Transcription
Obviously, in the business you're in, you cover a company like Meta a lot. Obviously, it's an advertising juggernaut, but apparently, at least if you believe the Bloomberg reports, it wants to be more than just an advertising juggernaut. It wants to be a cloud juggernaut. Yeah. You're not, you're not hot on this idea.
Well, I think, yeah, there's a couple of ways to look at it. I think one, I think a lot of people think just AI infrastructure is possibly getting overbuilt. And so everyone else has a way to deal with that, which is they can sell excess capacity, and that does not. So in that regard, you know, kind of teeing up the possibility of doing that is very smart. Remember Space, that or X I, they did that with Anthropic, and it's like, kind of a fabulous deal for them. But I think to think of going into the infrastructure game against AWS, against Google Cloud at this stage, that's going to be very hard. And remember, the switching costs for companies are huge to switch out of one to another. Yeah. Or like multi-year projects at this point is very expensive.
When I first saw the story last week, my first thought was, is this somehow indicative of issues with the the core business right now, the ad business? The idea that maybe they see a slowdown there and they want something to diversify? Or is this just Zuckerberg doing kind of what he typically does, which is just throw something at the wall and see if it sticks?
Yeah, I mean, Meta, and I guess you can say Mark Zuckerberg have always been ambitious about fast-following other businesses. Ironically, the biggest business, which you think is Instagram, they bought that. That was a fast follow. They bought that, probably the best that in hindsight, that was great. Yeah. And but I think the ads business is not slowing down. If anything, I mean, it's growing at a phenomenal rate at this scale. And I think it's believed they're going to become the world's largest advertising company this year, overtake Google in terms of ad revenue, which is just a phenomenal comment.
Is that because of Meta's growth or Google's, uh, sort of lack of?
I think it's because the media's growth. Could be. I mean, it's if you think of, I've always said, if you take Google, um, they're there, um, um, search where you just type in the name of a brand and they give you search results. That's like half the revenue. If you take that out, is already bigger than Google, because putting ads against someone typing the name of a brand without .com on the end is not, you know, that's not a, it's a lot of money. But I don't think of that as bringing new consumers. But Meta is bringing new consumers. They bring it at scale, and that's what every business wants. There's no company that enters any market and doesn't consider, okay, I gotta advertise Instagram. Yeah.
So, I mean, tying those those two things together, I want to make sure I'm understanding your argument. Are you saying that Meta should just focus on this very successful ad business and not get distracted by going into the cloud, etc.?
Yeah, I think it has to be an AI company. And I think, you know, the, and their ads business is at this stage very dependent on AI. But, you know, Meta going into like cloud hosting even for AI, I, I, I don't, if I'm an investor, I'm not saying I'm not penciling in revenue targets for that. I don't, I just don't see that materializing over time. At best, some saying at least I can hedge all the cloud investments they're making, you know, which at this point, I think are like over $100 billion in infrastructure costs. And it's a really interesting critique because I think if you think about this moment in time, uh, the conversation being had, all these concerns about whether we're overbuilding, you think about this data center build-out, uh, whether in hindsight we're going to look back at this period of time and say, man, we, we over, and you know, how much capacity we actually need here.
Yeah, I think there is, there is no doubt that we are overbuilding in the United States, whether we're doing that worldwide. The, I think that could be argued. But putting data centers in the United States with expensive energy, expensive land, resistance to the data centers versus putting them in other countries that are welcoming those data centers. I think long-term is not going to make.
But I've heard this argument about the idea that, okay, maybe we should be building these things in more lower-cost countries, etc., or maybe space, depending on if you believe you like Musk. But I was always on the impression that these data centers also had to be in relatively close proximity to whatever the end user is. Is that not the case?
Not for training data, but for internet access? Yes. Even though data moves at the speed of light, it passes through so much infrastructure that distance does matter. Um, but when you're training models, you're housing vast amounts of data. That data can be located anywhere. Now, the real issue there is, well, if the data is located outside the U.S., you know, does that violate any laws? So I think you're going to see the development of a concept of data, um, embassies, where a data center located in another country is actually treated as an embassy of that country. And that's a concept I know for sure is being worked on in a number of different countries.
