Facebook’s Good Idea, Amazon Earnings, Intel Earnings

Facebook’s Good Idea
I watched most of Mark Zuckerberg’s speech at Georgetown on free speech and how Facebook plans to deal with their role in the world. While most of the commentary was pessimistic, there were a few things he discussed that I think merit more thought.

The core of Facebook’s issue is their attempt to behave, and monetize, massive user scale as a neutral platform. A fundamental challenge is that Facebook is essentially a general-purpose neutral platform, and the same Facebook we use in America is essentially the same Facebook as other parts of the world. When it comes to a global platform, Facebook may be facing issues never seen before. While we can argue, Facebook may need to be broken up, or perhaps even more specially regionalized, and perhaps each country in which they compete should be run in a way that works more closely with the specific countries. That being said, I want to focus on one specific idea Zuckerberg touched on that I think is a good start.

An idea brought forth by Zuckerberg, which related to how you place ads, was to make sure no one could create ads, especially political ones or ones that spread information without verifying their identity. Essentially, Facebook wants to make it, so accounts that are created or used to place ads need to be verified to an actual human. They plan to do this by requiring a government ID before they can place ads. The goal here is accountability, and ultimately this is the critical idea put forth by Zuckerberg.

If the spread of misinformation, damaging speech, and in general, the kind of content that is worse for society is to be managed, it starts with identity. While this alone may not completely stop the issue, at least there is a way to hold people accountable for their actions. This is certainly a better step forward and one I hope Facebook follows through with and explores more ways they can more deeply hold their users accountable for their actions. Accountability is a step in the right direction to discourage malicious intent.

Amazon Earnings
Many who study Amazon know they can pull levers within their business at any time to turn a profit or not. The commenters seem to forget this making a much bigger deal of lower than expected earnings. Amazon’s stock was down, irrationally, because they took a margin hit due to increased investments in one-day shipping. Amazon let investors get too comfortable with their quarterly profit trend, so the reaction was mixed when they decided to turn less profit and invest in some core areas of business.

Overall, Amazon’s business remains exceptionally strong. Amazon remains well-positioned to keep gaining advertising share, an area that contributed to their “other” business revenues, which grew 44%. Online stores grew 21%. AWS grew 35%. The only real negative was guidance, which management explained was due to continued investment in one-day shipping, which will impact Amazon’s commerce business to the positive once established.

On a quarter to quarter basis, the debate with Amazon will always be growth vs. investment. But Amazon’s upside remains too high to ignore.

Intel Earnings
Along with Amazon, Intel is a tech bellwether company. I don’t normally talk about Intel’s earnings, but there are some things brewing that I think could be positive for Intel and worth mentioning because they are a bellwether company.

Intel has just come off trying times. Their shift to 10nm from 14nm was a struggle, to put it mildly. That struggle impacted the PC ecosystem and to a degree, the data center. During this challenging time for Intel and their customers, both Intel and those who depend on Intel technology had to prioritize their product strategy. What that meant for Intel customers was prioritizing data center, due to demand, and a focus on enterprise PCs. Now it appears the end is in sight for Intel to be constrained with products, and as they ramp 10nm platforms, we will likely see some important new steps forward in both the data center and PCs for enterprises and consumers.

Ahead for Intel is the bigger opportunity coming to them from the smart edge computing devices, 5G, as well as their GP-GPU strategy, which, if successful, provides quite an upside to Intel to take share from Nvidia which will be the key storyline to watch.

Intel still has some execution challenges ahead of them, but as a few of their product kinks get worked out, the timing for growth may intersect nicely with some industry trends in the 2021 timeline.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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