Kurt Wagner

Yeah, I mean, my guess is that we're going to jump on this earnings call here in a minute or two, and you're going to hear the company talk a lot about how AI is impacting the ads business, because that's what they need to do to sell this right now, right?

It's hard to say.

It is in part because you see that rise in average cost per ad.

That's because people are getting more granular, more targeted.

They're spending less to create some of this ad copy because AI can do it for them.

There's a bunch of ways that AI can truly improve the ads business.

It's not as sexy, right?

It's not as obvious maybe because a lot of it's happening incrementally behind the scenes.

That is a story and a narrative that this company needs to sell because if you're just simply saying, trust us, we're building a $50 billion data center in Louisiana, and you'll see the returns of that in seven years, that's a hard pitch.

But if you say, hey, look, check it out, the ads business is growing quarter after quarter because of these ad improvements, these AI improvements we're making, that's the narrative that they're going to want to sell to people today.

yes so this is an annual thing right looking ahead to 2026 budgets uh in this case mark zuckerberg has a nice home in hawaii where they have a series of meetings executives come in in the month of november and to your point they talk about this year 10 cuts sort of across the board looking at uh all the different teams but that the metaverse has been asked to cut much more deeply than that

As much as 30% is currently being discussed, I should point out it hasn't been decided yet, but a cut of 30% would certainly also come with layoffs.

So to your point, this is an effort that Mark Zuckerberg has touted as being the future of the company for years.

So it's a pretty meaningful change there.

That's right.

And the virtual worlds aren't going away, to be clear.

It's still going to be something that they invest in, just not quite as aggressively as they had.

And what was explained to me by sources this week is that part of that is that the market has not really materialized.

You know, I think they originally

spent a lot of money building out this metaverse group thinking that they would have competition from others in the industry rushing towards a metaverse like product as well.