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In china’s world of video-game warcraft the phrase chong ta describes the storming of a castle before you are equipped with the right weapons and armour. More recently the term has been used to refer to an equally foolhardy and even more treacherous act: posting risky comments or content on Chinese social media knowing full well that this will incur the wrath of censors, or even higher-level officials.NetEase, a Chinese games developer, is familiar enough with the first meaning. Chong ta is, after all, a staple of “Diablo Immortal”, a hugely popular role-playing game set in medieval times. The firm was due to release the Chinese version of the game, developed together with Activision Blizzard, an American gaming giant, on June 23rd. On June 19th it delayed the roll-out, supposedly to further optimise the new version, prompting a 10% slide in its share price. Rumours swirled that chong ta’s second interpretation played a role. In late May the firm’s official “Diablo Immortal” account on Weibo, China’s Twitter-like service, posted a controversial question: “How has the bear not stepped down yet?” The cryptic message was widely interpreted as a reference to Xi Jinping, China’s president, who has often been likened online to Winnie the Pooh (apparently because he resembles the podgy bear’s Disneyfied depiction). The Weibo account was banned in June, shortly before the game’s scheduled release. Many Chinese netizens immediately spied chong ta. It wouldn’t be the first time inopportune online content has cost a Chinese tech company dearly. Last year Wang Xing, founder of Meituan, a delivery super-app, posted on Weibo a 1,000-year-old Tang dynasty poem. After certain internet users construed the verse as an affront to Mr Xi, investors fearful of state reprisal dumped Meituan stock. The firm’s share price fell by 14% over two days, erasing about $26bn in market value. On June 3rd a live-streamed broadcast of Li Jiaqi, an online influencer known to his millions of fans as Lipstick King, was suddenly cut off after he was presented with a piece of cake shaped like a tank. He has not appeared on his show since—a blow to Taobao, the e-commerce platform on which he plies his trade (as well as to international make-up brands), ahead of a big Chinese shopping holiday. Mr Li’s disappearance is widely assumed to be linked to the anniversary of the Tiananmen Square protests, in whose bloody suppression tanks played a role. The vehicles’ likenesses are thus scrubbed from the internet around the anniversary, lest they remind anyone of what happened that day in 1989. In recent months Chinese authorities have been signalling that their two-year crackdown on the consumer internet—which at its worst lopped some $2trn off the market value of Chinese tech firms, compared with late 2019—was easing. This month, for example, regulators even approved a new batch of games. The Diablo debacle and the Lipstick King’s predicament imply that any respite may be short-lived and selective. So do new rules requiring internet platforms to review user comments before they are posted, a draft of which was unveiled on June 17th.It is unclear if either NetEase’s alleged Pooh, Mr Wang’s poem or Mr Li’s pudding was in fact a defiant act of chong ta. Mr Li’s turreted, cookie-wheeled ice-cream cake certainly does not smack of premeditated subversion; the Lipstick King had not previously shown a dissident streak and it is hard to imagine him wilfully sacrificing a lucrative gig. Mr Wang’s sin may well have been to fail to consider all the possible interpretations of his post. Whether or not the managers of NetEase’s Weibo accounts knew what they were getting into, their plight—and that of Messrs Li and Wang—suggests that divining censors’ thought processes is becoming an ever bigger part of doing business in China. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

