Meta Ruled Not a Monopoly & “Baby Shark” Company Goes Public

0:28The best B2B marketing gets wasted on the wrong people.

0:36good morning brew daily show i'm neil freiman and i'm toby howell today can a lettuce change bring panera back to relevance then the company behind the addictingly annoying baby shark song just went public it's wednesday november 19th let's ride

0:58Yes, the nights are feeling extra long right now, but imagine if the sun didn't come up at all. Because that's the reality for people living in Utkiavik, Alaska. In the northernmost town in the U.S., formerly known as Barrow, the sun set at 1.36 p.m. yesterday, and it won't come up again until January 22nd. For the next 65 days, Utqiagvik's 5 ,000 residents will experience Polar Night. It's something they're used to, living 330 miles north of the Arctic Circle, but it probably isn't easy because not only is it dark all the time, but a quarter of all days in Utqiagvik don't see temperatures rise above zero degrees.

1:36Toby, two months of total darkness. Going outside is miserable. What is your game plan? Can you imagine? It would certainly change the intro to this show, Neil. So good night brew daily show, everyone. What am I doing? Crying first and foremost, probably some Legos or just looking at the bright side because I know the opposite effect happens in the summertime when the seasons change. Nighttime never sets in even during night hours. So it's based in sunlight 24 hours a day, which leads me to the craziest fact I learned via this story. All locations on earth get the same duration of sunlight every single year.

2:10So Utqiagvik sees the same number of hours of sunlight as Miami, Florida does. That blew my mind right there. Just a little more extreme. You get all or nothing. All right, now a word from our sponsor, U.S. Bank. Well, it finally happened, Toby. My laptop is starting to slow down and freeze up and it's time for an upgrade. But instead of breaking the bank and paying for a new computer out of pocket, the U.S. Bank Split card lets me pay later. Introducing the U.S. Bank Split World MasterCard, a new type of card that lets you pay later on every purchase. With the Split card, all purchases are automatically divided into three payments and place into a payment plan to be paid back over three months.

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3:28The FTC, which originally sued during the first Trump administration back in 2020, argued that Facebook, as it was known as the time, bought Instagram and WhatsApp to neutralize emerging rivals, labeling the buys as strategic moves to eliminate competition, not improve product offerings. But the judge in this case, James Boesberg, said that the FTC had one issue. It couldn't clearly define what the heck the social networking market even is in 2025. The market definition problem stems from what Boesberg described as a rapidly changing media landscape with surging and receding apps and new features being added faster than you can say, hey, what happened to Vine?

4:07Because of the fluidity of the market, the FTC couldn't draw a consistent line around what counts as a social network, a key part of an anti-monopoly trial. Even if Meta once had monopoly power, Boesberg admitted, the FTC would have to prove it still holds that power, something the agency failed to demonstrate. Neil, after whiffing against Meta and failing to break up Alphabet's search monopoly in any meaningful way, suits against Amazon and Apple remain pending. I had two hits over my entire middle school baseball career, and I still think I'm faring better than the FTC has against big tech. It's not a great average right now.

4:42The FTC wanted to bucket Meta in what's known as the personal social networking space. They wanted to show that right now when you go on Facebook or Instagram or WhatsApp, you are just communicating with your friends and family. And they're saying the only competition in that space right now is Snapchat. And Meta is completely owning Snapchat there. Granted, you could potentially grant that. But then Meta argued successfully that it is no longer a personal social networking service. When you go on to Instagram these days, what are you looking at? Are you looking at your friends' pictures or are you scrolling through reels about people that you don't even know and you're essentially using it like television?

5:18So that is what the judge decided. He said that Meta is not a personal social networking app. In fact, it is a social media company along the likes of TikTok or YouTube or any other competitors that Meta said were actually taking market share from and said there's a very robust competitive landscape peer, we are not only going against Snapchat, we are going against literally everybody on the internet and the judge agreed with that. And it just shows the perils of bringing an anti-monopoly trial against big tech in this day and age because it shows how startups often arise and start to nip at the heels of these big behemoths and they start to grow fast enough that they do end up looking like a competition.

5:56So it leaves these grand monopoly trials looking very old by the time they actually reach, you know, a verdict. The same thing happened earlier when the Justice department's battle with Google, the judge agreed that it was doing stuff to protect its search dominance. But by the time it came to rule on whether it had to divest any part of its business, AI tools already had arisen and started chipping away at that dominance. So it's a pattern we are now seeing play out over time that if you are maybe an antitrust lawyer for big tech, if you just draw it out long enough, someone will come up and start to say, hey, I'm going to be in your competition here.

