Is this the beginning of the end of Facebook? - Protocol

The signs have been out there for a while, but Facebook users have now declined for the first time ever.
It’s the beginning of the end of Facebook.
Facebook is dying. The signs have been out there for a while, of course: slowing growth around the world, an increased focus on Instagram and WhatsApp and Messenger and then a hard pivot toward the metaverse, including a whole-ass name change so that Meta’s potential might not be brought down by Facebook. But all we saw until now was slow growth, not decline.

Facebook users have now declined for the first time ever, Meta announced on its earnings call yesterday. The numbers are still ludicrous, obviously — 1.929 billion people still log on to the Facebook app every day, and Meta turned nearly $40 billion in profit last year, so don’t pour one out for the blue app just yet — but the number is down about a half a million users from the previous three months.
Meta’s stock has dropped about 20% since the earnings call. Big price swings have come for Meta before, but this one’s particularly problematic: Zuckerberg needs time, money and patience to pull off his metaverse play, and he may not have as much of any of the three as he thought.

Facebook is playing with both hands tied behind its back right now. TikTok is a formidable competitor, but Facebook can’t even buy a GIF company without getting antitrust scrutiny. Apple’s privacy moves continue to hurt, too: “The accuracy of our ads targeting decreased, which increased the cost of driving outcomes,” Sheryl Sandberg said on the earnings call, and Zuckerberg added that the company has had to rebuild “a lot of our ads infrastructure.” Ultimately, CFO Dave Wehner said, that could cost the company about $10 billion in lost revenue — which is about as much as Meta lost on all its metaverse projects last year.
Reels is the bright spot, at least until the metaverse becomes a thing. Zuckerberg underscored how important Reels is to the company as it tries to take on TikTok, and called it “our fastest-growing content format by far.”
Meta has been the most interesting company in earnings season so far. The sun rises, Big Tech makes money. But here are a few things we’ve learned from the other companies reporting:
This year, it seems, is going to be a year full of transition. The ad market continues to change; the supply chain should improve eventually; the digital transformations of so many industries continue apace; regulation is coming; the (hopefully, please, seriously) end of the pandemic will bring a sweep of change in everyone’s lives. Even the biggest companies won’t be immune to the change. But all that money they keep making will surely help.
A version of this story also appeared in today’s Source Code newsletter; subscribe here.
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David Pierce ( @pierce) is Protocol’s former editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.
Crypto was thrilled with a regulator who understood blockchain. But things have gotten testy between the fast-growing industry and an SEC chair determined to rein it in.
Gary Gensler was once seen as a potential crypto ally, but now some consider him a serious nemesis.
Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.
In April, SEC Chair Gary Gensler gave a cautious assessment of crypto: “lots of innovation, but plenty of hype.”

Ripple general counsel Stuart Alderoty picked up on something else Gensler said in his speech at the University of Pennsylvania, in which he reminisced about studying at his alma mater’s law school library.
“So let me get this straight, Chair Gensler isn’t a lawyer, but he once visited a law library,” Aldeorty said in a tweet.
That’s not just Twitter snark. The slam by a top industry lawyer epitomizes Gensler’s stormy relationship with an industry that once saw him as a potential ally but now considers him a serious nemesis. Since taking on the role last year, Gensler has quickly become crypto’s favorite whipping boy on Twitter, where critics portray him as a tyrant and accuse him of being aggressively anti-crypto.
The central complaint: Instead of providing clarity on how crypto companies should operate, the SEC under Gensler has embraced a policy of “regulation by enforcement,” marked by threats of legal action and fines.

