because it's a shrinking market. The smartphone shipments heading for the biggest decline ever in 2026. It's expected to fall 13% according to IDC as memory chip prices have gone up. The device prices have gone up, so the market's actually getting smaller, and they're getting to be at this point, so that's going to work against them.

(30:52):

Yeah, also, we think it's going to be a phone. It probably will be a phone. There's questions about what it will look like, if it'll be more kind of an AI screenless device. AI hardware hasn't gotten off to the best of starts. You've had Humane AI Pin. That's gone away. Rabbit R1 assistant didn't do so well. But it hasn't deterred others. Greg Bensinger of Reuters was noting that others are pursuing AI-native devices with the app-driven visual language of smartphones, OpenAI working with former Apple design chief, Jony Ive, on several hardware prototypes, and Apple, Google and Meta developing new AI-enabled glasses and other devices such as watches and headphones as well. There's definitely interest in developing an AI-centric device.

(31:37):

Half in. What do we have?

Marisa Jones (31:40):

I'm also half in.

Oscar Orozco (31:40):

Half in as well.

Marcus Johnson (31:40):

All right.

Max Willens (31:46):

I'm going not in because you have-

Oscar Orozco (31:50):

Oof, Max...

Max Willens (31:50):

... said that... Well, listen.

Oscar Orozco (31:51):

This is for earlier, huh, for forgetting the point, the half point?

Marcus Johnson (31:54):

I'm going half. I'm going-

Max Willens (31:54):

[inaudible 00:31:55].

Oscar Orozco (31:54):

Oh, I'm joking. I'm joking. Go ahead.

Max Willens (31:58):

No, I mean, I asked it kind of jokingly, but I think that, if what they are doing is... because I asked you whether you think that this is going to be sort of the lower end of the income scale versus a more premium product. I think that the reasons why Amazon wants this to be a thing are abundant. And I think you mapped them out really, really well, right? Like it's an amazing way to drive, lock in to drive consumption on media, which is really important as they continue to fuel retail media with their DSP. It's a great way to sort of provide defense against agentic shopping that doesn't involve Amazon as a retailer. But I just don't see why any person would voluntarily buy something like this when, as Marisa pointed out, like everyone's pretty content with what they have.

(32:55):

The shipments that Marcus laid out are an excellent point. We are reaching kind of asymptotic levels of improvement for the iPhone and the Samsung Galaxy devices. And so the idea that a critical mass of American consumers would just sort of go, "I'm going to ditch this thing that works perfectly fine, has worked perfectly fine, for something that is cheaper and also that I can like shop a little bit more easily and watch more stuff." I just don't see it essentially. If they said that the Transformer is like the Humane Pin, which sicko listeners of this podcast remember, I think is an amazing idea. And I remain super bullish on it. You would have gotten my half point, but you disappoint me and so you get it half point.

Oscar Orozco (33:45):

No. These are valid points. I want get the last thing in. I think we should revisit this in about two years, Max. Put it in your calendar, I think April, yeah, 14th of 2028. But, look, I think the first phone that was meant to get people to buy from Amazon, I really feel that this second one is going to make it easier for people to live within the Amazon ecosystem. I think there's something to it, guys. We'll see.

Max Willens (34:11):

100%.

Marcus Johnson (34:11):

We shall, indeed. It wouldn't have mattered though, Oscar, because you need a full point to tie and a point and a half extra, which Max could have given you to win because your prediction was a really strong one. I think it's really interesting. What if Amazon's new smartphone is a hit gets one point. Marisa's "what if Meta bought Roku" gets a point and a half. But Max is today's winner with "what If Meta keeps losing all of these lawsuits", with two full points, so congratulations to him.

(34:39):

That's all we have time for for today's episode. Thank you so much to my guests for hanging out with me today. Thank you first to Oscar.

Oscar Orozco (34:44):

Thanks for having me, Marcus.

Marcus Johnson (34:46):

Yes, indeed.

(34:46):

Thank you, Marisa.

Marisa Jones (34:47):

Thank you. It's always a pleasure.

Marcus Johnson (34:49):

Yes, indeed.

(34:49):

And thank you, of course, to today's winner, Max.

Max Willens (34:52):

Always a pleasure, Marcus. Thank you.

Marcus Johnson (34:53):

Thanks, fella. Thank you to the production crew, the talented people working on this one. We've got Luigi, Lance and John in the background helping out. And thank you to everyone for listening in to Behind Numbers, an EMARKETER podcast made possible by Verve. Watch upcoming episodes of our video podcast on YouTube, Spotify and, coming this spring, on Apple Podcasts.