October 26, 2022 Reading Time: 4 minutes
Reprinted from RealClearMarkets

How easily we forget. What do we forget? It’s that the future of commerce is the living definition of uncertain.

If you doubt this, consider Amazon’s market capitalization. As this piece is being written, it’s $1.15 trillion. The number is very telling. What it tells us is that the internet that so thoroughly defines modern commerce wasn’t expected to. Not even close.

If the future genius of the internet had at all been apparent, Amazon wouldn’t exist today. And it wouldn’t exist because well-capitalized companies of the 1990s like Walmart, Circuit City, and Target would have long ago put it out of business.

Amazon’s market cap confirms the above assertion. The simple truth is that no existing corporation sits idly as the some tiny start-up pursues a line of business worth trillions, or for that matter, billions. That Amazon is worth so much is a reminder that Jeff Bezos saw what vanishingly few saw, only for him to create an all-new future.

Amazon’s achievements rate mention ahead of a discussion of Facebook, which can presently claim a rather massive market valuation of $358 billion. Though not presently as valuable as Amazon, Facebook’s market cap tells the same story as Amazon’s does: exceedingly few saw social media’s potential in the way that Mark Zuckerberg did. If you’re still doubtful, consider what Peter Thiel once paid ($500,000) for a 10% stake in Facebook. Then do the math of what of what 10% of Meta fetches today. If Facebook’s future success had been at all apparent it, like Amazon, would have been put out of business long ago.

All of which brings us to FTC Chairman Lina Khan. Khan is aggressively at work trying to shrink Meta.

You see, Meta is in the process of pivoting. With good reason. Businesses that don’t pivot don’t last. See Blockbuster Video. Once the undisputed king of home entertainment, Blockbuster failed to see the power of the internet (see above!) to alter how consumers would order movies and television for home viewing. Netflix ($109B) saw what Blockbuster did not, only for it to offer DVDs by mail. Of course, as most readers know, the true genius of Netflix was in it essentially “disrupting” itself. Rather than rest on its DVD-by-mail laurels, Netflix recognized that the internet wouldn’t just make it possible for people to shop for and order discs, it would also make it possible for customers to access the world’s entertainment plenty instantaneously. Netflix 2.0 basically put 1.0 out of business. Unknown is how Netflix will pivot next, but pivot it must.

Zuckerberg and Meta recognize yet again that a failure to pivot, evolve, or both, is the path to decline. And if they don’t recognize this truth, markets will convey it to them in brutal fashion. It’s how the world works. Ubiquitous as Facebook, Instagram and WhatsApp are (the Wall Street Journal reports that they together “attract more than 3.5 billion average monthly users”), nothing is forever in commerce. What’s powerful and well capitalized today is a magnet for investment meant to knock what’s powerful off of its perch.

As evidenced by its name change from Facebook to Meta, Zuckerberg believes a substantial amount of future economic activity will take place in the “Metaverse.” Is Zuckerberg correct? If we had a clue as to whether he’s right or wrong, we’d all be billionaires tomorrow. It’s that simple, but that’s also why we just don’t know. The future is once again opaque. So few saw the potential of the internet, only for Zuckerberg to spend tens of billions in pursuit of essentially what follows the internet.

Zuckerberg’s intrepid and very expensive search for tomorrow has sadly caught the eye of the FTC’s Khan. Fearful of “power” or something like “power,” Khan is actively at work trying to cut Meta and Zuckerberg off at the knees. Her ankle-biting includes blocking Meta’s acquisitions of would-be players in the future of the Metaverse. In Khan’s words, Meta must not be allowed to put money to work in pursuit of knowledge because “Meta would be one step closer to its ultimate goal of owning the entire ‘Metaverse.’”

Except that there’s no way of knowing right now if the Metaverse will even be the Metaverse. Think about it. And while thinking about, think again about Amazon, Netflix, and yes, Facebook. Taken very seriously now, all three were once dismissed. And they were dismissed precisely because the view by the powers-that-be of the future of commerce had little to do with reality.

Despite this, Khan has anointed herself as all-seeing. Having apparently decided that the Metaverse is the future, she’ll use the power of government to ensure that Meta isn’t a player in it. How very defeating. Indeed, Meta and Zuckerberg are directing tens of billions toward a vision of tomorrow, and their reward is governmental interference. Khan doesn’t want Meta to achieve its “ultimate goal of owning the entire Metaverse.” The joke’s on Khan.

While the FTC Chairman works to restrain Meta’s dominance of the Metaverse, there remains little hard evidence that the Metaverse will define the future. Evidence supporting this claim is Meta itself. So far, interest among users in Meta’s vision of tomorrow is limited, and this is presumably reflected in Meta’s share price. Though worth $358 billion today, Meta’s market cap was once above $1 trillion. If Meta is correct about the Metaverse, expect its market cap to soar anew, but missed by Khan is how big an “If” it is about Meta being correct.

Which speaks to how unfortunate Khan’s actions are. Meta is yet again eager to spend billions in pursuit of a different tomorrow in a commercial sense. Whether it succeeds a lot, or a little, or fails altogether is unknown, but that’s the point. Whatever Meta discovers through its intrepid search for tomorrow, we’ll all be smarter for it having ventured a vision unlike the present. Too bad Lina Khan is so eager to blind us to the essential knowledge Meta is trying to create.

John Tamny


John Tamny, research fellow of AIER, is editor of RealClearMarkets.

His book on current ideological trends is: They Are Both Wrong (AIER, 2019)

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