Meta Disappoints and US Chips Bill Passes the Senate

in the quarter. We will discuss class The Senate passes ability to reinvigorate the U S ship industry, but PC sales are slowing. US consumers get out of this pandemic mindset. How will this change how Silicon Valley does business abroad? Will discuss and more bad news for coin based Kathy Woods. Arc just sold seventy five million dollars in shares after the SEC announced an investigation into trading activity. So why

are shares up double digits? We will explain. Let's stick with Metta now and bring in Deborah Ojo Williamson, principal analysts at Insider Intelligence, as well as our own bloo Room News Executive editor Tom Giles. Let's let's let's break down these meta results, Tom. You know, they don't look good. Engagement was, you know, came in slightly better than estimates when you look at daily active users, but revenue dropped. Uh, you know, ad revenue UM coming in light and the

first quarterly sales decline. Ever. Yeah, well thanks for having me. The thing that people are really focused on the outlook for the third quarter, and it's not good. It's going to come in well below analysts estimates UM. The miss on the revenue side. Some of the active users they gained on the daily but not on the monthly. So it's a very mixed picture there. The shares are down, they're not falling out of bed. People aren't looking this and looking at this and running around like their hair

is on fire. Still, it's not a great look. You have remember that that Mark Zuckerberg has made this big pivot toward the metaverse, and he's talked about we're gonna lose money on that, We're gonna spend ten billion dollars on it, We're not going to make a profit for many, many years. Right around the same time we get the war in Ukraine, we get this this sense of a slowdown in the US economy and the global economy and advertisers really pulling back. We saw it yesterday from Alphabet,

and we're seeing it again today. And David Winner, the CFO for just a few more weeks, came out and said, we really see advertisers facing headwinds and there's a lot of economic uncertainty and they're pulling back. Same messages we got from Ruth Poor at CFO of Alphabet yesterday. All Right, Uh, Deborah, let's talk a little bit more about this. Obviously, we look,

we're we're looking at chairs. They're uh. Zuckerberg saying Metas products are continuing to grow in a challenging macro environ men, challenging macroeconomic environment. Those are the words he's using. The company also saying they've reduced hiring an overall expense growth plans this year. What are your headline takeaways, Debra? Yeah, So I remember years past when Mark Zuckerberg would start out his quarterly earnings recap with phrases like it was

another good quarter or it was another great quarter. Um, we are not seeing that anymore, and not for the foreseeable future. When it comes to Meta. Uh, this year over year quarterly drop in revenue. Well, I think it was pretty much baked into expectations by this point um among investors. Uh, it's really showing just how quickly Meta's business has deteriorated in this uncertain economy that's affecting all of the digital ad supported businesses. You mentioned Google, you

mentioned Staff and Twitter. Uh, you know, we're all seeing them having difficulty in this economic environment. One thing that stood out for me with regards to Meta was the drop in ad prices. So we saw a fourteen percent drop in add prices in Q two That came after a QU one drop of of eight percent. So you know that really I think factors into what we're seeing going on with Meta's platforms. Now where the the ads, I mean, I guess to the advertisers, that's good news.

The ads are getting cheaper but for them, but it doesn't add up to very much revenue. And as Tom pointed out, you know, we're looking at Q three in Q four now and we are not expecting anywhere near the performance that our forecasts had led us to to uh to predict, at least even as as recently as

just a couple of months ago. Now, Dave Oyner, the current CFO, moving on to become Chief Strategy Officers, Susan Lee VP of Finance becoming CFO, the first female CFO at Meta I believe, ever, and this is get to be Cheryl Sandberg's last earnings call. Does Facebook have the bench Tom too, you know, continue to grow this company? Well, you've got You've still got other leaders there. You've got Chris Cox, You've got bos you know, You've got a lot of people who are who who are around Zuckerberg.