6:32Yeah. So let's see how the government is doing so far. You said it wasn't a great average, but actually they are two in one right now. They brought five major antitrust lawsuits against big tech, the FTC and the DOJ. They've got two against Alphabet. And in that case, a judge did rule that Google was a monopoly in terms of online search and advertising markets. In the online search case, there was a punishment handed down, but it wasn't really a big deal at all was a slap on the wrist. We're still waiting a punishment for the ad tech monopoly ruling. Suits are ongoing against Amazon and Apple and the one that just and they just took the L versus Meta.

7:10They could appeal this, but because they've invested so many resources and money into pursuing this prosecution, but it looks like they're not going to because the winds are shifting and most analysts are like, they're just going to take the L on this one. This has been kind of a cloud over Meta's stock for much of the year because this ruling was pending. We didn't know which way it was going to fall necessarily. And Meta has been the worst performing of the Magnificent Seven by far this year. Its stock rose a little bit on the news that the trial went in their favor, but nothing crazy because there are bigger issues going on in Meta right now, namely that they're spending a bajillion dollars, not an exact term there, but pretty dang close, on building out their AI infrastructure, and they don't have necessarily the income to support it like maybe a Google does.

7:59So didn't see a massive stock reaction, but it was a sigh of relief from this. The clouds are dispersing in this one area of business that it's been making investors nervous. Americans are not redoing their kitchens, and that's bad news for Home Depot. The home improvement retailer cut its profit forecast for the year and reported stagnant sales last quarter, saying that economic uncertainty and a frozen housing market had people putting off big ticket upgrades to their homes. Shares slid 6 % on the day after Home Depot's third consecutive profit miss. When you're talking bellwethers for the economy, it's number one, Toby's hairstyle, and number two, Home Depot.

8:36The company has long been used as a crystal ball into the state of the American consumer and the housing market since its business is so connected with the projects people embark on, bigger and small, to make their living spaces a little nicer. And what Home Depot's results show is that the housing market is still as frozen over as the pond I'm going to skate on later this winter. Prices are still sky high and mortgage rates have hovered between 6 and 7 percent in the last several years, discouraging any homeowner with a lower rate to move. That's a problem for Home Depot because its lifeblood is home turnover.

9:07When you move into a new place or spruce up the one you're leaving for a sale, that's when you rip out the walls and spend a lot of money at their stores. So as CEO Ted Decker said yesterday, some relief on mortgage rates in particular could help, and you can almost hear the desperation in his voice. And then another bizarre incentive for Home Depot to do well is the amount of storms that happen in a given year. A quieter storm season actually hurts demands for things like roofing, things like generator, other repair-related products. So kind of just an interesting set of incentives that spur buying at Home Depot.

9:40Obviously, you need the housing market to be up and running, but also if it is a particularly bad storm season, that also improves their bottom line. So interesting that you have to jump on an earnings call and go, hey, it was super mild in terms of the weather, and that impacted our business. Yeah, so what is Home Depot doing to kind of rejuvenate its sales at a time when people are really not doing huge remodeling projects? Well, it's trying to get into the B2B business. The big professional business wants to sell to professional contractors. contractors. So earlier this year or last year, it bought SRS distribution for$18 billion.

10:14It was the largest acquisition in its history. This is a company that supplies to professionals in the landscaping business, does pools and roofing. It also bought another company that does something similar, GMS, earlier this year. So kind of wants to proof itself against the folks like us who are looking at the housing market and saying, well, I cannot afford anything. So even going to Home Depot would be something I could never even think about because I can't even afford a house into the first place. So that's trying to get into the B2B business. The one bright spot that it was kind of trying to spin into a positive is the fact that homeowners themselves actually do remain financially healthy thanks to the fact that home prices have increased so much, 50 % rise in home value since 2019.

10:55So the actual people who have homes have money to spend, but they're spending it on things like cosmetic makeovers, like a new coat of paint, or some new landscaping. They need people to rip up carpet and rip down walls in order to drive meaningful spending increases. In business as in life, the little things can make a difference, like what kind of lettuce you serve in your salads. That's at least what Panera believes as it kicks off a multimillion dollar revamp to become relevant again in the fast casual space it pioneered. To hear CEO Paul Carbone talk about what went wrong for Panera, it does in fact all start with the lettuce.

11:31Last year before he was hired as chief executive, Panera decided to swap their 100 % romaine lettuce salads to half romaine, half iceberg, which is cheaper. Carbone thinks a fifth grader made that decision. No one likes iceberg, he told the Wall Street Journal, adding no one gets that salad with 50 % iceberg lettuce and goes, oh my God, look at that white salad. It's so appetizing. So now Panera salads are back to 100 % romaine. The lettuce debacle sounds quaint, but it's a symptom of the cost-cutting ethos that's dragged down the chain in recent years, or as Carbone calls it, death by a thousand paper cuts.

