Mark Zuckerberg, chief executive officer of Meta Platforms Inc., left, arrives at federal court in San Jose, California, US, on Tuesday, Dec. 20, 2022.
David Paul Morris | Bloomberg | Getty Images
For Matthew Hassett’s smart alarm clock company Loftie, the 2022 holiday shopping rush was the busiest in its five-year history despite a lackluster U.S. economy and persistent concerns of a recession.
Hassett, who’s based in New York, attributes the boon to one key decision. He reallocated his marketing budget, decreasing spending on Facebook and, for the first time during a holiday season, committing ad dollars to Amazon.
“So many people start their shopping on Amazon,” Hassett said in an interview. “I do personally for most things. So, we have to be there.”
Loftie is representative of a larger trend taking place in retail that’s having major ripples on Madison Avenue and Wall Street. Amazon’s increased advertising offerings for the millions of brands that sell on the site coupled with Facebook’s diminished targeting capabilities that resulted from Apple’s privacy changes have produced a significant realignment in the digital ad market.
Until a year ago, Amazon didn’t even disclose the size of its advertising business, leaving analysts and investors to guess how much the company was making in allowing sellers and brands to promote their wares on the site and apps. Now, the company’s ad division is a $38 billion annual business, and last week reported 19% year-over-year growth in the fourth quarter to $11.6 billion.
Facebook-parent Meta, meanwhile reported a 4% annual decline in revenue for the quarter to $32.2 billion, shrinking for a third consecutive period. Google has been less impacted by Apple’s iOS update, but the ad business is still being hit by the economic slowdown. Parent company Alphabet posted growth of 1% to $76 billion.
Amazon has catapulted to third in the global digital ad market, with 7.3% share, according to Insider Intelligence. Even as it takes share from Google and Facebook, it’s still well behind the two market leaders, which control 28.8% and 20.5%, respectively, of the industry. The Facebook figure includes Instagram.
Loftie continues to spend more money on Facebook than Amazon, but the equation has changed dramatically. In the days surrounding Black Friday in November, he allocated 10% of his marketing budget to Amazon, up from zero the year before. Facebook and Instagram fell to 40% of his budget from 71%. The rest of the money he pulled out of Meta went to Google, as he increased spending there from 29% over the holidays in 2021 to 50% last year.
Hassett said Facebook ads simply don’t work as well anymore, after the iOS update in 2021 began forcing app developers to ask users if they wanted to be tracked. With more consumers opting out of app tracking, the pool of potential customers has been “hollowed out and so we can no longer reliably target people,” Hassett said.
“Facebook has to serve the audience to a bigger pool of people in order to find the same people you’re finding before, and that’s just more expensive,” he said. “You have to pay a lot more than you did a year ago, and a lot of that is due to Apple’s privacy changes.”
Meta finance chief Susan Li told analysts on last week’s earnings call that growth in the company’s biggest verticals, online commerce and consumer packaged goods, “remained negative” in the quarter. She said the pace of the year-to-year decline in “online commerce has slowed compared to last quarter,” but was uncertain if the sector will significantly rebound anytime soon.
People take selfies in front of the logo of Facebook parent company Meta on November 9, 2022 in Menlo Park, California. Meta will lay off more than 11,000 staff, the company said on Wednesday.
Liu Guanguan | China News Service | Getty Images
For Loftie, Amazon and Google provide better value because a shopper is showing intent by searching for a particular item. Hassett purchased keywords like “white noise” as well as “Loftie” to make sure that consumers who wanted to find his products weren’t misdirected.
“The work we do off of Amazon on advertising definitely pays dividends on Amazon because people are going there and typing in Loftie,” Hassett said, adding that his shift in ad spending helped Loftie generate a record $250,000 revenue over a four-day stretch during the holidays.
Investment bank Cowen noted in a recent survey of ad buyers that “Amazon was the most popular survey response when we asked respondents which ad platform outside of GOOG / FB properties could emerge or is emerging as a meaningful part of buyers’ Digital ad spend, ahead of TikTok.”
The survey indicated that there continues to be “broad interest among advertisers” to grow their Amazon budgets in 2023, with 54% of surveyed Amazon advertisers saying they are planning to spend more this year than last.
While Facebook remains a core piece of a brand’s budget, its influence is diminishing, and the company’s investment in its TikTok-like Reels product will take a few years to make a significant financial impact, the Cowen analysts said.
“In the near term, we expect Meta ad share to decline further in ’23 given macro headwinds and the pivot to Reels,” they wrote.
A Meta spokesperson declined to comment for this story but sent CNBC examples of brands that the company says increased their allocation to Facebook and Instagram and have seen improved performance from ads on the site.
Like Loftie, Robin Golf also had to move away from Facebook in promoting its catalog of golf clubs and related equipment. CEO Peter Marler said over the past year more of that money has gone to Amazon.
