Meta Heading to Antitrust Trial Over IG, Whatsapp & Disney+ Rallies With 4.4M Subs

0:03When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Good morning, Rue Daily Show. I'm Kyle Heggie. And I'm Anne Berry. Today, Meta is heading to an antitrust trial. What that means for their ownership of Instagram and WhatsApp. And Disney's latest earnings have investors excited.

0:43Have they finally gotten their streaming legs under them? It's Friday, November 15th. Let's ride.

0:53So it is Friday and we actually are making Morning Brew Daily history because there's no Neil, there's no Toby, they're slacking off. They're out somewhere having fun. It's me and Anne Berry locked in the studio. And Anne, the audience might know me a little bit, but they may not know you for Morning Brew Daily Show. So tell us a little bit about yourself. Thanks, Carl. First of all, I miss Neil and Toby. So shout out to them. Who doesn't? So I am really involved here in brew markets where we are focusing on the hottest stories coming out of public stocks. And we do a ton of great work. We have a newsletter.

1:28We are building on social. Come find us on Instagram. Come find us on X. and there's a lot more to come. So Working Hard also hosts, just like you do, another podcast here at Morning Brew. It's called After Earnings. That's where we have in-depth conversations with public company executives that retail investors often don't get to have. So we're trying to unpack that for folks. I love it. Well, Anne is probably the smartest person at Morning Brew. So this is going to be a really fun conversation. We actually are talking a lot about earnings today. So you're going to be right in your sweet spot and I have to compete with this accent.

1:55So I'm a little nervous, but let's get into it. Yes. But before we get to all that, let's hear a word from our sponsor Sage. Not the herb, but a tool that saves finance professionals a lot of time and money. Life as a CFO is stressful. And I was talking to our CFO here at The Brew and he said that a lot of times CFOs call themselves chief figure outers. And part of the reason why CFOs call themselves that is the financial health of a business is like a jigsaw puzzle. Bill pays over here. Closing a quarter is over there. It's hard to see the big picture. Which is where Sage comes in. It is the box that contains all the puzzle pieces, but it also shows you the picture you are trying to make.

2:31So if you want to do a little less searching on the ground for pieces and a little less guessing where those pieces go, check out Sage. Head to sage.com forward slash morning brew. That's sage.com slash morning brew. I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year, and I think this season's lineup is even cooler. And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

3:09We are about to find out who is stronger, the U.S. Federal Trade Commission or Mark Zuckerberg and his wife Guy era. Now, why is that? It's because Meta must face trial over claims it overpaid in its purchase of Instagram and WhatsApp to crush emerging competitors. This strategy is often called buy or bury, no relation to the co-host and bury, where a company basically says, let me buy you or we will throw our entire weight behind destroying you. Now, for reference, Meta bought Instagram in 2012 for a cool$1 billion, and they bought WhatsApp in 2014 for 19 times that, for$19 billion. Now, the history of the case, the FTC and 48 states attorneys generals sued Metta in 2020 during the first Trump administration.

3:54And the lawsuit was then refined under the Biden admin, which kind of highlights this seemingly bipartisan effort to curtail Metta's influence and more broadly, Big Tech's perceived monopolistic power. Metta had urged the judge to dismiss this entire case, saying it depended on an overly narrow view of social media markets. It didn't take into account competition from ByteDance's TikTok, Google's YouTube, X and Microsoft's LinkedIn. Trump's return to the White House in January. It might bring some changes to this antitrust approach that the U.S. has had, although it's hard to predict how exactly his admin will act in practice.

4:31And do you think we have a serious threat to Meta here? I don't think we do, actually. And for a couple of reasons. First of all, can we just touch on something you said right at the top? Yes. You said the fact that Meta is now defending its purchase, saying it overpaid. If you could buy Instagram for a billion dollars now. It would be a great deal. Amazing deal. Incredible deal. Deal of the century. So I thought that was just interesting to show how times have changed. Right. So that's your question, which is, is this going to happen? Look, we are looking at with the change administration, a change more likely than not in leadership of the Federal Trade Commission.