12:06Because it's not just the salad getting pinched for pennies, it's the staffing at stores, which has been reduced, as well as the portion sizes, which has resulted in customers feeling like they aren't getting value at Panera. Foot traffic has dried up as a result, and sales fell 5 % last year to just over$6 billion. To mount a turnaround, Carbone launched a program called Panera Rise, which attempts to reverse cost-cutting measures with investments in food quality, value, staff, and building more restaurants that reflect those themes. Toby, can you pull it off? Maybe. I would like to say I like iceberg lettuce, especially if it's got a little crunch to it.

12:40But the general point being that it was indicative of just larger systemic issues at Panera where they were just skimping on the small things that you don't think customers notice, but over time you realize, huh, no one really loves us anymore. And I do feel for Panera because they have a brutal competitive set because not only are you competing with fast casual places like Chipotle and Cava and even Raising Cane's, which have a ton of these brand loyalty and have these very large portion sizes. You're also trying to compete with the Starbucks's of the world because you are a coffee place. You go there for beverages as well.

13:17So they're trying to roll out beverages too to compete with the big boys in that space as well. So not only do they feel pressure from just the bowl slot places of the world, but they also are feeling pressure from the coffee chains of the world. They should be careful about what beverages they rolled out because anytime Panera has been in the news for the last year, it hasn't been because they're doing good at business. It's because of these charged sips, which were these lemonade drinks that were so highly caffeinated that it actually faced two wrongful death lawsuits from people. And so it removed those from the market.

13:48And the new CEO came in and he's been basically dissing all of his predecessors. There's been three CEOs since 2020. There's been a lot of turnover in the C-suite. And he said, we didn't do any testing for these beverages, which would probably would have shown up that they could, you know, be a problem for certain people because of their high caffeine content. But we're just weren't doing testing in general. We weren't doing things that the customer actually enjoyed. Another thing besides the lettuce that he pointed to in terms of Panera just skimping on everything, they don't slice their cherry tomatoes in half when it comes to their salads.

14:21And at the same time, when they put an avocado in, they just dump in a half of an avocado instead of slicing it up nicely. So just these small things that you might not really think about hopefully prove a difference for Panera if they start investing in making their salads a little more robust and for, you know, what customers want now is value. And when they went into Panera, they were not getting it. The final aspect too, is that you would walk into a Panera and you'd be greeted by these kiosks and very few workers, which did not make it feel like a very welcoming place. So the question is, how do you find the sweet spot between kiosks and And human workers, it's what every chain is trying to figure out right now.

14:54McDonald's has invested very heavily in kiosks. But I'm wondering if we've almost hit peak kiosk in the industry because they realize whatever efficiency gains we are getting, we were losing the fact that our environments just feel sterile. They do not feel like an oasis that you want to step into. So maybe you'll be greeted more with faces rather than these big blank screens that people were not necessarily jiving with. All right, we're going to take a quick break and come back with Baby Shark.

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16:37Maybe your audience starts their morning with Good Morning America or ends their evening with ESPN. Wherever they are, Disney Campaign Manager can sync your advertising with news, sports, and entertainment all in one place. Reach your people and reach them at all hours of the day. Learn more at DisneyCampaignManager.com. That's DisneyCampaignManager.com. The company behind the most viewed YouTube video of all time just went public, and it's worth less than you'd think. Pinkfong, the South Korean company that brought you the infamous Baby Shark video, popped as much as 62 % in its first trading day yesterday.

17:12But despite its star piece of content racking up over 16 billion views and counting on YouTube, Its market cap is hovering just around$400 million. How is it possible that nearly every parent in the world can sing, Baby Shark Doot Doot Doot Doot Doot? And yet the company only generated$67 million in revenue last year. It stems from YouTube's monetization rules. YouTube has much stricter restrictions on children's content, including borrowing more personalized ads, disabling comments, and turning off subscriber notifications. If those restrictions weren't in place, the baby shark behemoth could likely generate double or triple the direct revenue for Ping Fong, according to a Boston University estimate.

17:55Neil, Ping Fong wants to use the proceeds from its IPO to develop new characters to prove it's not a one shark wonder. And I do want to apologize to everyone in advance for getting the song stuck in their heads. We need to talk about how big this YouTube video is. So over 16 billion views. It's way past second place, which is Despacito. It it in 2020. The video of Baby Shark has the equivalent amount of views to Taylor Swift's 10 most popular YouTube videos combined. Traffic comes from all over the world. It's available in 25 different languages. The most viewed place is the United States with the most, the country with the most likes is Brazil.

18:36So everyone around the world knows this song. It's a South Korean company. It's most viewed in the United States, most liked in Brazil. It's an absolute behemoth. and we'll see whether this IPO can make this company from a one shark wonder in, you used that term, it was perfect, into an actually legitimate content company that can churn out one, two, three, four baby sharks. Yeah, that's the question. How does it grow from here? That is what analysts are saying. The key would be how effectively the company can both create new IP and then monetize existing IP because if you are an investor and you're looking at it and you're like, okay, most of your distribution channel is YouTube and YouTube is cracking down on how much money you can make off of children's content, how you can distribute that content.

