Facebook continues to grow at unthinkable rates. It sees 25% of the world's population on its products every day while nearly half the world doesn't even have an Internet connection yet. The facts we can go over are mind boggling.
But there are two facts that are equally disruptive -- and they signal that Apple has had enough of the Facebook run and it wants its business. Facebook is a company that exists because of mobile -- and the most valuable and dominant mobile device is the iPhone. Here come two attacks that are so abrupt, so fundamentally aggressive, and so combative, that we can only say: Facebook and Apple are soon to be locked in a cage, and only one might come out.
THE SET UP
We learned yesterday that Facebook gets over 1.5 billion mobile monthly active users (MAUs). Further, it's mobile, and nothing else, that is driving the growth. Here's a great chart:
FACEBOOK MOBILE VS DESKTOP REVENUE
An investment in Facebook is a bet on the thematic trends of social media, mobile advertising and online video advertising. It's also a bet on continued success in innovation and competitive defense. Snapchat is a worry and in fact TechCrunch noted that Snapchat briefly took the number one spot on US App Stores for the first time. Google (NASDAQ:GOOGL) is a direct competitor. But Apple (NASDAQ:AAPL), of them all, brings the greatest risk.
With this back drop, we introduce the combative reactions from Apple.
This first one is simple to understand and, while it's a non trivial attack, it allows Facebook a little bit of cover, for now.
Mark Zuckerberg stated on the earnings call two quarters ago that the risk of ad blocking apps was material. According to a report published by PageFair and Adobe, ad blocking software worldwide has increased 41% year-on-year to 198 million monthly active users and is expected to cost publishers more than $21.8 billion in 2015 in lost revenue (BusinessInsider).
Here's the incredible chart:
PROLIFERATION OF AD BLOCKING
For now Facebook has some cover from ad blocking because the vast majority of users engage the social media through the app on a mobile device. The Facebook app family (Facebook, Messenger, Instagram, WhatsApp) has its own ecosystem which hypothetically exists independently of whichever mobile device they sit on.
That casual analysis falls short. App developers are like sharks -- they go where the meat is. For them, the meat is users, and there is no more meat than Facebook. It's coming, a day when applications built to sit on top of other apps to block ads will be released.
While Facebook should be able to fight many of them off, it may not be able to fight one that is built by Apple to run specifically on the iOS. If you think that's an impossible idea, then we refer you to Apple's announcement of iOS9. Friends, it's not only possible, it's coming.
The second threat is yet more disruptive and the interesting reality is that if you love Apple, then this sounds perfect. If you love Facebook, this sounds irrelevant. Both groups are wrong. It isn't perfect and it isn't irrelevant. It's an atom bomb. It will go off and one of these two firms is going to get smashed. Here it is:
In 2014, Apple released iOS8 and a part of the focus was on iMessage. Users were all of a sudden able to capture, send and set a self-destructing timer for audio and video messages without leaving the app (Source: CIO.com).
Within hours of release, WhatsApp (now owned by Facebook) co-founder and CEO Jan Koum tweeted:
WHATS APP IMMEDIATELY RESPONDS
That poke from Apple has turned into an all out assault:
APPLE'S SOCIAL MEDIA IS COMING
The world doesn't need a new social media -- that's the general thinking. For people who love Facebook it is the social connector to family and friends and it's entrenched at a level that makes it irreplaceable. For those people that don't like Facebook, it feels like a "Facebook friend" is simply a vanity-voyeurism benchmark.
It doesn't actually matter which side of the fence you stand on, because US Patent Number US2015/0127728 A1 is attempting to break everything:
WHAT IS THIS?
We did our research and dug around the US Patent and Trademark Office (USPTO) and we found this filing registration. Apple is creating a social network which focuses on a real world social interaction, rather than just a digital interaction. In fact, here is a rendering from that patent application:
RENDERING FROM US PATENT OFFICE
It looks wonky and sort of simple -- and that's the point. Almost every technology patent filing is purposefully made to be confusing -- it's a competitive move made over and over again.
But if you read through the entire registration and look through all of the renderings, as we did, you 'll see it, you can almost touch it -- Apple is going to connect all one billion of its devices with a social media that combines real-time communiqués through iMessaging just like Snapchat, WhatsApp and Facebook Messenger combined into one and then combine that with real world interactions.
It's a take on social media we haven't seen before -- one that encompasses all of Facebook's beauty, all of Snapchat's trendiness, all of Facebook Messenger's immediacy, and then goes further to connect human beings in the physical world.
It might sound weird and weak, or maybe it sounds amazing and exciting, that's really personal taste, for now. But what is not personal taste is the fact that a new social media driven by Apple's iPhone that automatically connects people without requiring an app or a download that takes the best of the existing social media is a ferocious attack on Facebook's world.
SEEING THE FUTURE
This is the beginning of the analysis, not the end. We have the full analysis in CML Pro and to truly understand Apple and Facebook we have to dive into nearly a dozen different technology shifts that are occurring. And then you realize, to find the 'next Apple' or the 'next Facebook' we must get ahead of this curve. This is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have.
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The Internet of Things (IoT) market will be measured in trillions of dollars as of next year. CML Pro has named the top two companies that will benefit.
Market correction or not, recession or not, the growth in this area is a near certainty, even if projections come down, this is happening. CML Pro has named the single best cyber security stock to benefit from this theme.
These are just two of the themes we have identified and this is just one of the fantastic reports CML Pro members get along with all the visual tools, the precious few thematic top picks for 2016, research dossiers and alerts. For a limited time we are offering CML Pro at a 90% discount for $10/mo. with a lifetime guaranteed rate. Join Us: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.
Thanks for reading, friends.