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Another 10,000 bite the dust

Meta returned to the headlines this week in a story which has become increasingly familiar in recent months, following wave after wave of big tech layoffs.

As reported by the New York Times, the Facebook and Instagram owner is set to sack another 13% of its workforce – or around 10,000 individual employees.

Founder Mark Zuckerberg has, presumably in yet another attempt to convince the public that he is not an AI-powered humanoid robot, described 2023 as the company’s “Year of Efficiency,” and it seems he will stop at nothing to trim the fat from the firm’s bloated workforce.

Meta’s recruiting team – perhaps unsurprisingly given that there is little recruitment going on at the moment – will be the first to be affected, before a restructuring of its tech and business groups will see those areas put under the microscope in April and May.

The firm already laid off around 11,000 staff in November, which was also some 13% of its total workforce at that time, and is now set to axe 5,000 job postings that had yet to be filled alongside the latest round of cuts.

Investors responded positively to the news, it seems, as shares in the tech giant jumped more than 7% by the close of trading on Tuesday, after the announcement was first made.

The NY Times laid out the now-familiar roadmap which has brought the company to this point.

Meta hoovered up all the talent it could find during periods of rapid expansion – for example following its acquisition of WhatsApp, or as mobile app usage boomed during the Covid pandemic.

As the old adage goes, however, what goes up must come down, and it seems the number of employees able to hold on at the tech giant is no different.

The article points to Amazon, Google, Microsoft and Salesforce all following a similar trajectory as they too attempt to cut down on costs amid a slowdown in the global economy.

It also points out that Zuckerberg’s big bet on the metaverse has yet to pay dividends, and that emerging technologies such as these continue to face an uncertain future.

So too do Meta’s remaining employees, who must now continue working, aware that the scythe may soon swing in their direction.

Silicon Valley Blunder

In more miserable business news, the Financial Times reported this week on the damage caused to tech start-ups by the much-publicised collapse of Silicon Valley Bank.

According to the piece, new firms are now “scrambling to deal with tighter regulation and the influence of larger banks that are set to replace the informal financial relationships and close personal connections that have characterised Silicon Valley Bank’s dealings with the sector.”

Naturally, the first priority of a lot of SVB clients on hearing rumour’s of the bank’s shaky position was to remove their cash and spread it around a bit, to avoid being reliant on a single bank again in the future.

“A lot of concentration in one bank in a highly connected community clearly turned out to be a very bad thing,” Laksh Aithani, founder of UK-based biotech company Charm Therapeutics told the FT

And, when you put it like that, it does seem fairly obvious.

Still, there were benefits for start-ups in the simplicity of holding all their cash in a single bank. 

Founder of sustainable period care start-up The Flex Company, and former SVB client Lauren Schulte Wang, told the FT that her firm had opened an account at JPMorgan over the weekend and planned to diversify further, but that the new set-up will inevitably make life more complicated.

SVB had previously touted itself as a one-stop shop for start-ups, with services designed around fitting their particular needs.

“There was always somebody you could speak to, no matter how small [the start-up],” Robin Klein, a VC investor at LocalGlobe, told the FT. “That’s very different from the big banks.”

The paper concluded that losing the bank is set to make life a lot more difficult for start-ups and their founders, eventually tilting technology markets further in favour of bigger platform companies with strong balance sheets.

Indeed, it said, the collapse of SVB marks the beginning of a new era for tech start-ups, who now have “to deal with the loss of a singular institution that had sought to provide for all their financing needs.”

While the media has been quick to reassure the public that the collapse of SVB does not precipitate a 2008-style global financial crash, one thing is for certain: The future is beginning to look a lot less bright for new businesses looking to shake up the tech world.

Why not have a flutter on… well, Flutter

Barron’s this week suggested that FanDuel’s parent company (as it’s known to Americans) remains a valuable buy, despite a recent rally in its share price following the announcement it may consider a dual listing in the US.

It pointed to FanDuel’s undeniable dominance in US sports betting, with around 50% market share, and its recent turn to profit in the market, making it the first licensed online bookmaker to do so.