In a monty python sketch from 1969, the middle-aged Mr Anchovy, played by Michael Palin, wants to give up what he calls the desperately dull world of chartered accountancy in order to become a lion-tamer. His “vocational guidance counsellor”, aka John Cleese, suggests he consider an interim career path—banking, say—while he works towards lion-taming. “No, no, no, no, no,” Mr Anchovy interrupts. “I don’t want to wait. At nine o’clock tomorrow I want to be in there, taming.”Echoes of Mr Anchovy’s yearnings can be heard in the haste with which ey, one of the Big Four accounting firms, is considering spinning off its fast-growing consultancy practice from the unfashionable audit side of the business. Not only is it a bold move by the standards of book-keeping firms—to the point, says Michael Izza of the Institute of Chartered Accountants in England and Wales, that ey’s three rivals, Deloitte, pwc and kpmg, will be considering their next steps in light of its decision. There is also a hint of Pythonesque farce about it. Such is the excitement that details of a proposed initial public offering (ipo) in 2023 were leaked to the Wall Street Journal, which published them on June 20th. They included the size of the potential bonanza for some of the firm’s 13,000 partners—something ey’s bean-counters of old would much rather have kept under their bowler hats. The firm insists no final decision has been made. Yet a split would make sense. Regulators worry that consulting services generate conflicts of interest for firms also carrying out statutory audits. After a string of accounting scandals in recent years they are urging the auditors to stand on their own two feet. As for an ipo, that is bound to set consultants’ hearts racing. But like Mr Anchovy, they should think twice before they leap into the lion’s den. In the long run, audit may well be the more prudent bet. Make no mistake, the advisory practice is the red-blooded side of the business. It accounted for two-thirds of ey’s $40bn in revenues last year. Unshackling much of the tax, consulting, strategy and transactions work from audit would give the consulting arm more room for manoeuvre and free it from a partnership model that smothers quick decision-making. The new advisory firm could raise capital more easily to invest in technology, as well as developing trendy outsourcing businesses such as fully running multinationals’ tax affairs. It could bolster its fortunes by offloading niche businesses. (Not that it needs to wait for an ipo to do that: last year pwc sold one that handles global companies’ foreign postings to a private-equity firm for $2.2bn, its biggest divestment in nearly two decades.) There is an even more enticing precedent. Accenture, which was spun off from Arthur Andersen and then went public a year before the accounting firm collapsed in 2002, has soared in value to $190bn. ey’s consulting arm would not be worth close to that. However, the leaked documents, based on recent market conditions, suggest it could raise $10bn by selling a 15% stake. The partners who join it would receive 70% of the shares (the remaining 15% would be for lowlier staff).It is not all upside for the consultants, though. The split would involve a cash payout from the spun-off company to partners remaining in the rump ey, and would cover potential claims against the firm for problems such as those at Wirecard, a failed German payments company, and nmc Health, a collapsed British hospital chain, both of which ey audited. To make the payment, the new firm would reportedly borrow $17bn—a large sum considering that publicly traded rivals like Accenture and tcs have low debts.Those are not the only competitors, either. Barriers to entry in consulting are low. Big tech firms such as Microsoft and data-miners such as Palantir may try to muscle into the space. The ey brand may have raised the stature of the consultancy practice, but it will probably be floated with a new name. Like some other consultants, it could fall victim to delusions of grandeur.That is why, despite being the pedestrian side of the business, audit could be a dark horse. Its shortcomings are well known: lack of trust, conflicts of interest, low pay compared with other professional services, the risk that ai-powered “audit bots” will crawl over its business model. Yet it has some advantages. For one thing, it remains an entrenched oligopoly. The Big Four audit 99% of firms in the s&p 500 index. Moreover, structural changes are afoot that could benefit it. The first is regulatory. As the Big Four auditors are forced to become more independent, they are raising fees. As pressure mounts to improve audit quality, they will charge more for it. The second change is to their scope. The firms are expecting a lot of new work as regulators force companies to disclose more about their climate impact. Much of this will have to be checked and approved by auditors. One senior accountant talks excitedly about hiring “thousands of eco-warriors”.If history is any guide, the windfall from the split may favour the auditors, too. Though the partners remaining on the audit side would receive lower payouts than those departing with the consultancy, cash in hand is precious, especially in times of volatile markets. The last time ey split off its consultancy, selling it to Capgemini, a French firm, in 2000, the partners who received cash, not shares, did better. And after that the auditors simply rebuilt the consulting side of the business. Even now they plan to retain elements of advisory work, such as parts of the tax practice. These could again be reconstructed into something bigger.Ants in the pantsThose with long memories, such as the older partners, will know all this. Many of the more junior ones may find themselves lured by the eat-what-you-kill excitement of consultancy. But if they ignore history, they should not ignore comedy. Mr Anchovy never did become a lion-tamer. What he thought was a lion was instead an anteater. Shown a photo of a real lion, he passed out. ■Read more from Schumpeter, our columnist on global business:Amazon has a rest-of-the-world problem (Jun 16th)What’s gone wrong with the Committee to Save the Planet? (Jun 9th)Why Proxy advisers are losing their power (Jun 2nd)For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Management is not a heroic calling. There is no Marvel character called “Captain Slide Deck”. Books and television shows set in offices are more likely to be comedic than admiring. When dramas depict the workplace, managers are almost always covering up some kind of chemical spill. Horrible bosses loom large in reality as well as in the popular imagination: if people leave their jobs, they often do so to escape bad managers. And any praise for decent bosses is tempered by the fact that they are usually paid more than the people they manage: they should be good. A world without managers is a nice idea. But teams need leaders, irrespective of the quality of the people in charge. Someone has to take decisions, even if they are bad ones, to prevent the corporate machine gumming up with endless discussions. That is true even of flatter organisations. In a paper published in 2021, researchers described an experiment in which a number of different teams took part in an escape-room challenge. Some randomly selected groups were asked to choose a leader before the task began; the rest were not. The teams with leaders did much better: 63% of them completed the challenge within an hour, compared with only 44% of those in the control group.The difference between good bosses and bad ones is striking. In one paper published in 2012, a trio of academics looked at the output of workers in a large services company who frequently switched between different supervisors. They found that the gap in output between the best and worst bosses was equivalent to adding an extra person to a nine-member team. Even the average boss enhanced their team’s productivity by enough to justify their higher salary. Managers are needed, but they do not have it easy. The job is structurally difficult. Most managers have to meet the expectations, sometimes unreasonable, of people below them and above them. The blurring of work-life boundaries as a result of the covid-19 pandemic seems to have made life tougher for them. Gallup, a pollster, found that in 2021 managers suffered higher levels of self-reported burnout than workers, and that the gap between these groups had widened considerably over the previous year. They are subject to conflicting demands. They are meant to care about members of their teams and be ready to get rid of them. They are supposed to give people agency while making sure that things are done in the way the organisation wants. The concept of the “servant leader” is utter nonsense. (What next? The weepy psychopath? The serf dictator?) It is also a reflection of the different directions in which bosses are pulled. Many of those in positions of power don’t want to be managing at all. True, some of them have found their way into management because of thrusting ambition. But others have wound up there because it is the only route available to more pay and greater influence. Hence another screwed-up office character: the “reluctant leader”. Managers are also handling the most baffling material on Earth: people. A study conducted by researchers in Germany found that handing out monetary bonuses for good attendance to apprentices in retail stores led to sharp rises in absenteeism (paying for behaviour that was previously considered normal seems to have made people feel licensed to bunk off). Another piece of research, by academics at iese Business School and the Poole College of Management, found that empowering employees could lead to more unethical behaviour if workers felt under greater pressure to perform. The law of unintended consequences runs through the workplace.Managers are allegedly human, too, and also susceptible to bias. Bosses who take steps to encourage employees to contribute their ideas are doing the right thing by their organisations and by their teams. But according to research by Hyunsun Park of the University of Maryland and her co-authors, the more they solicit input, the less likely they are to reward people for speaking up. Instead, they credit themselves for creating the right kind of environment. Laudable, no. Natural, yes. It is true that managers do not save lives or nurture young minds. Even the best ones spout jargon and cause unholy amounts of irritation. The worst ones make life a misery. But the job that managers do is almost always necessary, often unpopular, sometimes done reluctantly and pretty difficult to boot. Every so often that is worth remembering. Read more from Bartleby, our columnist on management and work:Work, the wasted years (Jun 16th)Corporate jets: emblem of greed or a boon to business? (Jun 9th)Do not bring your whole self to work (Jun 2nd) More