But remember he's the guy making decision at the end of the day, and if people start to lose patience with him, there's nothing that the investors can do. Given his ownership, given his control of the stock in the company, he really does need to bring smart people around him, especially when you see when you see Cheryl leaving. This is the woman who has built that advertising business into this this monster. Not doing so great right now, but she's got quite a legacy and big, big shoes to

fill and this company is making an enormous pivot. And Reality Labs lost Deborah two point eight billion dollars in the quarter. This is a bet on a metaverse in a future that some people don't really believe is even possible. What do you make of that? Are these investments, these losses worth it? Yeah, that is really the big question. And getting back to the the idea of Mark Zuckerberg being in charge, I mean this is his call. I mean he has changed the name of the company, he

has decided to pivot the company towards the metaverse. Uh, he is building this company towards that future ambition which we don't see any hardly any revenue potential from four years. And at the same time, the core business is suffering. And so I will be the first to admit that I am a metaverse skeptic. I have been for quite a long time, since the days of virtual reality of

Second Life. I think there's a lot for meta to prove here with regards to the metaverse, about the potential for marketers, for advertisers, even for consumers to engage in the in it. And we just saw earlier today that the FDC is now starting to investigate an acquisition that

Facebook made in the metaverse realm. So Facebook and metas having it just so many challenges in front of it, uh, on so many fronts that you know, this is really the quarter where I've really become more concerned about the company than I think I've ever been before in all

the years that I've covered it. Interesting, as you mentioned, the FTC is trying to block Meta from buying a VR company called Within Unlimited, and Tom, it's interesting that there are already antitrust issues in a metaverse that doesn't exist yet, and that Mark Zuckerberg seems to be pursuing the straight same strategy, which is by not build exactly.

And the FTC has to be really careful here. Remember, they have come under a lot of fire in recent years for not calling out Facebook when it bought when it bought out its potential competitors. It bought Instagram for a billion dollars and that's become this huge business for them. It bought it when Instagram was tiny and nobody batted an eye What'sapp. It paid a lot more money for again,

a potential competitor. And so the FTC has been criticized for not calling out Facebook and not saying, hey, we need to take a really close look at these acquisitions because you're taking out somebody who down the road could be your competitors. You've got to bet they're looking really closely at this deal, even though it's small. Well, either way,

big changes in store for Meta. This big executive leadership change is going to be happening in November um and we will of course be watching Bloomberg's Tom Giles thank you as well as Debra Ajo Williamson insider intelligence. Always great to have you as well. Meantime, Apple just poached a twenty year veteran of Lamborghini to work on its electric car. Luigi terra Barelli will join the project, which

has been under wrapped for years. The Apple car is being designed by hundreds of former engineers from Tesla, Ford, Rivian and other automakers. Apple plans to launch a car coming up. The Senate passes a bill to make the US less reliant on chips from abroad. How this could dramatically reshape Silicon Valley's relationship with China. That's next, Mrs Bloomberg. Qualcom earnings are the latest signal that there is a

change in consumer habits. The biggest maker of chips for smartphones reporting and earnings miss reiterating a lackluster forecast for the rest of the year. Meantime, this Senate has approved a fifty two billion dollar bill to boost chip manufacturing in the United States, which relies heavily on parts from overseas. But the semi conductor industry is in for a rough

patch these next few years. The research firm Gartner slashed its two global semiconductor sales growth forecast from to seven percent. That is a huge drop from the tent jump in chip sales we saw. Meantime, the Pentagon is making contingency plans if how speaker Nancy Pelosi makes that trip to Taiwan, though they say they don't think China would attack her lane. They say the speaker is entering a hotspot. China, of course, considers Taiwan part of its own territory and long source

of controversy now for decades. Bloomberg's Peter Elstrom are managing editor out in Tokyo. Joins us now to discuss who just happened to be here in town. There's a lot going on here. What do you make of this Pelosi visit to Taiwan in the middle of all of these others very controversial at this point. I mean, clearly she has ended up in a very tight spot where their tensions on both sides. If she decides to proceed with

the visit that's going to cause problems with China. But at this point it's very hard for her to also back down and pull out of a visit that she has been thinking about because it looks like they're stepping back or retreating from this issue with China. Clearly, she is going to put pressure on Biden during their phone call to try to get him to apply pressure to Nancy Pelosi uh sidestepping the fact that actually doesn't have

control over her action. She gets to make this decision herself. Anytime, you have this Chips Act, which seems to be heading to Biden's desk unlike other pieces of legislation, and this is going to potentially massively reshape the relationship between China and the rest of the tech world. Right that's the hope of the US. I guess the question is are

we there yet? It's taken three years to get to this point where the Senate has now passed the legislation, but the House still has to sign off on this legislation too, and then they have to reconcile the two bills. It is fifty two billion dollars. As you say, that's about thirty nine billion dollars in financial assistance, along with another thirteen billion dollars for training and research and that