Despite announcing significant growth in its Q4 and full-year 2022 earnings report, Flutter’s shares fell following its release, which Barron’s said was the result of investors underplaying the growth opportunity in the US and instead focusing (on this occasion) on apparent weaknesses in the Australian market.

The UK, of course, may also have played its part in the tumbling share price, with shares in the market currently trading at a record 40% discount to those in the US, according to Citi analysts.

Still, Flutter shares are up 24% so far this year, which Barron’s suggests means investors “are starting to wake up to the bigger picture.”

Susquehanna analyst Joe Stauff gives the stock a Buy rating and a target price of £163 – around 21% ahead of where it sits today.

He noted that the US market size for Flutter over the next two years is set to become as large as the nine largest countries it operates in today, combined.

According to Barron’s, the stock also “isn’t too expensive, trading at 24.7 times estimated 2024 earnings, lower than an average of around 34 times among a basket of competitors, according to FactSet data.”

Gambling reform in the UK could present a roadblock up ahead, but apart from that, it seems there are still plenty of reasons to have a punt on Flutter.

Meta has updated its Facebook marketing policy for gambling ads, with advertisers now set to require written permission from the social media giant.

According to reports, the company is now enforcing new rules that it introduced during the summer from August.

Advertisers who wish to feature ads that promote online gambling and gaming now need to request approval from Meta via a dedicated online form.

Requests must include evidence that the gambling activities are licensed by regulators or otherwise lawful in the geographic locations or territories that they target.

Additionally, Meta does not allow targeting for online gambling and gaming ads to people under the age of 18.

Meta defines online gambling and gaming as any product or service where anything of monetary value is included as part of a method of entry and prize.

The company highlights that monetary value includes but is not limited to cash or digital currencies like bitcoin.

Pre-approval is now required for advertisers promoting all forms of online gambling, including betting, lotteries, raffles, casino games, fantasy sports, bingo, poker, skill game tournaments and sweepstakes.

Moreover, the rule applies to games where anything of monetary value is included as part of a method of entry and anything of monetary value is included as part of the prize.

Ads with landing pages that contain promotions for online gambling or games, even if there is no opportunity to gamble or game directly on that page, such as aggregator or affiliate sites, will also need to request written permission from Meta.

The firm will grant approval for ads featuring specific URLs in approved territories.

“Having an ad account ID approved for one territory does not entitle advertisers to target another territory and advertisers must seek additional approval for any new territory they are seeking to target, or URL they are seeking to advertise,” the company emphasised.

Ads for physical, real money gambling activities or establishments, including “brick and mortar casinos”, certain prize promotions, state or government lotteries, as well as entirely free-to-play games, do not require a written permission from Meta.

Big tech has long had a difficult relationship with the gambling industry, which brings in important advertising revenue.

Last month, Apple rolled back new ad placement rules on the App Store following a backlash from app developers after gambling ads appeared on pages related to their products.

Major stock price crashes for tech companies including Meta, Amazon and Google have stoked fears among investors amid a worse-than-expected Q3 period.

Shares in Facebook owner Meta collapsed by more than 24% following the release of the tech giant’s Q3 report this week, which showed brands spending less money on marketing with the firm amid global economic uncertainty.

Investors wiped some $89bn of value from Meta’s market cap yesterday (27 October) as the business reported its second consecutive quarter of declining revenues.

Alongside broader macroeconomic conditions hammering the business, Meta faces increasingly stiff competition in the social media space from challenger platforms such as TikTok, while changes to Apple’s privacy policy have made it more difficult for the firm to target and measure advertising.

The Guardian’s UK technology editor Alex Hern went further, suggesting the share price collapse is proof that the firm’s “metaverse plan never really had legs.”

He suggested that Meta’s focus on emerging virtual and augmented reality in an attempt to become the world’s leading business in the web3 and metaverse space was a gamble which has so far failed to pay off.

And now in spite of its faltering revenue, the company is predicting further cost increases, with expenses expected to grow more than 10% further over the course of 2023.

Shares in the social media giant are currently down more than 70% over the course of 2022, having slipped under $100 per share this week. In January, shares traded for as much as $338.