5:06You've had Lena Khan there. Technically, her term expired in September. And so the question is, is she going to be reappointed? Probably not. So who is it going to be that's going to get appointed by the Senate? We don't know. And until we know, I don't think we know what's going to happen with this case. Just one person's view. Yeah. And it's been interesting. I think Facebook or Meta at one time had maybe bipartisan zeal to attack it, maybe for different reasons. Now it seems like Zuckerberg and maybe the company are pivoting their PR. They're showing a different side of them. I'm not sure actually if there is still the same bipartisan anger towards Meta as there maybe used to be.

5:41But also just against the backdrop, a lot of the big tech companies are getting sued. I think Amazon is facing an antitrust lawsuit. Apple is facing an antitrust lawsuit. Google is facing two antitrust lawsuits. So until we see what changes are going to happen in the administration, it might still be hunting season for big tech. It's also interesting to see how with time elapsing, the definitions of the markets that these big tech companies are defending changes. So you just said it, right? When this deal was done in the 2012 era, and Meta was going after buying social assets, that was before TikTok exploded, right?

6:15It was before X exploded. It was before YouTube exploded. So the argument today about who are we competing against? Do we dominate the social market? Different argument today than then. Same thing, let's take Google, right? Antitrust going after them because of search. I mean, do you use Google for search or are you using ChatGPT? I mean, ChatGPT is definitely increasing perplexity and big in the search space. So I think your point about these markets change or consumer behavior changes. And so maybe we don't even need to break them up. This is just a distraction, allowing a little bit of sunlight in the market for these new emerging companies to take some share from these big tech companies.

6:47I will say, I think Zuck, I mean, I don't think he wants his company to be broken up. But either way, he is loving life right now. He recorded a song with T-Pain to show how much he loved his wife because he met her and they would play the song Get Low. So this guy's having a good time no matter what. Also, how sweet is he with his wife? Didn't he get a sculpture commission? Oh, so sweet. He's in his wife Guy Era. I love it. I also, if somebody wanted to make a sculpture of me and a T-Pain rendition, I would find that. Yeah, listeners, you heard it. Yeah, I know. I'm going to get flooded now with D.S.

7:18I'm going to find a ton of this coming into my inbox. The other thing, Carl, that you touched on, which is how perception has changed. It used to be bipartisan. I don't hear people riffing on Facebook now the same amount that they're riffing on X. Yes. The power of X is what everyone's talking about. No one's really talking about the power of Facebook when it comes to public discourse in quite the same way. Agreed. So we'll have to see how this case plays out in the new administration. Now it's time for our Friday segment, Stock of the Week, Dog of the Week, where Anne and I tell you about a stock who is full of holiday cheer and one who is just mumbling bah humbug.

7:51Now, as a reminder, we are not financial advisors. I was a philosophy major. Do not take my advice on stocks. Anne, I'll throw it over to you for Stock of the Week. Don't take my advice on stocks either, by the way, just to double down on that. My Stock of the Week is Disney. And it's not just because the stock popped, went up just under 7 % yesterday, Kyle. It's because the story behind Disney, the magician when it comes to storytelling is absolutely fascinating after years of investing heavily in their streaming business seems as though it could finally be paying off disney reported on thursday a profit of 321 million dollars for the third quarter actually it's fourth quarter so that's for september bouncing back from a loss of roughly the same amount a year ago big boost to their financial performance because there have been so many question marks about where's this company going in the age where linear TV is really struggling.

8:41So let's talk about what happened in their streaming business. A whopping 4.4 million new subscribers joined Disney +, crushing expectations of 900 ,000. And there was a little bit of Netflix mimicry here. Took a page out of the Netflix playbook, hiked up prices, and it pushed some subscribers to their ad tier plan. And there was this really funny moment, I don't know if you saw this. there seemed to have been a hot mic moment where CEO Bob Iger almost accidentally disclosed about 47 % of US subscribers are in that ad tier. Now, don't forget that ad tier only launched less than a year ago. So it's working and it's not only working, it's working at real pace, which I thought was pretty interesting.

