caroline: from bloomberg's world headquarters in new york, i'm caroline hyde. sonali: romaine bostick is out today. caroline: what did he miss another we are both back in new york? california dreaming. we are focused on the many parts of the tech appeared and the names that call the state their home. facebook out with its earnings. missing revenue slightly but buying back, helping the stock move higher after hours as it

also announces a new reporting structure going more into the mess of it. the social media giant enters after a trove provided inset as to how mark zuckerberg writes the company. we will dig into the facebook papers. earnings and what people seem to be think is priced in. taylor: our headline is so-so earnings. the breakout news is the structure going to be divided into two segments. we have the facebook reality labs. looking at full year capex at 19 billion. a little lower than other expectations. it is because they are making some big investments in the new reality labs, which will include augmented and virtual reality. were looking at fourth quarter revenue. slightly below the top end of previous estimates of 34.8 billion. we recapped the third quarter.

revenue came in a little bit light. 29 million versus estimates of 29.4 5 billion. that just scratches the surface. let's do a deeper dive. a neutral rating at a price target of 355 on the stock. we can look at the top line numbers and the profitability and daily active users. is that what this report was about or has it pivoted to the new augmented reality segment that you see? >> there were a number of things that are important and will be in focus as we head into the earnings call shortly. the first thing is the top line miss. that is not a big strength for the company. it is not something you see that often from facebook. that is what is going to happen with the three q slight mess and

four q guidance below expectations. that is probably the most important thing out of everything. the biggest factor is how impactful apple's ios privacy initiatives have been. facebook has been talking about that for a while. snap was last week. in the report come a big signal of how much of a headwind those issues will be. have to hear more about that. we expect to hear mostly about meta-verse on the call. that is going to be a big initiative. we already know that. sonali: let's talk about the meta-verse a little longer. what is the longer-term plan for that? is it going to be a major cash burn? i'm stealing a note from caroline. is it something they should look to spin off? >> we are really early for that. thinking about spinning it off. we are starting to break out of the business now.

i think this is a big vision for mark. i would not expect that to be spun off. i would expect it to be toward facebook in the coming years. it will be a cash burn. certainly in the first couple years. it is not going to be a big revenue driver. does at a level revenue attached to it right now. it is now going to be a huge revenue driver. there is a lot of cost associated with it. this is mark zuckerberg step the future. you can expect him to go all into it. caroline: let's talk about users and where you see growth or lack thereof. we are digging into some of the slides on the investor website. pretty stable in the u.s. and canada. 196 million users. they seem to keep it at this level. we are not seeing a falloff. is it the demographics that are changing? are you worried about this reporting from the facebook

papers? were having a tougher time -- are they having a tougher time getting younger audience? >> not that much of an issue for instagram. that drawls a much younger audience. we do not know the never graphics. facebook -- the demographics paired facebook does not tell us what they are. facebook has been trending older. that is why instagram has been so important to it. we put whatsapp in that category. the overall users, they were ok. especially in the u.s. and canada, which is saturated. it did take a sequentially. engagement has been fine. you're seeing decent growth there. the fact it is maintaining growth is really important. the demographic issues or challenges, whatever you want to call them, those are really important.

facebook will continue to address that and focus there. instagram is a big area where they are getting a younger audience. taylor: you need to hear more information, more transparency on the breakdown of users on the call? is that a key headwind that could be removed? >> it is not going to be. i would be surprised to hear a ton of demographics on the call. i would expect to focus on the apple privacy initiatives. that is probably the biggest factor on why the guidance is lower than the consensus. that is having a larger than expected impact. facebook put out a poster during the quarter about how much of an impact that is having. a lot of focus on the restructure and how the breaking out revenue and cost now and a lot around the meta-verse.

i would expect to hear a lot from mark about the meta-verse and we wait -- and we might hear more about efforts and investment around safety. that ties together what we have heard need the negative news over the past quarter. caroline: it has been great to get some of your take and we thank you for doing it ahead of the limp or call. -- head of the all-important call. coming up, we are going to be digging into facebook more. hearing a take from one of the early pcs. he is going to be seeing how the state of big tech is. this is bloomberg. ♪

caroline: other than facebook's earnings, we have all been focused on the documents collected by facebook whistleblower that shows the company has been struggling to attract younger users or keep them. that has been happening for a decade now. some senior employees are alarmed over the company's inability to keep the teens engaged. which app are we thinking of? are we thinking instagram? taylor: the traditional blue app. that is what we think of it when you think facebook you are smart to -- when you think of it. you're smart to point out there is a family of apps. you can see here -- this is from the internal report. we have re-created this. we look at the number of minutes age. the white line is 30 plus.

then you take a look in yellow and that is the 18 to 29. it is flipping a little bit. it was alarming is the pink line at the bottom is age 13 to age 17. you have gone from 31 down to 26 minutes. what was so interesting is we just heard from -- it is like the meta-verse is now going to be the focus. you wonder, where does this come in? what are these questions start to come in? this seems to be so important. we have caroline: the perfect voice to understand what gen z is all about at the moment. perhaps health facebook wins back gen z and the young millennials. timothy is with us. he has worked with so many companies. nike, deliver room, to win the hearts and minds of gen z. are they doing that through instagram?

