The Hustle

🙅‍♂️ The US government vs. Facebook

Want to win a 3-hour business strategy session with Sam Parr and The Hustle team? More details here.In other news… breakdancing is officially the newest Olympic sport, and competition will debut at the 2024 Paris games. It’s part of the International Olympic Committee’s ongoing effort to appeal to a younger demographic. The real question is: Will the gold medalist be a TikTokker?


December 10, 2020

PLUS: What’s happening to pilot jobs?

December 10, 2020
TOGETHER WITH

Want to win a 3-hour business strategy session with Sam Parr and The Hustle team? More details here.

In other news… breakdancing is officially the newest Olympic sport, and competition will debut at the 2024 Paris games. It’s part of the International Olympic Committee’s ongoing effort to appeal to a younger demographic. The real question is: Will the gold medalist be a TikTokker?

The Big Idea

Zucked: the United States government wants to break up Facebook

Less than 2 months ago, the US Department of Justice (DOJ) smacked Google with an antitrust case.

In perhaps the greatest “hold my beer” ever, another government agency — the Federal Trade Commission (FTC) — just launched an antitrust case of its own against Facebook.

And, unlike the Google case, this case is aiming for a breakup of its Big Tech target, according to the New York Times.

More than 40 states will join in on the lawsuit

The meat of the case concerns Facebook’s history of buying on-the-rise social apps and snuffing out future competition.

Of particular note are Facebook’s acquisitions of:

  • Instagram for $1B in 2012
  • WhatsApp for $19B 2014

Today, Facebook is a $790B+ behemoth with annual revenue of $80B+ and 4 products that boast 1B+ users: Facebook (2.7B), WhatsApp (2B), Messenger (1.3B), Instagram (1.1B).

Few major antitrust cases have tried to unwind previous mergers

One of Facebook’s defenses is the very fact that the FTC approved these mergers years ago.

Facebook further contends that without its infrastructure and social expertise, the likes of Instagram and WhatsApp would not have seen the same growth.

In more recent years, Facebook CEO Mark Zuckerberg has latched onto TikTok as an argument against a breakup of Facebook:

  • First, the video app’s hockey stick rise proves that social media remains competitive.
  • Second, Facebook is a defense against the rise of social apps from China, a country which has a “dangerous” approach to internet regulation, according to Zuckerberg.

Prosecutors want to break up Facebook and block future deals

These are “some of the most severe penalties regulators can demand” according to the New York Times. The case — which took 18 months to put together — will likely take years to resolve.

Somewhat ironically, Facebook announced a $1B acquisition of chatbot startup Kustomer last week.

If the FTC wins this deal, the period of freewheeling Big Tech M&A may come to an end.

Snippets

 
Face Me

Bruce Wayne Sam Parr (Source: Reface)

Not The Onion: Reface raises $5.5m for its AI-powered face-swapping app

In the absurd 1997 action movie Face/Off, characters played by John Travolta and Nicholas Cage undergo next-gen surgery to exchange faces.

Today, there’s no surgery necessary.

Reface, a viral AI-powered app, lets users (like our Sam Parr ☝️) swap their faces with celebrities (like Christian Bale as Batman) and share them — which 65% of its users do.

To keep the party going, Reface just raised a $5.5m seed round

Per TechCrunch, the app — which ranks among the top 5 most downloaded apps in 100 countries — has top investors including Andreessen Horowitz as well as the founders of gaming giants Supercell and Unity.

Co-founded by 7 Ukranian entrepreneurs in 2011, Reface has focused exclusively on AI since 2013, perfecting a specific version of machine learning known as generative adversarial networks (GANs).

“In a nutshell it’s generating a new animated face using the twin inputs (the selfie and the target video),” writes TechCrunch, “rather than trying to mask one on top of the other.”

Total downloads are up to 70m…

… with celeb users from Joe Rogan to Justin Bieber sharing the creations.

Moving forward, Reface wants to deepen its relationship with the entertainment industry but is planning for user-generated content (UGC), which presents a whole host of problems related to DeepFakes.

Before you can swap faces with grandma, the startup has to put detection and moderation systems in place so that users can’t just randomly Reface strangers.

This will go a long way to help Reface become “the biggest platform of personalized content”… no word on whether that includes a (much-needed) sequel to Face/Off.

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Hey, Captain

What’s happening to airline pilot jobs?

Most people think that pilots have an attractive job. Well, here’s a stat for you: In 2018, it was the No. 2 most right-swiped male occupation on Tinder (it was No. 1 in 2016).

In the US, the role requires many years of training and commands a median salary of $130k+.

Due to the expertise required and the boom-bust nature of air travel, pilots’ unions are also among the world’s most powerful, according to the Wall Street Journal.

The airline-union relationship has been strained by the pandemic

Unlike many other jobs, pilots are unable to work remotely — so their bargaining power vis a vis the airlines has taken a hit:

  • American Airlines has furloughed 1.6k pilots
  • Norwegian Airlines has furloughed or cut 1.9k jobs
  • Southwest Airlines is on the cusp of furloughing pilots for the first time ever (we wrote more about Southwest here)

Even airlines that have avoided job cuts (like Delta) are guaranteeing fewer hours and reducing pay.

One union president tells the WSJ that he believes airlines are angling to use the pandemic to permanently cut costs.

It’s very expensive to get a pilot’s license 

Total cost: between $60k-$80k, by one estimate.

Furlough schemes typically put the most junior pilots out of work first, making it difficult to pay off the training.

But if airlines lose too much capacity, it could burn them in a few years.

“If you think the industry is going to be recovered by 2025,” a United executive said on an industry call in November, “we need to start to think about how to attract those pilots of the future today.”

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Zuck-toid of the day

Long before Facebook CEO Mark Zuckerberg was telling people how he was going to F the Winklevoss twins “probably in the ear”, he was actually quite an accomplished entrepreneur.

In high school, Zuck Daddy Coder built Synapse (pictured above), a media player that used some voodoo to figure out a user’s musical taste.

AOL reportedly offered $1m for Synapse.

Zucky McKeyboard passed on the offer and ended up at a (probably poorly ranked) school called Harvard.

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Editing by: Zachary “Zuck me” Crockett, Ron DesVue (Director of Clandestine Meetings).

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