9:22Let's talk a little bit too about what's been going on in the box office. Shining performances from the studio division, including Inside Out 2, brought out one. Did you watch Inside Out 2? Oh, I saw it. Oh, did you? I did. Did you love it? I thought it was good. I also didn't even see Inside Out 1, so it got me on 2. It got you. Well, it got you and$1.7 billion worth of other getting people 2. Highest grossing animated movie of all time. And Marvel's Deadpool and Wolverine rated$1.3 billion, setting a new record. I love this for an R-rated movie. So, Carl, in all of this, though, decent performance.

9:56There has been huge drama in the C-suite at Disney. So have you been following all of the stories about the succession planning issues? I mean, I think this is a really interesting part of the story, which is Bob Iger obviously left Disney and then he came back. It's kind of like LeBron James leaving Cleveland and then coming back for the second stint. And, you know, Bob might be a little bit more washed up. You talked about the hot mic moment now, but I still think he is one of the best executives probably ever in media. And I would not bet against Disney. I think you've shown the streaming numbers are turning around.

10:29They have, I think, one of the premier brands in all of business. You, like, are a bad parent if you don't take your kid to Disney World. So they really own that relationship with a young generation. And I think Bob is putting them in a good spot. But the succession planning, because they've announced that they're trying to find a new CEO in early 2026, that is what I think is going to be kind of the linchpin of this continued success of Disney. Can they find someone to replace Bob Iger? because the first time they tried, they put in another Bob and that didn't work. So just pick someone without the name of Bob and maybe you're in a better spot.

11:02So, Anne, what do you think of the succession plan? Are they going to find someone to replace Bob Iger? Well, they're definitely taking it really seriously and the pressure's on to do it this time. So we've got James Gorman, who is the former CEO of Morgan Stanley, who is now taking over as chair of the board and running the succession planning committee. Now, James Gorman himself had been CEO of Morgan Stanley for 12 years, did a really good job of handing over the seat. So let's compare that to Bob Iger. He was CEO for about 15 years the first time, left in 2020, came back two years later when the board ousted his successor, possibly with his own workings in the background.

11:37No comment from Bob. And he's meant to be gone by now, but he's still sitting there. And Mary Barra, who's the CEO of General Motors, is on the same succession planning committee, so is the CEO of Lululemon, right? So you've got people who are really serious people really focused on this. What I thought was really interesting, Kyle, as a separate but nuanced point around this, Disney very, very unusually put out three-year projections in their earnings call yesterday. And they said, look, we're good till 2027. We've got challenges. It's tough in TV. It's been a little tough in the theme parks.

12:10But we're good till the end of 2027. And I think that was almost their way of saying, even when Bob Iger's gone by the end of 2026, We're telling you there's life after him. We're going to be OK. Yeah, I think that's a really great call out. And I think that is right. That is the question. Like Disney has been very successful. Bob Iger left. Things started to get rocky. He came back turning it around. Can Disney exist in a post Bob Iger world? We got James Gorman and company on it. We'll see how it goes. Let's move on to the dog of the week. My dog of the week is electric vehicles. Now, this holiday season, I'm hoping Santa can fit an EV down your chimney because come 2025, these vehicles might be getting a little more expensive.

12:50Now, the Trump transition team is discussing ending the$7 ,500 EV subsidy as part of a broader tax reform effort. This EV tax credit was actually established as part of the Inflation Reduction Act. Now, the current EV tax credit, if left alone, is set to remain in place for 10 years. And there was actually a big change in 2024 that allowed consumers to use a point of sale discount. Essentially, instead of claiming this as a credit on their tax return, they would get the discount immediately at point of sale. So it pushed a lot of people to feel a lot more comfortable buying EVs. It also allowed electric vehicle companies or companies trying to establish themselves in the EV space to remain profitable on these vehicles because they were getting essentially$7 ,500 from the government.

