Ford Ditches Argo AI While Meta Sticks To Metaverse

Bet on the future, or focus on the present. Bear markets and fears of an economic slowdown have a way of lending the issue’s urgency to public companies.

News leadership: Meta and Ford Motor Company—two completely different companies with very different existential challenges to contend with—take divergent routes as they navigate a similar decision tree.

playing condition: Ford announced Wednesday afternoon in partnership with Volkswagen that it is closing its long-term self-driving car project, Argo AI, saying it wants to focus on more self-driving technologies in the near term.

• Ford’s stock rose about 1.4% despite writing off $2.7 billion with the closing of Argo AI, which has been described as Ford’s response to Tesla’s Autopilot and General Motors’ Cruise.

On the other hand Meta, the parent company of Facebook, has announced that it is moving forward with massive investments in the metaverse, even as the company’s modern digital advertising business is watering.

• Meta investors don’t like what they see. The company’s stock closed 24.6% down Thursday, at least in part because of that commitment.

Reality check: The risks run both ways.

• Deciding whether you want to move forward with remote technologies or dump your resources into implementation in the near term reflects a tipping point that can make or even the largest companies.
• “You can catch on if you’re too early or too late,” Eric Gordon, a business professor at the University of Michigan, told Axios. “It’s a disingenuous thing.”

what are they saying: “I understand that a lot of people would disagree with this investment,” Mark Zuckerberg, CEO of Meta, told investors on a conference call, referring to reverse spending.

• “But from what I can tell, I think this is going to be very important, and I think it would be a mistake for us not to focus on any of these areas, which I think are going to be fundamentally important for the future.”
• By contrast, Ford CEO Jim Farley said the automaker is saving on driverless car pursuits because it is “probably the toughest technical problem of our time” and “will require major breakthroughs that advance in many areas.”
• He suggested that the company could later buy or license the technology if it needed to – when it was ready.

be clever: In 2022, it’s impossible to know whether Facebook’s investment in the metaverse or Ford’s divestment in self-driving cars are the right moves.

• For Ford, autonomous vehicles are expensive — and so “there’s some reason to hesitate in getting in with both feet because insiders know that full-fledged utility vehicles are a long way from what they look like in the mirror,” Gordon says.

• But “the risk for Ford is that if it doesn’t invest enough in the technology that accounts for most of the value of future cars – and has to license it from someone else – Ford basically becomes a screwdriver shop that makes a little money in order to put together all the valuable things it earns.” the others. “
• For Facebook, “the metaverse could be a New Coke” — that is, a new formula that turns out to be an epic failure — “or it could be Amazon Web Services,” says Amazon’s successful cloud computing services division. .

to remember: As the controlling shareholder in Meta, Zuckerberg is under less pressure to respond to investors angry at the drop in the value of their shares to their lowest level since 2016.

• “Zuckerberg has a luxury car that Ford doesn’t — Zuckerberg controls the vote. He can’t be fired. So he can think long-term. He can ignore the stock price,” Gordon says. “Ford’s CEO is more restrained.”