what do you think facebook can do at the moment? >> thanks for having me. they are doing it through instagram and snapchat on tiktok. i have been running this business for the last five years and i have never heard someone say how do we target gen z through facebook? flip -- platforms like instagram, tiktok. snapchat primarily for the ar and messages are winning the field when it comes to reaching gen z. sonali: is instagram the way that people can reach consumers? is the blue app kind of the lost cause when it comes to the new regeneration? >> i love how you describe it as the blue app. very cool. that is the case. really, it is down to a number of things. everyone talks about this whole thing about when your mom is on

facebook, that is the time you get off. i think it is more than that. facebook has become a bit too bloated as a platform. there are so many things to do. there is marketplace. there is news feed. rather than instagram is far simpler. the other thing is when you think about gen z, we actually do generally create content less. generally, we have less friends. the problem is on facebook, it is weird to try to friend someone you do not know. where on instagram, you can follow people. you can create content on there without knowing the person directly. that pressure does not come on instagram. that means gen z as a whole are flocking more there. then on facebook where there is that pressure to need to know the person and have this

abundance of friends. taylor: you talk about the platform that makes instagram more appealing than facebook. what about the content where in many cases facebook can feel a little more divisive and you get the angry comments back and forth? instagram feels a little more calm if you will. less hate at least from my own feed. is some of those also to do with the content we are seeing? >> i think it is not only just how divisive the content is or how on divisive it is. i think also it is how relatable the content can be on these platforms. this is the reason why we see tiktok doing so incredibly well. it is so relatable and the algorithm has been able to precisely no what you want to see. it is not just about it being

divisive. it is how relatable -- i can go on facebook now and i look at stuff and i have no clue what is going on. i go on instagram and at least some degree i can see stuff tailored toward me. caroline: it can be a little bit too perfect i feel. what is interesting is, talk to us about instagram and how much that is going to continue to be a driving force for the younger demographic. we are hearing the single use and multiple accounts. the numbers looking inflated on instagram because people have several profiles on there. >> looking at the report, there was something i saw and i thought that is interesting behavior. one of the things we see a law is the rise of finstas. that is effectively fake instas, which is a second identity for individuals. that is a behavior that is very common in gen z. to me, i see instagram continued

its position as the platform for gen z primarily because messaging. messaging is still quite a cool component of what people are solely used instagram four. think about a phrase, which everyone knows here. they talk about sliding into someone's dm's. that is primarily based off instagram. as long as they keep messaging as a core function of what they do, they are going to retain people. caroline: slide into our dm's anytime, tim. the ceo of fanbytes. we hear from one of the original vc's. an early investor in companies such as apple and aol. what does he think about big tech? what does he make of facebook? demographics as well. here's a man trying to focus in on the silver dollar.

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taylor: our big focus today is this week for tech earnings. facebook kicking things off this hour. joining us is a venture-capital pioneer who has invested in companies such as aol, apple and venmo. he is the cofounder of primetime partners. he has said that some tech giants, they might have become too powerful for their own good. let's dig into this a little more. thank you for joining us. talk to us about that. we think about facebook. with about these papers that have come out. what do you want to see in terms of some of the big changes that would help instill some more transparency in this company? >> i think facebook has the

bigger problem. we are in a time now where there is enormous focus on the general populace and congress and their congressional hearings going on in the senate and house. all the states attorney generals are all focused on facebook, google, apple, amazon to they get to a point where they have too big a share of the field they are in? what does facebook represent? 24% of total world digital advertising. you get to a point where concentration becomes a problem. we faced it any the early 1900s. we have not had a real revision in regulations in a long, long time.

sonali: what is the responsibility of investors as well? you are seeing some hit to the stocks since a lot of these revelations came through. you're thinking about yesterday investing, where is the g? at what point do investors have to sound the bigger alarm? >> it is an interesting question. it is something we are all talking about and i'm not sure how many people are doing that much about it. it is clearly a trend going forward. i think we are in a time right now where we have to think about how much we want to allocate forgetting faster deliveries and somewhat lower prices in terms of what it is doing to alternative retail distribution. the case of facebook, what is it doing to discourage younger companies trying to get some share of the advertising market and are facing a behemoth like facebook, which has enormous

market penetration in terms of users? there is going to be legislation. it may not be in the congress this year but it may come next year. the wind is blowing in that direction. i think we are going to see action. i hope it does not result in splitting off care i think the biggest problem is controlling data. when you have the ability to cross reference names and affiliations from instagram and facebook, from google to youtube, you have been norma's power that no one else has. -- you have in norm s power -- caroline: what about yourself, you started as an investor. when aco wants to remain as much voting control as someone like mark zuckerberg has managed to,

do you advise on that? >> you are talking about multiple ownership. we just solid the other day when it became public. i am strongly against it. i think giving excessive voting control to founders. we are in an environment now where the market is so euphoric. the appetite for public companies is so strong that ceos are in strong position. you saw that happen. the famous example was wework. they came out public again in a totally different valuation with different rules in place. i think we go back to one share, one vote. the idea of going public was to give broad ownership and participation with the people invested. we go public and you are still leaving 20 times the share votes

in the hands of the founders, which does has an impact on the ability to control boards, has the ability to get fired. has the ability to control an awful lot of elements of a company. people think they are public and they are not so public. i have been on the side -- instilling some fundamental rules. i think we are going in that direction. it is going to be up to congress or the sec. taylor: we talk about the regulatory risk. it is interesting to have had the rise of more popular apps in terms of engagement when you think of snap and a tiktok and instagram versus facebook. you see a scenario where facebook could argue all of the other platforms have better engagement and maybe higher teen usage and they can argue that? >> they are going to argue that.

the question is, is that sufficient to distract the people who are trying to get their hands around it? you have grassley in the senate. serious people are spending a lot of time to look at that. they're trying to come up with constructive ways of controlling the data, of determining how much of these individual companies should have. in the face of it, there still able to make acquisitions. ironically, the stocks go up. the public does not care. they should care because this is an inextricable trend. roger, who was an original investor of facebook, spoke out

widely. i'm supportive of the book he wrote, which is bringing out these issues. caroline: we sadly have to leave it there. that is a wonderful piece because i do believe roger is on bloomberg technology. this is bloomberg. ♪

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