The SEC, which has markedly not engaged publicly with the criticism outside of Gensler’s public speeches, could not be reached for comment.
Gensler has also taken heat beyond the crypto realm. He’s been criticized for new SEC rules that would expand the agency’s control over private markets, a concern that 47 House members, including 28 Democrats, raised with him recently.
But his stint as SEC boss has been defined by his agency’s very public skirmishes with the fast-growing crypto industry.
In September, Coinbase announced that it was shelving a plan to roll out a lending product after the SEC threatened legal action to block it. CEO Brian Armstrong complained in a tweet: “Some really sketchy behavior coming out of the SEC recently.”
His tweetstorm also underlined the crypto confusion about securities laws. “Seems strange. How can lending be a security?” Armstrong said, which prompted responses that offered to help him review the Securities Act of 1933. Even the SEC subtweeted Armstrong.
BlockFi learned this the hard way after the SEC announced that the crypto company would pay a $100 million penalty for offering a crypto lending product that should have been registered as a security.
Some crypto companies have had more constructive encounters with the SEC. Katherine Dowling, general counsel and chief compliance officer at Bitwise, said the crypto investment management company has had “a very good and open dialogue” with the SEC.
“That dialogue is based in part on a recognition by the SEC and companies like Bitwise that these are not assets for everybody, and it’s not something that grandma should be mortgaging her house and putting all her money in,” she told Protocol.
But more clarity is needed, she said: “Investments are coming into the space, the brainpower is coming into the space, there’s a lot of products that are being created, their businesses being born, and we want to make sure that they are moving in the right direction.”
Marc Fagel, the SEC’s former regional director for San Francisco and now a lecturer at Stanford Law, said the cases the agency has filed “are well-reasoned that under settled law, these are securities.” But he also said where the SEC “falls short is giving more than proactive guidance with rulemaking of what the industry can do that won’t get them in trouble.”

The responsibility for the problem also rests with Congress, which has also failed to legislate on crypto. As a result, “both politicians and regulators are not finding a way to quickly get in there and provide some industry guidance,” he said.
What’s ironic is that the crypto industry initially cheered Gensler’s appointment as SEC head because he taught blockchain at MIT. He didn’t come across as an anti-crypto crusader in his popular lectures, which have garnered millions of views on YouTube.
In a 2018 lecture, Gensler offered a positive view of blockchain and DeFi, saying that “in some circumstances, decentralization really will compete and beat the centralized intermediary.”
Gensler also co-wrote a 2018 paper that said “blockchain technology has a real potential to be a catalyst for change in the world of finance.”
“The consensus that the group reached was that there was promise in blockchain technology that could have an impact either directly by replacing legacy infrastructure technology and financial services or by catalyzing change in the industry,” Klaros Group partner Jonah Crane, one of Gensler’s co-authors, told Protocol.
But Gensler has serious concerns about the way the crypto market is evolving. One of them is how major crypto exchanges are structured.
“Unlike traditional securities exchanges, crypto trading platforms also may act as market makers and thus as principals trading on their own platforms for their own accounts on the other side of their customers,” he said in his University of Pennsylvania speech.
That can lead to serious conflicts of interest. Crane cited situations in which “just by agreeing to list a new token an exchange can have a material impact on its price.”
In fact, that issue got some attention recently when Coinbase announced that it would start posting a list of tokens being considered for listing. The announcement sparked speculation that Coinbase was grappling with front-running, or traders making bets based on insider information about cryptocurrencies the exchange was planning to list.