Between July 2021 and the same month a year later, Robin’s cost to acquire a customer jumped 260% to $180 from $50, Marler said. He attributed most of the surge in costs to Facebook’s reduced targeting abilities, and said Google also wasn’t performing as well.
“We started investing more heavily in Amazon,” Marler said. “We shifted budget away from Facebook, we shifted budget away from Google, and we shifted to Amazon, and our Amazon sales have shot up by about 600% in 2022.”
Overall, the value of the tracking cookie has withered because of a renewed emphasis on consumer privacy. There are very few major online ad platforms that don’t rely on targeting, Marler said.
“Changes in the efficacy of those platforms really have forced us to reexamine our reliance on them,” he said. “We are actively moving our budgets away and decreasing the amount of money that we are spending with Meta.”
‘Not our customer’
Reliance on Amazon has its own pitfalls. The company is a dominant force in online retail and can make or break a brand’s success based on its performance on the site. That’s particularly risky because Amazon has its own ballooning private label business, which regularly rolls out products that compete with sellers on the platform.
Vitamin company Manna Health has been increasing its presence on Amazon, committing more of its ad budget to the site since the iOS changes, with plans to possibly double its allocation in 2023 from less than 10% currently, said marketing chief Ryan Farmer.
But he worries about brand loyalty, when so many transactions take place on Amazon.
“It’s not our customer, it’s Amazon’s customer,” Farmer said.
Farmer likens Amazon’s online ad system to Google’s in that companies run ads based on keywords that they think resonate with potential customers who may be searching for certain products. Manna also uses Amazon’s demand-side platform advertising tool, which is helpful for placement in banner ads that can be seen by people “searching for certain things,” Farmer said.
Manna, like Loftie and Robin Golf, maintains a customized Amazon home page that contains graphics, slogans, and a listing of the company’s various products that it’s selling on Amazon. However, the system is a “black box,” Famer said, because it doesn’t provide the kind of demographic data or other information to help Manna retain and nurture its customers.
Manna doesn’t even get contact information for the buyer. CEO Jeff Hill said he wished that Amazon offered “more insight into the customer, obviously, and sharing emails would be a bare minimum” so Manna could build a community and talk to clients.
“‘Hey, you bought this joint supplement, you know you might also be interested in our new bone supplement,” Hill said, describing a potential follow-up email. “It would help our company out and we would be able to buy more on Amazon and it would be mutually beneficial for us to make it to the customer and drive more traffic back to Amazon and the products.”
Amazon declined to provide a comment for this story.
Rachel Tipograph, CEO of marketing technology firm MikMak, said there are other unforeseen costs tied to Amazon advertising.
Unlike Meta, which just requires you to login to Facebook’s business manager to start buying ads, advertising on Amazon comes alongside listing products on the platform and a host of other services that brands are often buying, including warehouse space. Premium ad placement is the equivalent of slotting fees in retail stores, where brands pay for shelf visibility.
A Target customer looks at a display of board games while shopping at Target store on December 15, 2022 in San Francisco, California.
Justin Sullivan | Getty Images
Tipograph expects these costs will “cause the pendulum to swing back” towards brand promotion, and companies will rely more on channels that direct traffic to their own website and give them more control over their expenses.
“What CFOs want is profitable advertising, profitable growth,” Tipograph said, “and they want to know that they are driving incremental growth.”
Ryan Flannagan, the CEO of e-commerce marketing firm Nuanced Media, said that as Amazon’s ad business has grown, so has the competition to run “premium copy and visuals.”
Companies that aren’t investing in Amazon ads are “basically losing market share, because they’re not defending themselves,” Flanagan said.
Amazon has plenty of work ahead to keep its ad offerings attractive enough for brands to continue forking over bigger portions of their budget. But for now, companies like Loftie are happy with the returns they’re getting from Amazon, given the challenges with Facebook.
The way Hassett sees it, even with the rising expenses and associated risks, Amazon is providing enough value to justify the headaches.
Hidden among the majestic canyons of the Utah desert, about 7 miles from the nearest town, is a small research facility meant to prepare humans for life on Mars.
The Mars Society, a nonprofit organization that runs the Mars Desert Research Station, or MDRS, invited CNBC to shadow one of its analog crews on a recent mission.
“MDRS is the best analog astronaut environment,” said Urban Koi, who served as health and safety officer for Crew 315. “The terrain is extremely similar to the Mars terrain and the protocols, research, science and engineering that occurs here is very similar to what we would do if we were to travel to Mars.”
SpaceX CEO and Mars advocate Elon Musk has said his company can get humans to Mars as early as 2029.
The 5-person Crew 315 spent two weeks living at the research station following the same procedures that they would on Mars.
