(upbeat music) - Okay, sounds good. This question is from Cameron. He's in college. He has a question about your thoughts on the metaverse from Meta. - Hi Cal, college student here. What are your thoughts on the metaverse that Meta is currently trying to build? How do you think that it's going to affect society?

Thank you. - Well, there's a few things going on here. One, why is Facebook doing this? And in part it's because, as I've been predicting for a few years now, the age of social media monopoly platforms has begun its descent. We just didn't realize it. Now we're actually starting to see it.

Facebook posted one of their first reductions in active user minutes, and their stock lost something like $150 billion. The biggest in absolute value, single one day drop of a company's valuation ever. So people are leaving Facebook, people are leaving Instagram. This era in which there's six platforms you have to use, but you can't communicate and you're completely out of it.

That's all dissolving into a world of much more niche social media. And I've talked about before why this has happened. I talked about this on Lex Fridman's podcast, for example. I went into detail on this. The issue is the network effect, the main network effect that these platforms had that made them monopolies, was everyone you know is using them.

And so when their main promise was, you're gonna update people on what you're up to and see what people you know are up to, that network effect dominates. If I need a place to go to see what people I know are up to, and they're all on this one platform, no competitor will succeed.

I have to go to Facebook. That was the foundation on which they built their massive user base. They then got spooked because they saw Twitter come out of nowhere and have a lot of success with this algorithmic curated timeline feature. And so the main social media companies, namely Facebook and Instagram, and then Facebook eventually bought Instagram, said, well, what we're gonna do instead is, say these platforms are not about connecting with people you know, it's about distraction and entertainment.

We will select articles and posts and things that are generating a lot of engagement and we'll put them in an infinite scroll newsfeed. And you could just click on that F on your phone when you're bored and there's gonna be something there that's gonna press your buttons and it's a good distraction.

That was the beginning of the end for these platforms. Yes, when you already had 1.3 billion people on these platforms, they were gonna use it more in the short term 'cause that's more interesting than seeing what your cousin's up to. But in the longterm, now there's no reason to be on Facebook if I wanna be entertained.

Yeah, that's entertaining, but so are podcasts. So are shows on the streaming services. So are books. You know, so are any other number of other services where it could care less if my cousin uses it. And that's exactly what happened to Facebook. It's like, yes, that was more entertaining for their existing users, but over time their users were saying, I don't really wanna see Facebook newsfeeds.

I wanna watch, you know, Yellowstone over on Paramount and listen to a podcast on some niche topic I'm really interested in. This is entertaining, but other things are even more entertaining. So they're starting to lose users. And so what we get instead is the rise of much more fractured social media where the experience is, okay, if we're gonna do distraction, let's just do distraction.

And that was TikTok's play. TikTok said, okay, if this is just about scrolling things and being distracted, let's just plug that matrix cable straight into the back of your spine. Let's get rid of the whole, like my cousin's on here and I have a wall and I'm connecting to people.

Just get rid of all of that. And let's just like hone in like a laser beam on just the absolute most in the moment, dopamine hijacking, attention generating style of content. And don't even worry about where it comes from. We'll just show you things one after another. If that's our game here, then let's just purify that.

And that's what TikTok is doing. And that's why it's sort of eating the lunch of the other social media platforms because it's saying, forget this, like I wanna connect to people I know stuff. However, that is a world in which the obligation to be on these platforms completely dissolves.

And I don't mean to rant too much about this, but Cameron, I think about this a lot. Five years ago, when I would say in public, I don't use social media, I don't use Facebook. People were aghast. Like this is crazy. How can you survive in our society without it?

That's where everyone is. That's how you know what's going on. That's where all the cultural trends are. That's where all the news is. That's how you get business. In an age of TikTok, no one cares anymore if you're not using it. 'Cause it's just purified dopamine distraction. So if you say, hey, I don't have a TikTok account.

No one's like, how do you survive? Like, yeah, I know it's weird. You know, it's fun, but there's no expectation that you would use it. And that's actually way more healthy relationship with these tools. And so what we're gonna get is TikTok 2.0 and 3.0, all sorts of different services that directly press buttons in very specific types of ways.

