Tucked away in Meta’s earnings report last week was some big news about an emerging technology. No, not the metaverse — rather, the fediverse. 

In a call with investors, Mark Zuckerberg said Threads (Meta’s X/Twitter clone) was approaching 200 million users. That may be small potatoes compared to Meta’s flagship platforms, but it’s a big deal for the federation of decentralized but interconnected social networks — dubbed the fediverse — that Threads is part of. And what they used to say about the metaverse they’re saying about the fediverse: It’s the future of the internet. 

He’s a Fed

For the uninitiated, the fediverse is essentially a collection of social media platforms all built on the same technology — a protocol called ActivityPub — making them interoperable. For instance, Threads users can see posts made on other platforms (like fellow ActivityPub-based Twitter alternative Mastodon), and vice versa. But interoperability is only part of the sales pitch. ActivityPub also disentangles users from specific platforms. Simply put, a user’s friends, followers, and connections can follow them from platform to platform. Hate Facebook’s user interface, algorithmic recommendations, or data-collecting policies, but don’t want to start over on a new social network? The fediverse promises to fix that problem, freeing users to shop for the platforms that suit them best. 

“This is an opportunity to build a social media universe that is truly diverse, wild, open, and not under any one company’s control,” Nathan Schneider, assistant professor of media studies at the University of Colorado Boulder, told The Daily Upside. Schneider likened the fediverse’s approach to social media to the current state of email: Many companies offer services built on the same open protocol, and users are freely allowed to message across them.

Some say the fediverse takeover may be coming sooner than most would think:

• Tumblr, Medium, Flipboard, WordPress, and other platforms have all integrated ActivityPub in one form or another, meaning you may be sitting on the precipice of the fediverse without even realizing it. 
• Additionally, billionaire Frank McCourt has spent the year cobbling together an investor group to make an acquisition offer for the soon-to-be-banned TikTok, with a promise to place its 170 million US users on an ActivityPub-esque open protocol.

The Long Game: Robert Hodgins, manager of the Sand Hill Road Technologies Fund, told The Daily Upside that increased regulation of large platforms could push the internet toward the fediverse and its more user-oriented approach to privacy and data. Adam Mosseri, Instagram’s founder who now runs both Instagram and Threads, agrees. “The fediverse is a long-term bet,” Mosseri told the tech-focused newsletter Platformer earlier this year. “I do believe the world is going to become more open over time.” 

With soft landings like this, we’d hate to see what a hard one feels like. Are we about to find out? 

Little more than two weeks ago, the market’s latest bull run led the S&P 500 and the Nasdaq to new all-time highs. Then Friday ended with the main indices in Europe and New York pointing down in unison like a Siskel and Ebert movie pan, the Nasdaq even entering correction. Even worse, the Nikkei 225 index of leading Japanese stocks fell a staggering 12% today, its biggest ever daily loss and worse even than the infamous Black Monday of October 1987. Here’s what brought about the brisk anxiety.

Indicator Pontificator

The headline shock on Friday was America’s latest jobs report. Unemployment rose to a three-year high of 4.3% in July and the economy added a paltry 114,000 jobs, well below the 175,000 consensus forecast. The rise in unemployment triggered a noted recession indicator, the Sahm rule, with the current three-month average in the unemployment rate exceeding the lowest three-month average in the last year by at least 0.5%: It’s now at 0.53%.

And it’s not a loner data point: The Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, released three days earlier, showed 8.18 million jobs — the second-fewest this year. First-time applications for unemployment benefits rose to the highest since August 2023, and continuing claims rose to the highest level since November 2021. The Institute for Supply Management said its manufacturing Purchasing Managers’ Index dropped to 46.8% in June, the lowest in eight months, due to dwindling new orders. A labor market losing steam equaled stock markets losing their cool. There may be cause for restraint: 

• The inventor of the Sahm rule, former Federal Reserve economist Claudia Sahm, told Fortune “no one should be in a panic mode today,” citing stable household income, consumer spending, and business investment data. (On the other hand, earnings at Starbucks and McDonald’s, as well as Yum Brands — which owns KFC, Pizza Hut, and Taco Bell — all missed last week.)
• There’s definitely a rate cut coming in September, right? If the US Fed finally comes through, which markets are pricing in as a near certainty, that should support equities. (On the other hand, the New York Fed estimates a 55% chance of a recession in the next year, which might lead to an “I told you so” from those who advocated for earlier cuts.)

Low Tech: Of particular note is the erosion of bullish sentiment around AI, which came amid underwhelming earnings from Google (down 2.3% Friday), Microsoft (down 2%), and Amazon (down 8.7%), as well as an announcement by Intel (down 26%, yikes) that it will cut 15,000 positions. The downstream implications of that sentiment fading can already be seen on the Philadelphia Semiconductor Index, which tracks chipmakers and was down 10% last week.

Warren Buffett famously said he doesn’t invest in technology companies because he doesn’t invest in what he doesn’t understand. He doesn’t seem to get Apple anymore. Berkshire Hathaway slashed its stake in Apple by nearly 40% this past quarter, helping grow the Omaha company’s cash pile to more than $270 billion, a new record. 

The Big(ish) Apple

By the time Berkshire started buying Apple stock in 2016, the Cupertino company was releasing the iPhone 7 and its price-to-earnings ratio was in the low teens. But today, that P/E ratio stands at more than 33x, which could help explain Berkshire’s hefty withdrawal. But despite his romance with Apple, Buffett never really fell in love with Big Tech. 

Berkshire’s positions in tech are fairly limited, with less than 1% of its portfolio tied to Amazon. For Buffett, the thing about tech is that it’s so unpredictable, whereas people will always drink Coke (unless it’s New Coke):

• For the quarter ending on June 30, the value of Berkshire’s stake in Apple was $84.2 billion, down 38% from the $135.4 billion it reported at the end of March.
• Of its other largest holdings, Berkshire’s stakes in American Express, Bank of America, and Coca-Cola grew in the single digits, while its position in Chevron dropped by about 4% by the end of the second quarter. However, in recent weeks, Berkshire has sold off $3.8 billion worth of shares in BofA.

Canary in the Coal Mine: Berkshire dumped nearly $76 billion in stock this past quarter, but that doesn’t mean it’s lost its taste for cash flow. Interest rates are high, and that’s been beneficial to Berkshire’s portfolio of Treasury bills — which have earned $8 billion in interest income over the past year, outpacing the $5.4 billion the company received in dividends from its $285 billion stock portfolio, the Financial Times reported.