Can Zuck Monetize Threads?

Plus: Nearly half of Americans work at small businesses, which remain glum. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

July 12, 2023

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TOGETHER WITH

Good morning.

Being connected to one technology linked to Armageddon isn’t enough for OpenAI founder Sam Altman. He is also a major backer of Oklo, a nuclear-fission startup that announced it is going public via a merger with a SPAC firm. Oh, the SPAC firm involved is co-owned by Altman himself. We’d like to unpack all that, but we also like to keep these introductions short.

Morning Brief

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Is Threads more than just yin to Twitter’s yang?

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It’s hard out there for mom and pop.

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The FTC can’t stop Microsoft.

Tech

Threads Embraces Branded Content, Shuns News

Who needs a cage match when the marketplace battle between Elon and Zuck can be so thrilling?

After a blazingly fast start, Threads is bringing over its branded content tools from sibling platform Instagram as Meta looks to monetize that popularity, Axios reported on Tuesday. This is part of a broader push to make Threads a more upbeat, influencer-heavy platform than Twitter, and to avoid making it too newsy (read: depressing and/or enraging) while giving its marketing business a jumpstart.

Which One is the Evil Twin?

Threads hit 100 million downloads just five days after it launched. Since Elon Musk took Twitter private the company doesn’t have to announce user numbers, but The Wall Street Journal reported the company told advertisers it has 535 million monthly monetizable users. So Threads attained a little under 20% of Twitter’s userbase in less than a week.

Threads has positioned itself as the opposite image of Musk’s Twitter 2.0, but there’s no guarantee that its early adopters will stick around. Meta has to decide what exactly Threads is going to offer in the long run, other than a break from Musk’s increasingly irascible tweets. Barreling towards branded content and leaning on Instagram’s built-in army of influencers to get the profit wheels turning gives us a clue:

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Matt Navarra, author of the social media-focused Geekout Newsletter, told The Daily Upside that Threads doesn’t exactly feel like a Twitter clone content-wise. “The vibe and the tone and style of the content is probably more aligned to being like a hybrid of TikTok and Instagram at the moment,” he said.

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Instagram boss Adam Mosseri said Threads won’t court politics and news content, saying the “scrutiny, negativity (let’s be honest), or integrity risks that come along with them” are not worth the hassle. A few troll farms east of Moscow probably beg to differ…

This isn’t just about reverse-mirroring Twitter. “Meta has spent a large period of time now trying to distance itself from news and news publishers and journalism in general, and politics,” Navarra pointed out. The company is currently in a bunfight with Canada over whether it should have to pay for news links on its platforms, and has banned news URLs entirely.

Community Spirit: Ultimately, how newsy Threads becomes might not be within Meta’s control. “If people start sharing news there and discuss news there, make it more of a Twitter, it will be more of a Twitter,” Navarra said. He added that the platform’s meteoric user growth comes with a problem. “The downside to adding 100 million users in a week is that no one really knew what the platform was, or is, or could be. No communities, or clusters of communities, or sense of community, really even developed,” he said.

– Isobel Asher Hamilton

Economy

Lower Inflation Isn’t Lifting Small Business’ Spirits

(Photo credit: Mike Petrucci/Unsplash)

America’s small business owners are feeling less pricing pressure these days — but you’d forgive them for not going on TikTok and doing a victory dance.

A new survey from the National Federation of Independent Business found that 29% of small firms raised their prices in June, the lowest level since March 2021. While that’s 3 percentage points lower than three months prior, it’s still rather high.

Nightmare on Main Street

The past three years haven’t been kind to America’s 33 million-plus small businesses. A pandemic, tighter credit, and global crises like the invasion of Ukraine made keeping the lights on, the shelves stocked, and workers on payroll a Herculean task. “Inflation and labor shortages continue to be great challenges for small businesses,” NFIB Chief Economist Bill Dunkelberg said. “Owners are still raising selling prices at an inflationary level to try to pass on higher inventory, labor, and energy costs.”

Despite year-over-year inflation falling last month to 4% — its lowest level in two years — small businesses aren’t celebrating:

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Roughly 42% of small firms in the NFIB survey said they had openings that were hard to fill, and almost all said they had few or no qualified applicants for jobs. According to the US Chamber of Commerce, the US has nearly 11 million open jobs, while the unemployment rate remains low at 3.6%.

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There have already been 10 Fed rate hikes since March 2022, and there will likely be two more before the year is over, as both wage and price growth continue to outpace the Fed’s 2% inflation target (inflation data for June will be released Wednesday). In addition, 76% of small businesses say rising interest rates are limiting their ability to raise financing, according to the Small Business Index. More than 70% of business owners reported dipping into their personal finances to stay afloat.

When the Prices Go Up: Relief from rising prices may be short-lived, as 31% of owners said they plan to charge their customers more in the next three months. And as a group, they remain decidedly downcast. “Halfway through the year, small business owners remain very pessimistic about future business conditions and their sales prospects,” Dunkelberg said.

– Griffin Kelly

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M&A

Judge Approves Microsoft-Activision Merger

The biggest merger in tech industry history just got the green light.

On Tuesday, a federal judge in California denied the Federal Trade Commission’s request for a preliminary injunction seeking to block Microsoft’s monster $69 billion deal to acquire games-maker Activision Blizzard — in effect, giving the merger the go-ahead. Mark it as a major loss for FTC chair Lina Khan.

Khan’t Stop Won’t Stop

A quick timeline of events: Microsoft’s acquisition stipulated a July 18 deadline for closing the deal. Citing the possible monopolistic power Microsoft could hold over the console gaming market by acquiring a top maker of game titles, the FTC filed suit to block the merger. But that trial isn’t scheduled to begin until August — hence the motion for a preliminary injunction ahead of the July 18 merger deadline.

Now, US District Judge Jacqueline Scott Corley has ruled the FTC is likely to lose that August trial anyway, denying the preliminary injunction and essentially approving the deal:

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Central to the FTC’s case was an argument that Microsoft could dominate the console market by keeping popular Activision titles, specifically Call of Duty, exclusive to its Xbox console. But Microsoft has committed to keep Call of Duty on Sony’s Playstation and Nintendo Switch for at least 10 years — good enough for Judge Corley to dismiss concerns.

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Judge Corley also balked at the FTC’s star witness: Playstation CEO Jim Ryan, writing: “The FTC’s heavy reliance on Mr. Ryan’s testimony is unpersuasive. Sony opposes the merger; its opposition is understandable… [the merger is] Perhaps bad for Sony. But good for Call of Duty gamers and future gamers.”

Next Up: The FTC may still appeal the decision — though in similar recent defeats, such as its failure to block Meta’s acquisition of VR firm Within, the agency simply moved on. The European Union’s antitrust regulator has already approved the deal as well, leaving the UK’s Competition and Markets Authority as the sole remaining regulator holding up the acquisition after vetoing the deal in May. But Microsoft seems to be making progress on that front as well. Following Tuesday’s ruling, the company and the CMA made a joint submission to the Competition Appeal Tribunal for a stay of litigation in order to carve out time to hash out any lingering concerns. Microsoft’s legal team, in other words, is really answering its call of duty.

– Brian Boyle

Extra Upside

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No, really? Tech mogul Bryan Johnson said swapping blood with teen son didn’t de-age him.

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Don’t throw stones: Tesla’s board investigated whether company funds were used to plan a giant glass house for Elon Musk.

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