Jim Cramer begins to cry and apologizes on being wrong on $META pic.twitter.com/c8qoB8iv3m

— unusual_whales (@unusual_whales) October 27, 2022

Amazon, meanwhile, saw its share price dip by as much as 19.8% in after-hours trading yesterday, after the firm fell short of expectations in its Q3 earnings report.

Both revenue and operating income came in below analysts’ expectations while lower-than-expected Q4 guidance caused a stir among investors.

Elsewhere, shares in Google parent company Alphabet have dipped 5.7% over the past five days, as it suffered a similar fate to Meta with ad spend down among businesses during a period of macroeconomic uncertainty.

Net profit at the firm dropped by 27% year-on-year, although still came in at a seemingly healthy $13.9bn.

Collapses in the value of these blue chip businesses will likely send shockwaves across different industries as Q3 season continues, not least in the technology-driven iGaming sector where investors have become accustomed to high levels of share price volatility.

Large-cap gambling stocks have also faced a tough year, with shares in market-leading firms such as Evolution down by 20.1% in 2022 to-date and Entain down by 25.6%.

Those businesses have fared better than others, however, with shares in 888 as one example collapsing nearly 70% since January.

Flutter Entertainment-owned PokerStars VR is set to be a launch title for Facebook owner Meta’s Quest Pro mixed reality headset, which is expected to launch on 25 October.

The firm’s free-to-play virtual and mixed-reality social casino game will be one of a select few game titles chosen to launch alongside the flagship device, which was revealed by Meta yesterday (11 October).

The Quest Pro, which comes with an eye-watering $1,499 price tag (compared to existing headset the Quest 2 which starts at $399), brings the added benefit of mixed reality capability, allowing digital content to be overlaid on the real world.

Meta chief Mark Zuckerberg has described mixed reality as “the next major step for VR”.

Flutter said Lucky VR, the developers of PokerStars VR, have been working behind the scenes to come up with new ways of taking advantage of the headset’s capabilities and integrate them into the free-to-play casino game.

PokerStars director of VR and innovation James O’Reilly: “Our goal with PokerStars VR is to push the potential of new technologies as far as we can to create a fun and authentic social casino game that really is limitless.”

PokerStars VR players using the Quest Pro will be able to choose between a fully immersive virtual reality experience, a partially immersive experience that brings objects or spaces from the physical world into the game through “passthrough windows”, and a full mixed reality experience allowing players to bring virtual game elements into their own world.

Further, face and eye-tracking technology will add an additional dimension to the game, allowing players to make and see more realistic facial expressions in their customised avatars.

Players will be able to smile, frown, and glance at their cards as they would at a real poker table.

Flutter added that advanced haptics will also add to richer, more engaging gameplay with players getting the full experience of the hundreds of toys, props and items available.

“Our goal with PokerStars VR is to push the potential of new technologies as far as we can to create a fun and authentic social casino game that really is limitless,” said James O’Reilly, director of VR and innovation at PokerStars.

“We’re extremely proud to be part of the launch of Meta’s Quest Pro, which is a transformation in virtual and mixed reality. Our developers have been having great fun exploring what this technology means for our players and we can’t wait to show them what we have in store.”

PokerStars VR offers players a variety of free-to-play casino games in addition to poker. Roulette, Blackjack and slots also feature, while last week the brand announced the addition of craps to its list of available games.

Kindred in court

This week, Swedish newspaper Expressen revealed that a famous former customer has filed a lawsuit against Unibet owner Kindred, with a view to suing the firm for SEK10.3m (€1.0m).

Self-described gambling addict Per Holknekt, who is also a Swedish fashion designer and media entrepreneur, gambled away as much as SEK26m over 15 years, and claims that he was “seduced into a viciously dependent position towards the gambling companies.”

After announcing that he would be filing a lawsuit against Kindred in 2020, this week the suit was sent to the Stockholm District Court.

“The gambling company has deliberately ignored the player’s gambling addiction and through constant incentives worsened his financial situation,” the lawsuit claims.