David Laude, who served as the crew’s commander, described a typical day.
“So we all gather around by 7 a.m. around a common table in the upper deck and we have breakfast,” he said. “Around 8:00 we have our first meeting of the day where we plan out the day. And then in the morning, we usually have an EVA of two or three people and usually another one in the afternoon.”
An EVA refers to extravehicular activity. In NASA speak, EVAs refer to spacewalks, when astronauts leave the pressurized space station and must wear spacesuits to survive in space.
“I think the most challenging thing about these analog missions is just getting into a rhythm. … Although here the risk is lower, on Mars performing those daily tasks are what keeps us alive,” said Michael Andrews, the engineer for Crew 315.
Formula One F1 – United States Grand Prix – Circuit of the Americas, Austin, Texas, U.S. – October 23, 2022 Tim Cook waves the chequered flag to the race winner Red Bull’s Max Verstappen
Mike Segar | Reuters
Apple had two major launches last month. They couldn’t have been more different.
First, Apple revealed some of the artificial intelligence advancements it had been working on in the past year when it released developer versions of its operating systems to muted applause at its annual developer’s conference, WWDC. Then, at the end of the month, Apple hit the red carpet as its first true blockbuster movie, “F1,” debuted to over $155 million — and glowing reviews — in its first weekend.
While “F1” was a victory lap for Apple, highlighting the strength of its long-term outlook, the growth of its services business and its ability to tap into culture, Wall Street’s reaction to the company’s AI announcements at WWDC suggest there’s some trouble underneath the hood.
“F1” showed Apple at its best — in particular, its ability to invest in new, long-term projects. When Apple TV+ launched in 2019, it had only a handful of original shows and one movie, a film festival darling called “Hala” that didn’t even share its box office revenue.
Despite Apple TV+being written off as a costly side-project, Apple stuck with its plan over the years, expanding its staff and operation in Culver City, California. That allowed the company to build up Hollywood connections, especially for TV shows, and build an entertainment track record. Now, an Apple Original can lead the box office on a summer weekend, the prime season for blockbuster films.
The success of “F1” also highlights Apple’s significant marketing machine and ability to get big-name talent to appear with its leadership. Apple pulled out all the stops to market the movie, including using its Wallet app to send a push notification with a discount for tickets to the film. To promote “F1,” Cook appeared with movie star Brad Pitt at an Apple store in New York and posted a video with actual F1 racer Lewis Hamilton, who was one of the film’s producers.
(L-R) Brad Pitt, Lewis Hamilton, Tim Cook, and Damson Idris attend the World Premiere of “F1: The Movie” in Times Square on June 16, 2025 in New York City.
Jamie Mccarthy | Getty Images Entertainment | Getty Images
Although Apple services chief Eddy Cue said in a recent interview that Apple needs the its film business to be profitable to “continue to do great things,” “F1” isn’t just about the bottom line for the company.
Apple’s Hollywood productions are perhaps the most prominent face of the company’s services business, a profit engine that has been an investor favorite since the iPhone maker started highlighting the division in 2016.
Films will only ever be a small fraction of the services unit, which also includes payments, iCloud subscriptions, magazine bundles, Apple Music, game bundles, warranties, fees related to digital payments and ad sales. Plus, even the biggest box office smashes would be small on Apple’s scale — the company does over $1 billion in sales on average every day.
But movies are the only services component that can get celebrities like Pitt or George Clooney to appear next to an Apple logo — and the success of “F1” means that Apple could do more big popcorn films in the future.
“Nothing breeds success or inspires future investment like a current success,” said Comscore senior media analyst Paul Dergarabedian.
But if “F1” is a sign that Apple’s services business is in full throttle, the company’s AI struggles are a “check engine” light that won’t turn off.
Replacing Siri’s engine
At WWDC last month, Wall Street was eager to hear about the company’s plans for Apple Intelligence, its suite of AI features that it first revealed in 2024. Apple Intelligence, which is a key tenet of the company’s hardware products, had a rollout marred by delays and underwhelming features.
Apple spent most of WWDC going over smaller machine learning features, but did not reveal what investors and consumers increasingly want: A sophisticated Siri that can converse fluidly and get stuff done, like making a restaurant reservation. In the age of OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini, the expectation of AI assistants among consumers is growing beyond “Siri, how’s the weather?”
The company had previewed a significantly improved Siri in the summer of 2024, but earlier this year, those features were delayed to sometime in 2026. At WWDC, Apple didn’t offer any updates about the improved Siri beyond that the company was “continuing its work to deliver” the features in the “coming year.” Some observers reduced their expectations for Apple’s AI after the conference.
“Current expectations for Apple Intelligence to kickstart a super upgrade cycle are too high, in our view,” wrote Jefferies analysts this week.