sort of thing. Just to put that in context. Fifty two billion dollars, of course, sounds like a lot of money, but tis m seats. How want Semi Conductor is going to spend forty four billion dollars on capex just this year, and the Chips Act is fifty fifty two billion dollars over five years. So it's modest in the grand scheme of things. It also signals that the US is uncomfortable doing this kind of industrial policy. It historically has not

done it. But this crisis that we've seen in the chips industry with shortages, chronic shortages that have knocked out auto production in particular, has forced them to rethink how they're going to do this, and instead of focusing on the efficiency of the of the chip industry, they need to focus on resiliency. To meantime, you've got another potentially big shift happening in the chip industry itself, Qualcom coming

out missing estimates. We're hearing from the CEO of Qualcom right now, Christiano Aman, on their earnings call, saying the phone market is smaller than forecast this year. Um. You know, obviously we've talked so much about the lack of chip supply. Are we now going to see a glut of chip supply? These cycles do happen in the chip industry all the time, right That is the big question in the chip industry right now, that we do go through these cycles, and

we've had shortages for so many years. Wait times are still very very long. The signals seemed to be that we need more production of chip, but Qualcom is an early sign that they are seeing a slowdown. Part of that, there's a caveat to that, and that's that they really focus on the smartphone market right now. And you have seen smartphone demands softening as consumers are hit with inflation

and some rising prices in other areas too. So that may be a Qualcom specific issue, and you may still have some of these chip shortages and the rest of the supply chain. So what are you watching? Obviously, the supply chain issues continue to evolve, and we've got a big one. We've got Apple coming up tomorrow where we'll get more insight into the supply chain. Well. Um, the industry is very closely watching weight times around the chip

industry and exactly where those white weak times are. So we've seen a little bit of a loosening in terms of the ability to ship these chips. That's helped some of the automakers. They're beginning to see some signs of improvement. Tesla has talked about some improvements in the supply chain also,

but it's not resolved at this point. And to be clear, this Chips Act is not going to address any of this because these chip plants will take years to build, at least two or three years before you can get any of this production online. So that's a long term solution. It's not going to address the short term problem, all right. Peter Elstrom in time from Chokya, Thank you Now to

Going viral. Meta platforms is facing some backlash after some of the most influential figures on their platforms, The Kardashians are speaking out. Kylie Jenner and Kim Kardashian specifically speaking out against recent changes to Facebook and Instagram that make both platforms look and feel more like TikTok. The pair have a combined six hundred eighties six million followers on

Instagram alone. Instagram CEO Adam Missary even posting a video explaining the moves, which some belief puts Meta's interests before their users. Bloomberg Sarah Fryer had a back and forth with Massari on Twitter. She joins us now, and of course, she wrote a book about Instagram. Am, what do you? First of all, let's let's let's talk about what Kim and Kylie have said. Don't make Instagram look like TikTok, right, don't make it a little like TikTok. Make it so

I can see post from my friends again. Please, And then Kim Kardashian added pretty please, So so listen. I think the Kardashians also have another interest here, which is that they have built their fame, They've built their businesses via Instagram, via building that relationship with followers that makes people want to buy their project products, by into their projects and and really focus on everything that's happening in their lives. It's part of reality TV, and they really

lean into that. And the changes that are happening on Instagram right now and Facebook as well, are d prioritizing those follower friend relationships in favor of injecting your feed with content from people you may not follow like TikTok, trying to have this discovery of new things to keep you entertained, to retain young users, and to fend off

this competition from the fastest growing up out there. Now, you had to back and forth with our Adamissary on Twitter, and you talked about how look Kim and Kylie are saying they want this. Instagram is saying they're making changes based on what users seem to want, not just what they say. They want to talk to us about your back and forth. So I pointed out that adamissaries explanation this video that you talked about was getting a lot of backlash, and and he said, you know, I get

a lot of backlash all the time. People. People are pretty pretty vocal when it comes to hating on what I have to say and listen, I said, like executives and social platforms, I have to figure out if they want to listen to the loudest voices what their users are saying, or if they want to listen to the data in the Facebook has always been airing on the

side of listening to the data. Now I got a lot of pushback for my comment because people were saying, well, how is this data making sense if it's a Facebook and Instagram are showing to us. Of course we're using reels more because that's all we get to see. Show us content from our friends, and we'll look at that too. So so the design of a platform really has a lot of impact on what users choose to do, because these platforms are getting more and more passive, less and

less about what we choose. And you know, I wonder if it makes sense, doesn't make sense to keep them more differentiated. Is that a competitive advantage or does Instagram just followed tik talk and say, well they're onto something.