Crane acknowledged that people from the industry have “reported that they had negative interactions or [were] frustrated by the lack of interaction” with Gensler.
Those negative reactions get amplified on Twitter, where Gensler now routinely takes a beating from crypto executives and their followers.
In a November interview with Protocol, Alderoty acknowledged that the tweets against Gensler were a way to “poke the bear” because “it’s clear that the bear has no interest in cooperating.”
But that’s probably not going to change Gensler’s position, Crane said.
“This is the one area I’ll comment on his personality,” he said. “I don’t think what anybody says on Twitter is going to change his mind. … He’s looking at the policy merits. I don’t think he’s working on the basis of any animosity or personal grudges.”
Crane added, “I think people in the industry should think about the way that they engage publicly with the chair of the SEC.”
Fagel said: “I would hope that the SEC is not taking its marching orders from Twitter. You wouldn’t want to think that the regulators are looking to Twitter for guidance.”
Painting a picture of Gensler as an anti-crypto hardliner would be a mistake, Crane suggested.
“I think if he wanted to put a bunch of crypto exchanges out of business in the U.S., he could have at least tried to do that already,” he said. “He hasn’t. … He hasn’t done anything that I think I find all that surprising and/or that is all that sweeping in terms of its impact on the industry.”
It wouldn’t be the first time a Twitter conversation had gotten detached from the real world. But with crypto’s economic impact growing by the day, the stakes of that disconnect could be measured in the trillions of dollars.
Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.
Sameer Sharma is the Global GM (Smart Cities & Transportation) for IOT Solutions at Intel and a thought leader in IOT/AI ecosystem, having driven multiple strategic initiatives to scale over the past 20+ years. Sameer leads a global team that incubates and scales new growth categories and business models for Intel. His team also focuses on establishing leadership across the industry playing a pivotal role in deploying solutions for the development of smart cities around the world—an important effort in furthering the goal of sustainability. These solutions include Intelligent Transportation, AI/Video, Air Quality Monitoring and Smart Lighting. With far-reaching impact, each of these solutions is providing local governments a plethora of data to enhance the daily quality of life for citizens while simultaneously promoting responsible practices to protect the environment. As a leading authority on Cities and AI, Sameer is a frequent keynote speaker at top global events and has been featured in publications such as Economist, Forbes, WSJ and New York Times. His high-energy talks cover pragmatic examples of impact and reflect his passion and belief that technology can and must be a force for good in our society. Sameer has an MBA from The Wharton School at UPenn, and a Masters in Computer Engineering from Rutgers University. He holds 11 patents in the areas of IOT and Mobile. He can be reached through LinkedIn (https://www.linkedin.com/in/sameersharma/) or Twitter (@sameer_iot)
“We have a once-in-a-generation chance to build an infrastructure that equitably creates opportunities for Americans, instead of further isolating them. We must act.” – U.S. Secretary of Transportation Pete Buttigieg
Infrastructure Transformation: The Time is Now
The Infrastructure Investment and Jobs Act (IIJA), a $1.2 trillion investment in US infrastructure, is a “once-in-a generation” bipartisan law that will fund upgrades and modernization of U.S. transportation systems and physical infrastructure while expanding access to broadband internet access. It is also an opportunity explore how digital technologies can transform our infrastructure, making it more resilient, innovative, and efficient and providing more value to our communities, municipalities, and states. The underpinning of this transformation is the connection between transportation and public safety, economic strength, equity, and sustainability.
The potential of the IIJA to shape our future is immense; if we don’t spend the funds wisely, the effects will be felt for generations. Physical infrastructure alone does not fully address the diverse needs of our modern, information-driven economy and set us up for future success. Digital advancements, built on the ‘superpower technologies’ of IoT connected devices, 5G networks, artificial intelligence, and cloud computing, will be critical to the success of this infrastructure buildout. These technologies are available today, deployment-ready and are already foundational to many elements of our daily lives.