13:34This was effective. In 2023, EV sales in the U.S. reached a record high of nearly 1.2 million units, And this was a substantial increase from 5.9 % in 2022 and 3.2 % in 2021 in terms of total U.S. vehicle market. Now, zooming out a little bit, Tesla is actually about half of all of the U.S. EVs in the third quarter. They sold half. So they are a major player in this. However, Tesla's U.S. EV rivals have collectively steadily eroded this market. because Tesla used to be about 80 % in the first quarter of 2020. So the EV market might be getting a shakeup. We're not sure who the winners are going to be.

14:16We're not sure who the losers are going to be. And does this mean I need to add a Tesla to my Christmas list? What should I be doing here? Well, here's what I find so fascinating. You've got Elon Musk, who's become this incredibly influential and loud voice advising what will be the new administration. Sitting right there, founder and CEO of Tesla. at the same time as this tax credit, which was helped the whole industry, is potentially going to go away. So my big question around this is why. So should you be adding a Tesla to your Christmas list? I mean, if someone dropped a car in my stocking for Christmas, I'd be absolutely thrilled.

14:49But my question is what happens more broadly? So if you go back to some of the things Elon Musk has said, and this is really interesting to me. He said earlier this year that killing the subsidy might slightly hurt Tesla sales, right? And we saw Tesla share price come down a little bit on this news. But he said it would devastate his U.S. competitors in EV, including legacy automakers such as General Motors. So if you get a Tesla, I mean, you might be the last person standing. Maybe everyone else does get decimated along the way. I think that is the most interesting point here, which is Tesla is kind of far out ahead of the competitors.

15:22They've built EV infrastructure. They have the manufacturing process down. GM, Ford, Rivian, all these companies are trying to catch up to Tesla. And in some ways, the subsidy is helping them all, but it's helping these challengers to Tesla a little more. So if they kill the subsidy, exactly to your point, it hurts Tesla a little bit. It hurts these other companies a lot more. What I also think is interesting is on a global scale, China is really ascending in the EV market. They have the company BYD, which is blowing up in China. It's trying to enter other markets. So far, we've been effective at keeping it out of the U.S.

15:56market. I don't see the Trump administration changing that. And so there's also this push of remaining dominant in the EV and battery space for the U.S. as a concern of national security. And there was this Alliance for Automotive Innovation actually telling Congress we need to keep these subsidies in place, not just for consumers, but to allow our companies to develop better EV infrastructure to remain competitive from a national security perspective as well. So I think this is actually a really interesting story. It has hurt most EV companies. Rivian stock was quite down on the news. We'll see if it goes through.

16:30But I do think the most sneaky piece is that it might also help Tesla overall. Amazing to see what Tesla stock price has done in response to this. I mean, it's been on a complete tear since the election. Yeah, I feel like every day I open up and Tesla's up like 20 % or down 20%. They've never had a normal day. Coming up, the story behind how The Onion won the bid for Infowars.

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18:01Now, The Onion's bid was actually backed by the families of victims of the Sandy Hook school shooting and one first responder. It's also going to have an exclusive advertising deal with Gun Control Group, Everytown for Gun. Alex Jones placed InfoWars parent company into bankruptcy and later filed for personal bankruptcy in 2022 following years of costly litigations with the families of Sandy Hook victims. He had been ordered to pay over one billion dollars in damages for repeatedly claiming on InfoWars that the 2012 Sandy Hook school shooting was a government hoax and involved crisis actors. Hence the maybe irony of the Sandy Hook school shooting families joining in this bid to take down InfoWars.