You know. Another thing that Adam Sarry told me, which confirmed one of my big suspicions, is that a lot of the friends and family conversation is moving into the other parts of their app Instagram stories, Instagram direct messaging, and he said, yeah, that's that's really where we're seeing it. And so from my perspective, I feel like the reason that they need to stuff the main Instagram feed with with reels their TikTok copycat is because people aren't posting anymore.

When's the last time you posted on your main Instagram feed? It feels really formal like a big lift now and people are posting more and more in stories because it just feels less like part of their permanent record, less

like it has to be a huge life event. And the same thing we saw happen on Facebook maybe five years before UM, where people are now posting on Facebook mostly if they have something really big to say, like a new job or a wedding or a baby, as opposed to just the mundane life updates that used to seem worthy of such a platform. As we grow our basis of of followers and following, it just seems less worthy. That audience seems less worthy of our mundane life updates.

Who's winning, well, TikTok's definitely winning right now. I think that's that's very clear. In Facebook's earning today, Meta's earnings today, we see a slowdown in advertiser spending. But you have to think, you know, that's not just about the economic

factors that they're citing. That's about this big change, the sea change happening at the apps that is causing people to use them, to rely or maybe abandoned them UM And they have to do everything they can to make this that work in order to fund the Metaverse Vision. Down the line are resident Instagram expert Serafi Er. Thank you so much for your analysis. Welcome back to Boomore Technology. I'm Emily Changing in San Francisco. Welcome back. We're going

to talk about earnings now, a lot to unpack. I want to dig into Spotify, which somehow avoided and add slow down in the second quarter, escaping the fate of other text docks like Snap. I want to bring in Bloomberg's Ashley Carmen, who covers Spotify for us for more. So, why did Spotify somehow pull out of this? You know, they didn't actually give us a full reason as to how they avoided this. They did say though, that you know, maybe it was just this quarter. It does sound like

they're looking over their shoulder a bit more. I spope that there's CEO Paul Glogal earlier to day. He said, you know, Q three, they expect the slowdown, although still growth, but they are looking over their shoulder. You know, could it could crater? Could not? You know? It sounds like they're kind of riding the way a little bit here. But I guess I should also note that we're talking about a lot less revenue here. I mean hundreds of millions of dollars versus billions as far as the tech

stocks go. So you know, I think it's a bit of a different scale as well, and a lot a lot less to wrinkle. I'm curious how what's happening me with Spotify. You know, perhaps on a smaller scale though, is some sort of um, you know, signal about what is happening on a larger scale as well. You know, you see a platform that's adding users, but gross margin declining? Is that a concern? So last quarter for Q one earnings,

gross margin was all anybody could talk about. When it came to Spotify earnings, the stock crater, investors, it was at the lowest levels it's ever been. Investors were concerned about the margins because they, you know, Spotify has been making all of these podcast investments, so the investors want to say, hey, one of those gross margins going to

go up um. And then this quarter we really weren't expecting them to improve drastically, but the gross margin actually dropped, and Spotify said that's because they are ceasing production of their car thing, which is basically a Bluetooth Spotify remote for the car, and so that actually caused their gross margin to go down. But that said, the stock is

up today. It doesn't seem like that spooked investors. Spotify had an investor day in June where they said they expect their margins to not drag so much from the podcast investments going into three, so we'll see if that long term vision holds true. Meantime, you of course still have some artists who just won't put their music on Spotify.

Now you're seeing some podcasts leaving Spotify. What's happening there? Yeah, So earlier today I published a story about a show called The Pitch, which was kind of this original Gimlet Media show, which Spotify acquired that company in twenty nineteen, and how the host of that show actually just bought it back from Spotify and is going to launch it independently. And it's just an interesting move given that we saw reply All kind of another Gimlet original show before the acquisition.