Siri should be an example of how Apple’s ability to improve products and projects over the long-term makes it tough to compete with.
It beat nearly every other voice assistant to market when it first debuted on iPhones in 2011. Fourteen years later, Siri remains essentially the same one-off, rigid, question-and-answer system that struggles with open-ended questions and dates, even after the invention in recent years of sophisticated voice bots based on generative AI technology that can hold a conversation.
Apple’s strongest rivals, including Android parent Google, have done way more to integrate sophisticated AI assistants into their devices than Apple has. And Google doesn’t have the same reflex against collecting data and cloud processing as privacy-obsessed Apple.
Some analysts have said they believe Apple has a few years before the company’s lack of competitive AI features will start to show up in device sales, given the company’s large installed base and high customer loyalty. But Apple can’t get lapped before it re-enters the race, and its former design guru Jony Ive is now working on new hardware with OpenAI, ramping up the pressure in Cupertino.
“The three-year problem, which is within an investment time frame, is that Android is racing ahead,” Needham senior internet analyst Laura Martin said on CNBC this week.
Apple’s services success with projects like “F1” is an example of what the company can do when it sets clear goals in public and then executes them over extended time-frames.
Its AI strategy could use a similar long-term plan, as customers and investors wonder when Apple will fully embrace the technology that has captivated Silicon Valley.
Wall Street’s anxiety over Apple’s AI struggles was evident this week after Bloomberg reported that Apple was considering replacing Siri’s engine with Anthropic or OpenAI’s technology, as opposed to its own foundation models.
The move, if it were to happen, would contradict one of Apple’s most important strategies in the Cook era: Apple wants to own its core technologies, like the touchscreen, processor, modem and maps software, not buy them from suppliers.
Using external technology would be an admission that Apple Foundation Models aren’t good enough yet for what the company wants to do with Siri.
“They’ve fallen farther and farther behind, and they need to supercharge their generative AI efforts” Martin said. “They can’t do that internally.”
Apple might even pay billions for the use of Anthropic’s AI software, according to the Bloombergreport. If Apple were to pay for AI, it would be a reversal from current services deals, like the search deal with Alphabet where the Cupertino company gets paid $20 billion per year to push iPhone traffic to Google Search.
The company didn’t confirm the report and declined comment, but Wall Street welcomed the report and Apple shares rose.
In the world of AI in Silicon Valley, signing bonuses for the kinds of engineers that can develop new models can range up to $100 million, according to OpenAI CEO Sam Altman.
“I can’t see Apple doing that,” Martin said.
Earlier this week, Meta CEO Mark Zuckerberg sent a memo bragging about hiring 11 AI experts from companies such as OpenAI, Anthropic, and Google’s DeepMind. That came after Zuckerberg hired Scale AI CEO Alexandr Wang to lead a new AI division as part of a $14.3 billion deal.
Meta’s not the only company to spend hundreds of millions on AI celebrities to get them in the building. Google spent big to hire away the founders of Character.AI, Microsoft got its AI leader by striking a deal with Inflection and Amazon hired the executive team of Adept to bulk up its AI roster.
Apple, on the other hand, hasn’t announced any big AI hires in recent years. While Cook rubs shoulders with Pitt, the actual race may be passing Apple by.
Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.
Kevin Dietsch | Getty Images
Tesla CEO Elon Musk, who bombarded President Donald Trump‘s signature spending bill for weeks, on Friday made his first comments since the legislation passed.
Musk backed a post on X by Sen. Rand Paul, R-Ky., who said the bill’s budget “explodes the deficit” and continues a pattern of “short-term politicking over long-term sustainability.”
The House of Representatives narrowly passed the One Big Beautiful Bill Act on Thursday, sending it to Trump to sign into law.
Paul and Musk have been vocal opponents of Trump’s tax and spending bill, and repeatedly called out the potential for the spending package to increase the national debt.
The independent Congressional Budget Office has said the bill could add $3.4 trillion to the $36.2 trillion of U.S. debt over the next decade. The White House has labeled the agency as “partisan” and continuously refuted the CBO’s estimates.
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The bill includes trillions of dollars in tax cuts, increased spending for immigration enforcement and large cuts to funding for Medicaid and other programs.
It also cuts tax credits and support for solar and wind energy and electric vehicles, a particularly sore spot for Musk, who has several companies that benefit from the programs.
“I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!” Trump wrote in a social media post in early June as the pair traded insults and threats.
Shares of Tesla plummeted as the feud intensified, with the company losing $152 billion in market cap on June 5 and putting the company below $1 trillion in value. The stock has largely rebounded since, but is still below where it was trading before the ruckus with Trump.
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Tesla one-month stock chart.
— CNBC’s Kevin Breuninger and Erin Doherty contributed to this article.