19:20That's not necessarily something that you want to see when investing in a business. And at the IPO price, Pinkfong stock is valued about 25 times 2025 earnings. That's compared with an average multiple of 40 for its peers. So it is a little undervalued compared to the rest of the market. I do think because one, you're nervous that you can't just recreate a baby shark every once in a while. and two, because of these YouTube monetization rules. Well, Baby Shark is not the only character that they have in their portfolio, so they gotta start creating new ones or leaning into other ones. I mean, have you heard of Bebefin or C-Look?

19:55And they also have a Fox character. So they're hoping that this cast of characters and they're going to use the proceeds of the IPO to create new ones will lead to more catchy jingles that can hopefully make them money, not necessarily on YouTube, but they have to go into other revenue streams as well. I mean, speaking of Bebefin, which I actually was watching before this. First of all, I guess - What animal is it? No, it's more just like a series of characters. I don't know. I was just watching one scene about a family who the boy was scared to get in the pool. I don't know. I could see why kids like it.

20:27It's very bright and loud, but that franchise is actually out-earning Baby Shark already. So they are trying to say like, hey, we are not just Baby Shark here. We have Baby Finn as well, and we have more coming down the line. So just a fascinating company. I didn't even know that there was a conglomerate behind Baby Shark. I thought it was just one of those things that hit YouTube gold and just kept spreading from there. But no, they are monetizing this thing. All right, let's sprint to the finish with some final headlines. Google's got a new model and all the AI companies are jealous. Yesterday, Google launched Gemini 3, claiming it to be the most intelligent and factually accurate model to date, which sounds like something your buddy dating a new girl would say.

21:08The model is natively multimodal, meaning you can interact with it in a variety of ways, not just through text. Google also took a not-so-subtle jab at OpenAI's recent GBT5 launch, saying Gemini 3 trades cliché and flattery for genuine insight while offering reduced sycophancy. So far, benchmarking backs up Google's lofty claims. Gemini 3 Pro now sits at the top of LM Arena's leaderboard, according to The Verge. Neil, Alphabet stock once again finished the day slightly in the green, showing some enthusiasm for this latest launch. It does seem to be cutting into ChatGPT's market share. So ChatGPT has 800 million weekly active users.

21:48Google said on Tuesday that its Gemini app now has 650 million monthly users. So it's not exactly apples to apples, and Google is still quite a bit behind ChatGPT, but it's catching up, and it released this model that is certainly an impressive, And it just made me think that in five years, we are going to look at searching Google and looking at a list of blue hyperlinks and clicking in as something as ancient, right? Like that will be seen as very quaint. And Google has really done a good job in taking the hits to its search business and turning into something positive with AI mode and a really impressive Gemini model.

22:27Meanwhile, we got some other AI news yesterday, and a love triangle is brewing. Long-time OpenAI supporters NVIDIA and Microsoft are making large parallel investments in its main competitor, Anthropic. Anthropic, meanwhile, pledged to buy$30 billion of Microsoft's cloud services. Industry watchers were quick to point out that this is yet another one of those circular, I scratch your back, you promise to scratch mine deals that the AI industry loves announcing. But where some see a bubble, the companies involved frame it as diversification. Weeks after OpenAI struck a$38 billion cloud deal with Amazon, Microsoft is saying, oh yeah, well, we don't need you either because Anthropic will buy our cloud products instead.

23:08And while OpenAI has also been a heck of a customer for NVIDIA, the chip maker is looking to spread its chips a little wider, deepening ties with Anthropic. Neil, I frame this as a love triangle, but it's probably closer to a love dodecahedron with the amount of names wheeling and dealing with each other. I think the word you're looking for is polycule because that is what is happening in AI. And the funniest thing to me about this particular deal is that Dario Amadei, who's the CEO of Anthropic, and Jensen Huang, who's the CEO of NVIDIA, don't like each other at all. Huang earlier this year said, I pretty much disagree with almost everything he says, and he's talking about Amadei, but when the AI revolution is happening and you stand to make a lot of money and you don't have enough money to spend and you need to do these polycler deals, then you let bygones be bygones.

24:00Everyone learned which of their coworkers used ChatGPT to write emails when the chatbot, along with a bunch of other popular sites like X, Spotify, and Morning Brew, went offline yesterday morning due to an outage at Cloudflare. The blackout lasted about four hours and was caused by a file that got too big and triggered a crash in Cloudflare's system that manages internet traffic, according to the company. A spokesperson said, we apologize to our customers and the internet in general for letting you down today. It is not a good look when you have to say sorry to the entire internet, but that's what you have to do if you're Cloudflare, which provides security services to about 20 % of all websites around the world.