It ended its production in June. Another show that was made by Gimlet called The Get Up, which was kind of Spotify's attempt at a morning radio show format, that also ended. So I'm not entirely clear what's going on there to be Frank I think, you know, it's just interesting to see all three of these shows. Clearly some things that put They've had some leadership shakeups and promotions, so you know, something is clearly going on with their

content strategy. It's just unclear what. Now. I'm gonna keep talking about earnings. I want to bring in Mitchell Green, founding partner of lead Edge Capital, his take on Meta's results and more so, Mitch, look, you know, not great across the board. That we did see daily active users coming in slightly higher than estimates, but add revenue light, overall revenue light, a big loss in in Reality Labs two point eight billion dollars. You know where they are

investing heavily. What's your takeaway? Really, I haven't you know, we don't own Facebook, and I'm not deep deal super detailed involved in it. I think the stock was up a little bit after hours, so the street must think it was positive on it, and and I would tell you that expectations, I'm sure we're pretty darn low on it. I still think I think I think Facebook has some issues,

maybe under the covers um you're you're seeing. I think, like Kim Kardashian, one of the Kardashians was out recently tweeting or something up talking about how like she wished Instagram we just stopped copying all the bite the bite dance, slash TikTok uh you know, um, you know features, um, you know, any bit's on their Instagram feeds can't help. But notice how many ads there are. I think TikTok

has given these people. These guys are running for their money in um in this you know, in this younger demographic. And I think I think like Snapchat still is trying to use the macro as the biggest reason, Like I think they have other reason and that their users are you know, on other platforms. Right, So, just how serious do you think Facebook, slash Instagram's TikTok problem is? It's pretty darm serious and it will be you know, I don't know when you know full the sculosure we're bite

daanst investors, But whis TikTok um? I don't It would be really fascinating to know, you know what, the very specific when the public starts to know how fast the bite dance and TikTok are growing. Um, I think there's gonna be a lot more written about how much pain these these companies are experiencing from these two. By the way, just go ask a bunch of year olds or thirty year olds, you know how much time they spend on TikTok versus Instagram versus you know, Facebook blue Like that'll

our snapchat, That'll answer your question right. Well, the question is is the digital ad spend also shifting stramatically? It certainly seems like there's an attention shift, but is the money's going to follow? I think I think it's like it's so I was speaking the system again, um, due to our bite Dance research and TikTok research. Um, I think a lot of the TikTok um ad budgets are still in the experimental phase. I think they're moving quickly

out of it and a much begger phases. But like again, just relative to the size of Facebook, like you know, TikTok's US business is not that big yet, but there's obviously a huge amount of room to Expand you're also an investor in Ali Baba and you know they're now exploring this primary listing in Hong Kong. How are you thinking about Chinese tech companies right now? There are so

many complicated dynamics. That's an understatement. UM. First, on the Ali Baba question, UM, I think what they're I think the biggest impact like the market as of when it was kind of yesterday it was leaked to the day before. It was kind of a muted response of a couple percent. It wasn't down market, so it was a little more

big of but it wasn't like huge. I think the biggest advantage to Ali Baba being the primary as I understand that the primary listening to be in UM in Hong Kong not in the US, is that they'll have access to the China Connect, to the Hong Kong Connect, which is a you know could I think I saw one research channel, let's say anywhere from six billion of incremental demand coming out of domestic China, I would want to buy the stock. It's cheap, so was every other

Chinese you know internet company. UM. It will either prove right now to be the best buy an opportunity or probably dead money. UM. Your guests is I don't really understand the zero COVID thing, UM, but it just makes it appears to me these people are like like taking their economy and they don't need to be But you guess as good as mine is. Why and when that ends and things like that. I like, you know, Wa owned Somemali Baba, haven't bought more, haven't sold it? I

don't know. I you think though, that multiples are will be in the multiple that somebody will pay for a Chinese equity is going to be impaired for a long time because but let's say, all of a sudden, they get like you know, they get like more government approval of the government looks friendly. Well guess what it doesn't mean in two years they change their mind. And I think people are gonna remember that. Well, hopefully for you not dead money. I understand Dial Capital got acquired a

minority stake and lead Edge Capital. How do you see lead Edge differating, differentiating itself from the pack? You know, where do you think you're going to find the next uber? Yeah, that's a good question. So how we how we differentiate ourselves is very unique for most funds, and that like most funds are solely backed by the endowments, pension funds, universities,

insurance companies. Most of our capital by number, actually of our capital by a number of investors is actually like world class exacts and entrepreneurs, and we leverage those people to like help our companies grow faster. UH. And so whether you know, somebody might be looking for a female audit chair, are looking for like customer intros or things