A clubhouse was like this. It was doing something else very specific, was very interesting. None of which have any network effect requirements. I don't need my cousin and my friends from high school and my grandfather to be on TikTok for it to be useful. And it's promised to me.

It's promised to me is like, we're gonna show you these videos and there's gonna be a cat on it and it's gonna be entertaining. And so once you got rid of the network effects, this whole thing is just gonna fragment into lots of different sources of entertainment. Some different than others, some much more base, some much more high end.

It doesn't matter. And no one will be expected to use any one of these things. And it's not a weirdness if you don't use any one of these things. And that's actually a much better, healthier world. This more long tail niche social media type world. It's less about connection and more about distraction is fine.

And that's where we're going. And you can't be a $700 billion a year social media company anymore, once we get to that world. And that's what Facebook sees. And that's why they're trying to shift away from it. All right, so that's the whole background for what's going on. I think the particular meta vision that we see now, which tends to be focused on social life occurring in virtual reality, that's a smoke screen.

That's not the big headline. The big headline with these technologies is going to be the dissipation of the personal electronics industry. I was talking to some people in the industry about this when I was doing a New Yorker piece last fall about people who work in virtual reality. This Cameron is the trend that is much more powerful.

And the trend works as follows. Once augmented reality glasses get to a certain level of quality, and once we have sufficient high speed internet wherever we need to be, and we're very close to that, there'll be no need to own any other consumer electronics beyond those glasses. If I want to use a computer, I don't buy a computer from Apple.

There is a instance in some Amazon virtualization cloud somewhere of my computer running in a giant server farm, and my AR glasses will create a screen wherever I want in the environment in front of me. And there is a screen of whatever size I want, and there I work on my computer.

If I need to use my phone, I do not need to own an iPhone or an Android phone. I have my glasses on. I can just pull my hands down and there is the list of my contacts and I can see who's texting me. I don't need a separate phone.

If I want to watch TV, I do not need a 65 inch TV. I can make a 65 inch TV show up wherever I want in my house, and it can be in a position where I see it through my AR goggles, but everyone else in my house sees it in the exact same position.

We can't tell the difference between that screen being there in real life or not. There's no need to actually buy or own TVs. That is the huge game changer that is coming. The virtualization of computation into the cloud and the replacement of interfaces with augmented reality goggles. Many companies disappear once that happens.

What's the Foxconn plant, Apple's Foxconn plant gonna do when there's no iPhones to produce, there's no iMacs to produce? What are they gonna do? You know, that's gonna go out of business. What's Samsung gonna do when high-end Android phones and large screen TVs don't need to exist? It's gonna disappear.

It's gonna be a huge change to the digital electronics industry. And guess what? All of the major players are investing huge amounts of money to make sure that they are not going to lose in that game of musical chairs. Yes, Facebook talks about META. Facebook is also caring a lot about this future of virtualized consumer electronics.

They are spending a lot of money on, guess what? Their own pair of these augmented reality glasses. Apple is putting a ton of money into this as well because it is existential for Apple. Apple is a trillion dollar company that will disappear and no longer exist if they don't win the fight to be the people who produce the best glasses that virtualize all this because you don't produce iPhones in a world of augmented reality.

Amazon and Google are betting big on both. Google is betting big on the glasses front. They're doing that with Magic Leap, which they put well over a billion dollars into. Amazon is trying to be the back-end computation. So if we don't actually have a phone, if we don't actually have a computer, where does that computation happen?

Amazon is saying, "We'll do it. "We're not just virtualizing computation, "we're virtualizing hardware. "We can make anything you want happen in our servers "and we'll just beam the screen to wherever you are." So Cameron, that is the big trend. That is gonna be the trend that's gonna completely upend our industry, not, as Mark Zuckerberg videos would seem to imply, us playing cards in virtual reality in a space station with some of our friends.

That's not that interesting to me. The thing that's gonna upend our world is all interfaces are virtual. All computation happens on Amazon servers. And 80% of the major digital electronics company that exists today no longer exist in any way that we, anywhere like how we see them today. That's what I would keep my eyes on, not being in one of these weird virtual reality space stations and doing Facebook with avatars or something like this.

Interesting stuff could happen there, but that's not where my eye is right now.