18:41Now, Ben Collins, who owns The Onion, said the new plan for InfoWars going forward was, quote, to shine a light on the economy around this that has completely engulfed our current media, which is people getting you really, really upset and then driving you to a page to buy a panacea. Robbie Parker, whose daughter Emily was killed in the Sandy Hook shooting, said in part, quote, the world needs to see that having a platform does not mean you are above accountability. The dissolution of Alex Jones' assets and the death of InfoWars is the justice we have long awaited and fought for. And I was a massive Onion fan growing up.

19:15Then it kind of faded into irrelevancy. It seems like it's back and back with a vengeance taking down InfoWars. Is satire back on the menu? I think the Onion satire is—it never went away. It's coming back into conversation. I find this move a tricky one, I think, for them to navigate. Because if you look at the motivations here, the family partnering with The Onion, you called that out. I can see them wanting to have a way to make sure that this content is pulled down. The InfoWars content is pulled down. It's in the control of someone who they trust. And it's going to be either managed away or goes away in a method that they can get behind.

19:53Where The Onion actually goes from here with it, I think is a real question mark. They've talked about turning it into a satirical website, turning it into a parody. Parody is a really tough pivot. I mean, this is tough stuff for them to go after, I think. Yeah, I mean, I'm glad the families were involved in this takeover of InfoWars because it seems like getting their buy-in is very important given the nature of InfoWars and that tragedy. So I'm glad they have involvement. I don't know what The Onion is going to do with this. I think one of the interesting things is they were doing a fire sale of InfoWars.

20:25Like, it wasn't just the domain or the assets. This included everything from Platform's studio equipment. They had an online dietary supplement store, a Teradyne armored truck, its social media accounts, and even a Winnebago motorhome. So Alex Jones was selling everything to try to get enough money to pay out these fines that he's been ordered to pay to the families. So I also just don't know what they're going to do with the Teradyne armored truck. So we're going to find that out soon. Maybe put the Onion logo and drive it around. I actually went down the rabbit hole a little bit to try and figure out who owns the Onion.

20:58And the owner of The Onion is one of the founders of Twilio, which I found quite interesting. So tech's sort of coming back into a very different kind of media ownership. I don't know if that gives some insight into what the motives of The Onion could be here. But figuring out who the players are, unpacking that a little bit more, I think it's going to be a part of how this unfolds. Yes. And Alex Jones, no surprise, was on X saying he's going to stay until the lights turn off and that there's probably a big conspiracy to take InfoWars away, obviously. So he isn't going away forever, but I think this is a big step in limiting his reach because InfoWars was relatively popular in the media landscape.

21:35All right, Carl, before we end our Morning Brew Daily Maiden voyage together, let's share some other stories that you should know before we head into the weekend, starting up with media, but a different kind. Tonight is a big night for Netflix because they're getting into live sports. We will see the streaming giant airing a highly anticipated fight between YouTuber-turned-boxer Jake Paul and boxing titan Mike Tyson, set to take place this evening at the AT &T Stadium in Dallas, Texas. But it's not just about the spectacle of the match itself. It's not just about the bout because for Netflix, the stakes are even higher.

22:11The company's bold move into live sports content could be a game changer for its growing portfolio of sports programming. There's been so much discussion, hasn't there, about traditional sports networks, seeing competition from digital platforms, Netflix betting big on high profile events like this one. Do you remember they also went after Raw, so they'll be broadcasting WWE starting next year. All of this to attract subscribers with the thesis that that's how you get engagement with these live sports and trying to redefine what live sports can look like in the streaming era. Now, Tyson's got a massive profile.

22:44It's not without controversy, by the way. both he and Jake Paul, slightly polarizing personas. But this fight does have the potential to bring in a new viewership to Netflix, to drive real engagement, particularly amongst younger audiences who may be familiar with Jake Paul from YouTube and bringing them over to perhaps try and tempt them into subscription. But Kyle, what's your take on this? It's a big bet. It's a big intention. Does it work? I have two takes. The first is Jake Paul fighting Mike Tyson. Like, just seeing that headline is almost surprising. If I showed that headline to my grandpa, I think his head would explode.