I am curious, though, to, I just going back to this decision early, but again, not decision. I would say the reporting by Bloomberg about this decision. Is there a sense that this also could also be an advertising play? The idea that, I mean, we've heard from advertising, you can tell us, I mean, you run an ad company more or less, its AI tools or the technology that we're seeing and build out. I mean, I would think to a certain extent has the ability to enhance, uh, the advertising process, whether it's discovery, whether it's placement, etc., etc.. Uh, is that potentially a play here? The.
Well, I mean, it's all at play. Yeah. I mean, but the thing going back to the whole point, the question of are we overbuilding? Every one of these companies is estimating that they, their share of the market is essentially going to be on 100%. And all saying AI is essentially going to be the size of the current global economy. Right. But what is the estimate? You know, like $28 trillion estimates, or at least that was space. As you know, I lost track of their us. Okay. So if they're all building towards that number, there has. Someone is overbuilding. Blank. They're not all going to get there. And I think that's the point is that, yeah, ultimately we are. And we saw this, you know, 25 years ago when the air was moved out, there was just vast amount of fiber laid and things like that. Then there was too much. And then eventually, you know, there wasn't enough as the reality. You know, it's like, like right out. And they went ahead of reality, got in over the skis, meaning all the people building out the capacity. Eventually that collapsed. But, you know, the world eventually get them caught up in that. I think that's what you're going to see here. Meta, in a sense, is being back on that original point, is being smart and saying, look, we can't be the only ones without a backup plan, right?
Okay, okay. Yeah. Fair enough. Has Google Cloud. Yeah. Amazon is AWS. And so I thought, I thought I thought Meta was gonna have to collapse something that their backup plan. You don't have a pair of those.
I do have. You do have a pair. Okay. All right. I think they're actually phenomenally good headsets. People forget that little speaker is built in.
Oh, no. No, we know our senior producer wears them. We can hear. I can hear she's watching them, but I listen. I listen to do phone calls.
Do you really? Yeah. So. So there's a use case there? Yeah. They'll walk down the street to Manhattan doing that. You might get some gloves.
Well, we have you here. We have to talk a little bit about the World Cup as well. Of course. I think there's still a lot of salty Americans out there after the U.S. got knocked out. But talk to us about, you actually rooting for America? I mean, yeah, because I. Oh, okay. All right. I was really going back and I have to say, like, I was rooting for North America, okay? That's a North American battle. So I was really into the Mexico game. Yeah, that was disappointing when they lost. To disappointment all around. But talk to us a little bit about what this has meant for mountain, what your involvement with the World Cup and, you know, all the associated, uh, fanfare around it has been.
Yeah, absolutely. So, um, we started the year, really for the first time, wanted to put small and mid-sized businesses into major sporting events because normally they'd be cut out of that kind of inventory. And so we launched a product we called Select, and which enables any sized business to get into events like the March Madness World Cup. So we have many of our customers and advertising in the World Cup. The, the CPMs, the prices are similar to what the largest advertisers are paying, but they don't have to drop $1 million to do it.
What about you, do you think like during the matches?
Yeah, during the matches we, and they can afford that. Um, they can. They're allocating budgets. The budgets are anywhere from $100,000 to $1 million. And the, and the these are brands that traditionally would not be in a sporting event like that, but it makes sense for their brand.
I just, real quickly, I mean, what's the kind of the stickiness of that? I know, I mean, obviously in the U.S., the Super Bowl, it's like one of those sort of a, you know, kind of completely transcendental advertising because people will watch the ads and not even watch the game. With you, with something like, uh, soccer, international football, do you see the same type of, uh, interest in terms of eyeballs on those ads?
Yeah. And you get an interesting phenomenon, which is major sporting events have a lot more people watching television. So remember, we're doing television advertising. So our, our product, you know, is very, very targeted. It's like you're putting ads in front of the exact right person. But when you do it in the World Cup match, there might be four or five people in the room. So you're getting a lot more reach for the same amount of spend. Yeah. And so it's, and I think for a lot of our brands, so also it's, there's a lot of credibility attached to being to being attached to these events. And so there are numerous reasons the revenue would rise. Meaning the performance, the additional eyeballs, the credibility, it all contributes to. There's a lot of emerging companies that at now, through MWR, now have access to events like that. And so it's something we're very excited about.