What is “Smart Infrastructure”?
The digital revolution is already here – transforming the way we live, work, and communicate. Smart infrastructure is a key part of this revolution. It brings the power of the digital world to physical components like energy, public transportation, and public safety by using sensors, cameras, and connected devices to collect data and provide real-time information to city planners and other decision-makers. This powerful combination of physical upgrades and digital advancements will enable goals like Vision Zero, a multi-national road safety project that aims to reduce traffic and highway fatalities and serious injuries from over one million every year to zero. Bottom line: the next generation of infrastructure is as much about bits, bytes and transistors as it is about cement and steel.
We have entered an era where citizens, businesses and institutions understand the impacts and benefits that technology can bring to our daily lives. A clear indicator of the success of the IIJA act is whether communities choose to augment physical infrastructure upgrades with digital technologies to “future-proof” their investments. It is imperative that cities and communities become more sustainable, affordable, environmentally safe, and equitable, ultimately providing all citizens with a higher quality of life.
Equitable and Sustainable Development
Advances in infrastructure have driven growth and prosperity since the beginning of civilization. The basic structures, systems, and facilities that citizens use for transportation, water, energy, and communications are vital to economic and social development. However, these advances have not always been distributed equitably and have even disrupted communities and displaced tens of thousands of citizens in historically Black communities from Miami to Detroit. Meanwhile, lack of access to transportation hinders access to jobs, education, healthcare, and other vital services. According to a 2020 report by the Congressional Black Caucus Foundation, 20% of Black households do not have access to an automobile and 24% of public transit riders are African American. We believe that access to transportation is an on-ramp to opportunities, economic prosperity and equality.

Meanwhile, more than half of the world’s population lives in cities, and this percentage is predicted to grow. But cities are also a driver of climate change; the United Nations Development Programme (UNDP) reports that they are responsible for 70% of global greenhouse gas emissions. Smart infrastructure can ameliorate these effects by increasing the use of remote sensing devices to monitor air pollution, make recycling systems smarter, and reduce traffic congestion.
Why Intel – and Why Now
At Intel, we have an over 50-year history of manufacturing development and are a leading provider of edge-to-cloud technology. As a pillar of U.S. innovation, we understand the possibilities of combining digital technology with physical infrastructure upgrades. Over the last few decades, we have invested in a thriving ecosystem of partners and driven interoperable, open standards-based solutions. We are also working directly with cities and communities to solve issues such as transit capacity management.
We are deeply committed to helping our world face critical challenges like climate change, the digital divide, and lack of inclusion. Our RISE strategy defines our goal to create a more responsible, inclusive, and sustainable world that is enabled through technology and our collective actions. Earlier this month,, we committed to achieving net-zero greenhouse gas emissions by 2040. We fully support the U.S. government’s vision to enable growth and prosperity for American people through IIJA funding.
Want to learn more about how smart infrastructure can support a more sustainable future for all? Visit us online for more insights on the power of technology to transform our world.
Sameer Sharma is the Global GM (Smart Cities & Transportation) for IOT Solutions at Intel and a thought leader in IOT/AI ecosystem, having driven multiple strategic initiatives to scale over the past 20+ years. Sameer leads a global team that incubates and scales new growth categories and business models for Intel. His team also focuses on establishing leadership across the industry playing a pivotal role in deploying solutions for the development of smart cities around the world—an important effort in furthering the goal of sustainability. These solutions include Intelligent Transportation, AI/Video, Air Quality Monitoring and Smart Lighting. With far-reaching impact, each of these solutions is providing local governments a plethora of data to enhance the daily quality of life for citizens while simultaneously promoting responsible practices to protect the environment. As a leading authority on Cities and AI, Sameer is a frequent keynote speaker at top global events and has been featured in publications such as Economist, Forbes, WSJ and New York Times. His high-energy talks cover pragmatic examples of impact and reflect his passion and belief that technology can and must be a force for good in our society. Sameer has an MBA from The Wharton School at UPenn, and a Masters in Computer Engineering from Rutgers University. He holds 11 patents in the areas of IOT and Mobile. He can be reached through LinkedIn (https://www.linkedin.com/in/sameersharma/) or Twitter (@sameer_iot)
The data broker is building out its TalentOS platform.
Comparably has been growing 150% year-over-year, Jason Nazar told Protocol,
Job boards won’t cut it anymore — even for non-technical roles. That’s why ZoomInfo is buying the employer review site Comparably to build out its TalentOS candidate acquisition platform.
The companies announced the acquisition for an undisclosed sum on Monday, which will help ZoomInfo — a $19 billion data broker that sells to marketers and salespeople — level up TalentOS. Comparably will bring its employer branding service to TalentOS, which helps clients find candidates and contact them.
“It was always hard to fill engineering roles on job boards, but you could fill sales and marketing and finance and design, and certainly retail jobs,” said Jason Nazar, co-founder and CEO of Comparably. “Today, it’s a completely different dynamic, where you have to spend so much time and money directly sourcing candidates.”
Comparably has been growing 150% year-over-year, Nazar told Protocol, and saw more than 20 million visitors come to its reviews site last year. The site is free to job seekers, and doesn’t run ads.