like that. And in the whole LP base has grown via like word of mouth over the last decade UM and so like, we think there's a ton of interesting opportunities in software and that our LP base can help UH and enable companies to grow faster and even fortunate to back a bunch of great companies, whether it's companies like Toast or Asana or Bizarre Voice and Marcato earlier on our companies like Well Health, the whole host of companies. Mitchell Green always great to have you here on the show,

founding partner of lead Edge Capital, Thanks for stopping by. Meantime, Twitter is leaning harder into cost cutting itself and remote work, the company cutting back on physical office space in a number of cities including San Francisco, New York, and Sydney. This in a memo to employees, Twitter says the move doesn't affect current headcount of employees UM And of course there's that ongoing lawsuit with Elon musk time now for

crypto report, and the crypto winter has been brutal. But let's take a look at DEFY and see how that is faring this downturn. Our crypto contributor Sali Bostick here with more sale. Yeah, absolutely, Emily, because the reason we're talking about this is a lot of the big failures you've seen, the big withdrawals you've seen, and the big issues you've seen with regulation are with the centralized platform. So let's take a look at DEFY. Then. Yes, it's

down on the year about sixty two. That is more than you've seen in bitcoin. But at the same time, you're seeing a big hop back up this month about about percent higher. And I've got to say even today alone, you've seen bitcoin jump on the heels of the Federal Reserve interest rate hike, and you've seen the Defy index here the Bloomberg Galaxy Defy Index hop up even further. So you are seeing that, yes, big drop off more than six percent this year, be more than you're seeing

bitcoin more than fifty this year. The DeFi index that we're looking at, we're going to be diving deeper into because what does it, what is it made up of It's made up of things like unite Swap, of a Maker, Doubt Curve, and just a lot of companies and projects that have really held up more than you've seen in other areas in centralized finance. So the big question here,

Emily is what is the future of defy. Is it the answer to the industry's problems and does it start to hop back even more than what we've seen this month? C five versus tv Ocationale. We're going to dig into this a little bit more. I want to bring in Mary Catherine later, CEO of the Decentralized exchange unice swap, which allows users to trade cryptocurrencies without the involvement of

a centralized third party like other platforms like coin based cracking. Uh. Mary Catherine, I want to ask you first of all, we saw today Kathy Would, for example, selling some coin based shares. There is a lot going on here and investors trying to interpret some nick signals. What's your take on what's happening in in C five versus d FI and where this is all headed? Well, thanks for having me first. Let me Esa whige a little bit of from a distinction between c FI and d FI. So UM.

While we know SAP certainly believe in crypto broadly, but that's as an asks the class or the underlying technology. Un swap and DeFi really is about the technology. It's really about decentralized rails for financial activity UM. In contrast, a centralized exchange, as you know, operates the same way frankly that a traditional exchange does, but with digital assets.

So that's a critical difference. It means that they're taking buy and sell orders, they're managing risk, they may be managing a balance sheet UM, whereas in contrast, unit swap with de centralized protocol is self executing code. It's kind of like you think about it as like SMTP as the core protocol at the core of email, and then you have applications like Gmail and others on top of

them that help you UM actually use those protocols. So in the what we've seen in the past few months is frankly risk mant challenges at some of the centralized players that have struggled UM, and and also some some

internal risk control challenges. Again, in contrast, these decentralized protocols don't ever touch customer money, they don't have customer accounts and so that means that um, the what you manage risk is by having really effective software that's audited, that's battle tested, and so in the past few months there's been plenty of volatility and defied protocols have have proven themselves generally resilient and have not been hacked, have been

have been secure, and have performed well. Let's talk about this a little more in terms of the customer itself. There's a lot of talk about how customers get paid back more fairly when it comes to defy rather than cify. Is that true and to the extent that it is true or not true? What is allowing that to happen at M with more certainty? Totally? So it is a

completely different business model. So when you're training with the centralized exchange, their entire business models to make the spread in the same way this for a traditional market maker or exchange UH to make the spread on a transaction as well as a transaction fee, whereas in a decentralized

exchange there is a two sided marketplace. So anyone can become a liquidity provider or a market maker, and that liquidity provider then gets their proad of share of the fees from the trades executed on the platform, so UNI swap actually has no revenue associated with the decentralized you know swap protocol. Instead, all of those fees are they're essentially flat fees that are redistributed and predescribed the flat fees at predescribed rates that are then redistributed to liquidity providers.