Kindred told Expressen it had noted the lawsuit, but declined to comment further.

Calling all crypto bros

An interview in the Financial Times shed a light on the difficulties of regulating cryptocurrency, as it revealed the chair of the European Banking Authority (EBA) holds major concerns over the regulator’s ability to govern the industry.

The EBA is set to introduce new regulations around digital currencies by 2025, although it appears that several obstacles still stand in its way.

According to the article, the Authority’s ability to hire specialised staff is a “major concern,” while chair José Manuel Campa said the organisation was also worried about the logistics of planning for its new powers, as it will not find out which currencies fall under the regulation until very soon before its introduction.

The intention is that the EBA will supervise “significant” tokens that are widely used as means of payment, as well as stablecoins, which are popular tokens linked to traditional assets.

According to the FT, banks, fintechs and consultancies are making the EBA’s life difficult by snapping up specialist talent while offering “lavish” packages to attract the top performers to work with them.

This does no favours for the regulator, which offers compensation packages in line with those of the European Commission. Campa said that giving the regulator more freedom to determine pay packets – and thus help it attract the talent it requires – is “not within the range of possible discussions.”

Meta chases its losses

Investors in Meta will be celebrating this week after the social media giant revealed it had managed to reduce the quarterly loss of its Facebook Reality Labs (FRL) division from a whopping $2.96bn in Q1 to a frankly insignificant $2.81bn in Q2.

The Crypto Times reported that FRL generated $452m in revenue during Q2, a tiny portion of Meta’s total $28.4bn in quarterly turnover.

According to the author, Meta previously estimated the FRL division would reduce its net profit by around $10bn in 2021, with the company suggesting it was ready to spend even more on the division in the coming years.

Back in 2001, Microsoft sold the Xbox at a loss so it could break into gaming and beat Sony and Nintendo. It lost around $125 on every console sold. It sold 24 million. Bill Gates also added more memory to the machine to make developers like Tim Sweeney happy.

— Dean Takahashi (@deantak) July 29, 2022

Reality Labs is Meta’s research and development division for virtual and augmented reality, and the owner of the Oculus Quest VR headset. The firm currently operates 12 Reality Labs research facilities around the world.

Meta’s latest financial report showed it had suffered its first year-on-year revenue decline in its history, after a fall in advertising sales saw total revenue slip by 1%.

Sportradar has recruited Brendan Tinnelly, former business lead for Facebook’s real money gaming department, to the newly created role of head of paid social advertising for ad:s.

The ad:s product is Sportradar’s industry specific multi-channel marketing performance platform. Tinnelly will join the product’s strategy team, leading a group of paid social media specialists to optimise client campaigns using the ad:s technology.

In his previous role at Meta-owned Facebook, Tinnelly developed strategies and drove sales for the real money gaming vertical globally and worked with some of the world’s largest betting companies during his seven years with the company.

His role involved helping gaming companies build their brands, acquire new customers, expand into new markets and navigate regulatory change in the industry.

Sportradar said Tinnelly’s appointment follows new hires across several of the company’s marketing functions, including paid search, affiliate marketing and connected TV opportunities.

Rainer Geier, chief product officer for sports entertainment at Sportradar, said: “From his senior role at Facebook, Brendan is a well-known figure in the iGaming industry and we’re thrilled to have him onboard as we continue to evolve our ad:s offering, combining proprietary and gaming-specific technology, with the best strategic and executional talent in the sector.

“Brendan’s hire sends a strong signal about the level of our ambition,” Geier concluded. 

Tinnelly added: “I have seen first-hand the transformative impact paid social can have for sports betting operators, many of whom are increasingly shifting their marketing budgets into the channel. 

“Through ad:s; our leading betting-focused marketing solutions technology, Sportradar can help sportsbooks across the world achieve strong ROI for their businesses by driving meaningful fan engagement.”

Other major hires at Sportradar over the last two months have included Rima Hyder, former SVP of investor and media relations at financial information provider FactSet as its new head of investor relations, ex-NCAA risk specialist Jim Brown as head of integrity services and harm prevention in North America, and Bloomberg veteran Andrew Bimson as COO for North America.

