morris, meta is one of your top picks for 2023, but i want to ask you about those numbers that steve kovac just brought us. this idea that the overall market for vr headsets actually st shrank this year how concerned are you about meta's investment in the metaverse and how does it play into your bull case? >> right now, i'm paying a low multiple for an advertising driven business with a huge audience that everybody i know still uses if it works, i get it for nothing. if it doesn't work, i still get an awful lot of value and a great business i think most of the money they're spending on the metaverse, but on the development of artificial intelligence technology to help them serve their audience a lot better, both in terms of getting people to use their products more and then i think helping them sell things to those people in a more targeted fashion i think that's really smart. i think they're trying to do that right now with whatsapp whatsapp has generated very little revenue for the company so far and has more than a billion users around the world so let's see what happens there. >> so mo

steve kovac joining us with more at the root of this issue, can you have monopoly powers in a marketdoesn't exist? >> the ftc maybe one day we will all be wearing computers on our faces and doing fitness exercises in the metaverse that's not the case today but the case they are trying to make right now. they make a relatively popular app called super natural i guess they have seen some good use cases with it. but it also speaking to meta's overall vision towards the metaverse. they're waiting and looking at the data to see how people use it to inform acquisitions and content like this. yesterday the cto of meta was in court testifying on this case saying we're bad at making content, so we need to acquire the content in order to be able to compete in this. >> can you afford to testify in court that you are bad at it first of all, i'm sorry, frank, you go ahead. >> no, no. go ahead >> i just know when i get ahead of steam about these metaverse trends but this is perhaps part of the question is the ftc serious about its legal case here or is it playing chicken with these companies boy,

we'll learn more from steve kovac. guess there was some rumors out it might be 2-2 but it's not it's 3-1 with the ftc saying not too fast. >> yeah. it seems more in line here, i've been reading through the lawsuit since it dropped yesterday afternoon. and one thing that's really interesting to me is how the ftc's suit tries to carve out in each -- niche cases. saying microsoft is in the high end of the console market with sony they ignore nintendo saying it doesn't count as part of the console market so they have to prove it's not a competitor with microsoft and sony that's tough to do on top of that they have to prove this young cloud gaming system that sony and microsoft offer -- actually nintendo offers a similar service that that's the future of gaming and that's where the growth is going to be. which microsoft does believe but they have to prove if that happens, microsoft is going to have an unfair advantage there as well. and, of course, there's the whole thing with call of duty and making that exclusive. and we

what exactly are these and what might they mean let's hit it with steve kovac. >> i'm going to talk about digital markets act or the dma, as most people call it one of the two major laws passed this year targeting the big tech companies. the dma will have the most impact on apple and google, forcing them to open up their software for smartphones this is why bloomberg reported a few weeks ago that apple is building a version of ios that would allow third party apps and app stores this is what to expect next year the eu will designate so-called gate keepers, the companies meeting markers for the number of customers and revenue in the eu it's written specifically to target apple, google, and amazon the companies will have to comply with the rules or face fines up to 10% of global revenues by march 2024 for some perspective on those fines, that would be nearly $40 billion fine for apple based on last year's annual sales apple and google may find ways to charge fees anyway, something they have done to get around other app store regulations. it may not be a huge financial hit for apple. in appl

that olive branch despite microsoft president brad smith's article in the "wall street journal," steve kovac joins us to break down this analog they're trying to build, talking about how nice it is to stream movies wouldn't it be nice to do the same in gaming >> microsoft already has that product. they launched it over a year ago and their vision is you can have anything with the screen and an internet connection where you can stream video games just like you can stream movies on netflix. what they want activision for and what brad smith is making the argument here is that we need more games to make this kind of service more enticing to more people and broaden the base there and activision like you mentioned has just key franchises, especially call of duty, and as they work through this regulatory process, carl, we have heard over and over and over again from sony telling various regulators and the eu and here, that look, if microsoft is allowed to do this, there are already a huge giant in the technology space, even if they are third in console gaming behind us, what this will do is give th

for more let's bring in steve kovac and seema modi replacing it is no small feat. there's a reason china is there in the first place and it will not happen overnight it could take years, potentially. >> apple is heavily reliant on china, deirdre, and what we are starting to see this year and seema will talk about this in a minute, and shift over in a more significant way to india whereas the last generation of iphones, for example, they didn't start making that generation until this year and then this time, and this cycle, the 14 cycle they started manufacturing in india pretty much right away and you can already see on the surface this acceleration plans to diversify outside of china. on top of that we are seeing them potentially diversify their chips. tomorrow tsnc is holding a big event with president biden and tim cook from apple will be there, as well where they'll open this new factory in arizona where apple will be purchasing some of the chips outside of the main plant in taiwan so we're seeing all of these little hints and pockets, deirdre, of apple making

let's stick with tech because the megacaps are getting hit hard steve kovac here with a look at some of the bigger movers as the nasdaq drops 3.3%. >> shares of these megacap tech names falling with the rest of the market and the losses extending into the afternoon let's start with apple, those shares are down more than 4% this week we got the report from bloomberg that apple is working to allow third party app stores on the iphone in compliance with a new law in the eu going into effect in 2024 if more countries impose similar regulations, apple's lucrative app store business could be in trouble. and microsoft, the ftc sued them a week ago today in an attempt to block the acquisition of the video game publisher activision. that deal could take longer to close than the initial target of june of 2023 also at amazon amazon is down as well off nearly 4%. but it's the two names relying on the digital ad market getting hit really bad so far today. we have meta and alphabet both down around 5% meta taking it on the chin, though look, it's the worst of the group here, sara it's also perhaps

. >> time for a sector short steve kovac has that for us. >> every sector is higher this morning, astocks try for a positive session along the pop performing sectors is communication services. w within that group we're searing gains in warner brother. net flex and meta are also higher, and we'll end on alphabet which is firmly in positive territory but still down double digits this month and tracking for its biggest annual decline since 2008. "squawk on the street" will be right back after this. lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. >>> during the pandemic, trillions of dollar of investment grade and high yield debt was issued at low rates now corporate ame