Instead, employers — which range from Fortune 500 companies to small businesses — pay for branding and recruitment marketing tools, salary data and competitive analysis. (Comparably touts that it only allows current employees to post reviews, and doesn’t allow customers to remove or alter ratings or reviews.)
TalentOS has also taken off since it launched in June 2021. The platform has more than 1,000 customers, with TalentOS revenue growing 50% between Q1 2021 and Q1 2022.
Nazar said Comparably’s more than 15 million reviews should bolster the platform further.
“If you look at our combined reach of traffic, and what we add to the footprint of already the millions and millions of people that come to ZoomInfo every single month, that’s pretty powerful,” Nazar said.
Nazar, a serial entrepreneur who sold his startup Docstoc to Intuit in 2013, co-founded Comparably in 2015 with Yammer co-founder George Ishii, InvestedIn co-founder Yadid Ramot and DebtMarket co-founder Michael Sheridan. Greycroft Partners led Comparably’s $7.25 series A investment round in 2017, with other investments from Comcast Ventures, Crosslink Capital, Upfront Ventures, Lowercase Capital, Alpha Edison, Cornerstone on Demand, Accelerator Ventures and Rincon Ventures.
Ramot and Sheridan remain at Comparably as its CTO and COO, respectively.
Nazar and the rest of the Comparably team will join ZoomInfo, Nazar said. ZoomInfo, which has 3,000 employees, will also grow Comparably’s team of under 100. The Comparably brand and product will remain intact, Nazar said, but will “integrate deeply” with the TalentOS platform over this year. Later in 2022, companies will be able to buy both products together, Nazar said.
Square Enix is offloading Tomb Raider, Deus Ex and its North American studios. Here’s why.
Square Enix wanted, but never got, a big hit.
Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Another week, another major video game acquisition. But this time, it’s different. Square Enix, the Japanese publisher known best for Final Fantasy, said it has agreed to sell off its Western studios and intellectual property to the acquisition-hungry Swedish holding company Embracer Group, including the Tomb Raider franchise, for just $300 million.
The sale speaks to the state of the game industry in many different ways at once: about single-player gaming as a business, Square Enix’s management style and how classic properties as well-known and beloved as Tomb Raider can be worth peanuts compared to mobile, free-to-play games.
Square Enix wanted, but never got, a big hit. The history of Square Enix’s Western game business can be summed up in two words: “missed expectations.” The company repeatedly threw its own games under the bus for underperforming, and it was never exactly clear what sales milestone Square Enix was hoping to achieve with its reboots of Tomb Raider, Deus Ex and Hitman.

