00:00Basically what sources are telling us is that Zuckerberg has said to the leadership of Meta, company-wide they're aiming for 10% cuts.
00:07But the Metaverse ambition hasn't really materialized.
00:12So according to these sources at Zuck's Hawaii home in the last few weeks, they basically reviewed it and said the cuts need to be deeper in that unit.
00:22It's really interesting because we're so focused on AI right now and it's a big move higher in the stock on this Bloomberg report, right, Danny?
00:27But I remember a time where the widening losses at Facebook Reality Labs unit was the main driver of the stock in the news cycle.
00:36And since 2021, those losses have totaled $70 billion.
00:40So that's where we understand those cuts will be felt deepest, 30% overall in the unit, far beyond what the rest of the company will experience.
00:50And it is part of, as we understand it, this budget planning for 2026 where the priority is now AI.
00:57That's where I was going to go with this, Ed.
00:58How much of it is just AI is hoovering up all the cash possible and all the investment possible in these hyperscalers like Meta?
01:07So we'll remember also that Meta is not a hyperscaler.
01:10It doesn't sell compute capacity.
01:11But you raise an interesting point, which is the AI story for Meta is to have a lot of data center capacity, partly so that internal teams working on advertising and other core product can use AI to make it more monetizable and better.
01:26The idea of the Metaverse is that Meta is pushing into hardware, you know, virtual augmented reality and smart glasses for consumers to interact with that AI software.
01:40The problem is, is that that connect hasn't quite happened yet.
01:44Well, to that point, Ed, they are still investing in their hardware to the point where they've poached Apple's top design executive.
01:50The timing of these two stories, like they're completely in Congress, right?
01:55Yes, you're completely right.
01:57Essentially, Apple's top designer is going to move to Meta.
02:02And the signal that that gives is that Meta is really serious about the consumer-facing product design.
02:13You know, this is somebody who has been very, very influential in all Apple products since the late 90s, Alan Dye, who you're showing on the screen now.
02:23So he is going to go to Meta.
02:25And what was so interesting about this Bloomberg reporting is that Apple felt important to issue a full statement from Tim Cook, who basically praises Alan Dye.
02:35And in the interim, by the way, Stephen LeMay, who's also been at Apple some time, steps up to become the most senior designer.
02:43But that's what I mean by in Congress.
02:45You have a story that Meta has gone for Apple's top design chief because they want to push deeper into hardware, but they're also making 30% cuts to the unit that's responsible for it in this transition to the metaverse.
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