What that means is that you could trade on a centralized exchange for three to five percent, and you could trade on UNI swap for one basis point to a hundred basis points. So it ends up being a really material, material difference. I should add the fees that you do have and defy are the network fees. So like gas fees on the theory ofm that you and your audients are likely familiar with right now, those are very low because there's less network activity. But overall the business model

for defy is fundamentally different. It's using and source code to provide the activities that have traditionally been performed by central intermediaries. And so we think about the promise of blockchains that we've been sort of awaiting to see in

UH in traditional markets for some time. I think what we've seen in the past few months, is how that can become very very different, how the benefits of the user is very different, and how in the case of market volatility, they still can really perform and and prove resilient. What are the lessons you've taken from this very tumultuous

time about how to make defy more resilient. I think most important is to anticipate how to protect your users and how to ensure security that if we want to grow at this point all of Defy is still only about four million users. In order for this technology to get broader mass adoption, we have to explain its benefits better. Uh so the cost benefits that I've just described, but then we also have to ensort making it simpler and

easier to use. Part of why people use centralized exchanges is that they have on ramps you can exchange your dollars for crypto. Uh they buy sports and stadium sponsorships and so you heard of them. And this is an opportunity I think to gred drive greater awareness of Defy

so that people understand some of those benefits. And the second thing I mentioned is that it's an opportunity to introduce risk management measures and screening that can help people understand the risk that they're taking even if we don't yet have regulatory clarity in the great level of detail. All right, Mary Katherine later Unit SWAP Chief operating Officer, along with our Sinali Bossic. Thank you for helping us better understand a very complex topic. Appreciate it. Coming up

more updates on metas earnings. Stay with us. This is Glover tex stox rallied as Jerome Pal said, the FED will slow the pace of rate increases at one point. Let's talk above hat and wrap attack results of the day with our own Ludlow. You've been listening into the medical Yeah, I think it's really interesting to take away from the FED. Was Fed Jpal saying we don't see a recession. We see no signs of recession, and yet on the earnings called. Mark Zuckerberg, CEO of Meta, had

this to say, they do see an economic quote downturn. Now, economic downturn is another word for a recession. However you want to slice it and dice it. The main thing is that budgets from advertisers are getting smaller, and no matter what Meta says, that's going to hurt them. The question, of course is what's the broader takeaway here? And is this is this a downward the start of a downward

trend for sales, the first quarterly decline ever. You and I were talking about how this has been a weird week, you know, on the one hand, yet where is my sound effects? Right? Okay? Alphabets saying lots of search for travel, but I point out something's in bugging me for twenty four hours. They also said that travel partners have been seeing headwinds. In other words, lots of people are googling where should go on holiday, but the advertisers are pulling back.

But alphabet stock went up. Metas results the outlook for the current period not strong, but it's getting tighter. It's they are giving the opposite view that actually the strength in their market's not there. We're getting inconsistency. We're seeing in the chip sector as well. Remember Texas Instruments earlier in the week, very good, Malcolm, not so good today. And we're also talking about mrs and beats by you know, very small margins. Alphabets add revenue beats by a small margin.

Facebook's ad revenue missed, yes, by a small margin, and that sends a big signal to investors, and you're always wondering if they're over interpreting those signals. But you wonder if Alphabet is in a better position than matter. Yeah, there there seems to be strength in search. You remember with with alphabet, YouTube was not as strong. It's all growth,

but nothing like the same period a year ago. If there's a shining light for Meta, and we've got to give them some positivity this time a year ago, what was happening Apple was changing its iOS settings. That was when we first started to see the pain for Meta and advertisers around tracking right on the platform. And what they're saying is that thankfully, going into the next period, the comparable as a favorable as lasts last year as

a disaster. So glad you mentioned App because we're gonna be all over Apple tomorrow as well as Amazon, Apple and earning Apple and Amazon the next to report. Okay, ed Letlow, thank you. That does it for this edition of Bloomberg Technology. We're also gonna be talking to Qualcom CEO Cristiano I'm on Thursday on the back of their results. In addition to Apple, Amazon and so much more. Don't forget to check out our podcast wherever you get your podcast.

I'm Emily checking in San Francisco. This is Bloomberg