When announcing Sportradar’s Q3 2021 financial results, CEO Carsten Koerl said the US had become the primary area of focus for strategic growth as the firm looks to significantly increase an overall revenue contribution of just 7% from the country.

Weather alert: Microsoft opens Gates to Blizzard

Microsoft caught our eye and, well, the eyes of the rest of the world this week, as the Wall Street Journal broke the news that the software giant had agreed to buy video game developer Activision Blizzard in a deal worth somewhere in the region of $75bn.

Xbox, Minecraft and Doom creator Microsoft said the all-cash deal would make it the world’s third-largest video gaming company by revenue, behind Riot Games owner Tencent and PlayStation creator Sony.

After adjusting for Activision’s net cash — that is to say, $7bn in debt — Microsoft said the deal is valued at $68.7bn. 

The WSJ reported that Activision’s long-time CEO Bobby Kotick is expected to leave the business after the deal closes, despite Microsoft’s claim that he would continue to serve at the helm of the business.

The deal marks Microsoft’s biggest ever acquisition by some margin, well ahead of the $26.2bn it paid for LinkedIn in 2016, its second biggest purchase, which is followed in the rankings by a $16bn deal for conversational AI specialist Nuance Communications in 2021, and the $8.5bn it paid for Skype back in 2011.

Facebook ain’t fungible: Meta to take a slice of the NFT action

According to the Financial Times, Meta-owned social media giants Facebook and Instagram are exploring plans to allow their users to make, showcase, and sell NFTs on the platforms.

Teams are currently preparing to launch a feature that will allow users to display their NFTs on their social media profiles, according to the report, while working on a prototype add-on to help users mint their own collectible tokens.

Meta has also discussed launching a marketplace to allow users to buy and sell the digital assets, too, according to the insider connections who spoke to the FT.

Apparently, Facebook’s digital currency wallet Novi, which launched as a pilot in the last quarter of last year, is likely to be central to Meta’s NFT objectives, with a lot of its supporting functionality used to power the yet-to-be-seen features.

Twitter threw its hat into the NFT ring this week too, as CoinDesk reported the platform had launched an official verification mechanism for NFT profile pictures.

By linking an Ethereum wallet, users can now have their hard-earned non-fungible profile picture appear in a “nifty new hexagonal border”, rather than the somewhat tired circular format used for old-hat, fungible profile pics.

Anyone attempting to steal your blockchain-registered asset will be easy to spot, then, as their worthless copy of the picture will appear in the classic circular shape. That’ll teach ‘em!

The ugly side of the beautiful game

The Athletic reported this week that the Football Association (FA) had opened an investigation into suspicious betting activity surrounding the award of a yellow card to an Arsenal player during a Premier League match this season.

Apparently, bookies alerted football’s governing body to unusual betting patterns after the match in question, during which a Gunner was given an official warning by the ref. It has not yet been confirmed which offence led to the booking, or for who. 

According to sources, an “unusual” amount of money was placed on the particular player being given a yellow card during the match. Helpfully, the notoriously loose-lipped FA told The Athletic: “The FA is aware of the matter in question and is looking into it.”

While it’s hard to get a word in edgeways around rambling statements like that, previous high-profile cases of so-called ‘spot betting’ have led to top-tier players being banned from professional football in the past.

In 2018, Lincoln City right-back Bradley Wood was banned from playing for six years, after he was found guilty of intentionally receiving yellow cards during the team’s FA Cup run.

This is what Xhaka was booked for on the 86th minute mark against Leeds.

Doesn’t look great… pic.twitter.com/kBm2OEXvY5

— now.arsenal (@now_arsenaI) January 19, 2022

According to speculation on Twitter, Swiss-born Granit Xhaka could be the key to solving this mystery, as users took to the social media platform to share videos of his yellow card against Leeds United on 18 December last year.

Xhaka, who is currently serving a suspension for another red card he received against Liverpool at Anfield, was booked in the 88th minute for time-wasting, despite Arsenal leading 4-1 against the West Yorkshire club.