Did Embracer Group get a bargain? Much of the conversation around Monday’s sale is concerned with just how cheap it seems: Tomb Raider, Deus Ex, three studios and a back catalog of 50-plus games for less than a third of what Embracer paid for Borderlands studio Gearbox last year. It sure seems undervalued at first glance, but the numbers may tell a different story.
Embracer Group has a plan. So what can a fast-growing gaming conglomerate do that one of the oldest and largest Japanese publishers can’t? It’s not totally clear right now. Square Enix’s Western business always felt messy and mismanaged, and its games poorly marketed.
This should not be read as Square Enix giving up on single-player games. The company is still heavily invested in Final Fantasy, with a new main entry in development, and has Dragon Quest, Kingdom Hearts and other related role-playing series squarely in its bread-and-butter zone. Square is also keeping control of the Just Cause and Life is Strange series and planning to publish the action game Forspoken later this year.
But Square’s winding and underwhelming attempt to break into the Western game market over the last decade by trying to revive old classics has ended with what many industry watchers are calling a fire sale. It’s not a triumphant end to this chapter of Lara Croft, but it’s an exciting and hopefully more financially sound beginning of an all-new one.
Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Here’s what tech workers think about your most recent blog post.
Is it more of a risk to stay quiet, or to take a stance that might provoke backlash among employees, customers or investors?
Welcome back to Ask a Tech Worker. For each installment, I head out to the streets of downtown San Francisco to chat with tech employees and entrepreneurs about issues affecting the workplace. Got an idea for a future edition? Email me.
It’s expected at this point: Tech companies — especially big ones — taking a public stance on social and political issues. Between threats to abortion rights, LGBTQ+ issues, the climate crisis, racial justice and the war in Ukraine, there’s no shortage of issues for companies to speak out about, or take action on. At the same time, there’s some interest in the tech world in being less political about issues that don’t directly serve the company’s mission.
But what do workers actually expect from their companies here? Is it more of a risk to stay quiet, or to take a stance that might provoke backlash among employees, customers or investors? I returned to Salesforce Park last week to ask workers when they want their employers to speak out, when they want them to step back — and when it all just looks like a PR stunt.

What I found: The workers I met had few reservations about their employers taking a stand on social and political issues, leaning toward wanting them to speak out. But they notice when companies hesitate, when they sound phony and when their statement is watered down to the point that no one could ever disagree with it.
“All these companies have accrued vastly disproportionate amounts of power, and along with that comes some sort of social responsibility to the communities that we exist within,” said software engineer Dan Spaeth of X, Alphabet’s so-called “moonshot factory.” “It’s definitely something to be wielded cautiously because when you have that power, making those statements is a form of exercising it.”
Sanika Doolani, a product designer at Salesforce, said she usually likes when companies speak out, offering the war in Ukraine as an example of a high-impact issue that some companies have been vocal about.
“When I see companies speaking about all these things, it feels like we are all in it together,” Doolani said.
And when companies wait to speak out — or take a stance that proves unpopular — that can provoke action from employees.
Philip, a Salesforce employee who declined to give his last name, pointed to Disney’s initial unwillingness to condemn Florida’s so-called “Don’t Say Gay” law that will ban schools from teaching kids in the third grade and below about sexual orientation and gender identity.
After Disney employees challenged that decision, Disney CEO Bob Chapek flipped and opposed the law. But it was too late by that point, and employees still held a walkout.
Philip applauded the grassroots effort.
“You look at the Disney thing going on right now, and they didn’t make a decision until employees made it a problem,” Philip said. “I feel like, ‘Good job, employees.’ And now they’re getting some backlash [for] it.”
Politics are a minefield, and companies will risk backlash no matter what. So how do you calculate that risk? Spaeth said he’d be more likely to get angry at an employer for not saying anything than for saying something with which he disagreed. He’s watched as past employers put out statements that were “not fully representative of their own situation,” he said, but noted that he hasn’t objected to social and political statements that they’ve made.

As it is, corporate political statements tend to be watered down and “very anodyne,” to the point where the only people who might be upset by them are people who would “get mad at anything,” Spaeth said.
Companies should also avoid phoniness. Many of these statements can come across as PR stunts, workers told me.
“Sometimes, it is a PR stunt,” Philip said. “There are times when they speak out, and I’m like, ‘Oh, is that because of the bottom line, or is it because of actually wanting an outcome that has nothing to do with business?’”
But, Spaeth said, scoring PR points isn’t always a bad thing.
“Whenever these statements are made, they are a PR thing, on some level,” Spaeth said. “That said, I don’t think it’s the worst thing to generate PR in a way that is positive.”
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