After more than two years of lockdowns and border controls, Southeast Asia is finally experiencing some semblance of the old days of travel.
Flights are steadily returning to 2019 levels in the region’s major economies, with Singapore, Thailand and Malaysia being the most popular destinations this year, according to the flight data analytics firm Cirium.

In Singapore, which had the most inbound flight bookings in the region this year, bookings rose from around 30% of 2019 levels in January to 48% by mid-June. The Philippines also saw a sharp uptick in bookings, from about 20% at the start of January, to almost 40% by mid-June, according to Cirium.
Tourism is a key moneymaker for Southeast Asia, a region which saw international visitors more than double from 63 million in 2009 to 139 million in 2019, according to the United Nations World Tourism Organization.
The industry accounts for around 10% of gross domestic product in Vietnam, Singapore and Malaysia and between 20% and 25% of GDP in Thailand, Cambodia and the Philippines, according to a May 2022 report published by the Asian Development Bank.

Arrows pointing outwards

Cirium’s chart on the absolute number of flight seats booked in 2022 in Southeast Asia and Nepal.

The pandemic “was probably more devastating in Southeast Asia than the rest of the world [because] governments kept the borders closed for almost two years,” said Gary Bowerman, director of the travel research firm Check-in Asia. “There were even restrictions on domestic travel.”
“If you compare that to North America or Europe, for example, in both years 2020 and 2021 … they had some tourism and travel flows,” he said.

Changing travel habits

Most countries in Southeast Asia — including Singapore, Thailand, Indonesia, Malaysia, Vietnam, and the Philippines — have stopped requiring fully vaccinated travelers to take Covid-19 tests before traveling.
After Singapore dropped its pre-travel testing requirement in April, business has been “picking up fast and furious,” said Stanley Foo, founder of the local tour operator Oriental Travel & Tours. He said travelers are booking longer trips and spending more than before too.

Before the pandemic, the company received around 20 tour bookings a week, mostly for tours lasting three to four days. Now, its handling 25 bookings a week, some for trips up to 10 days long. Average expenditures on customized tours rose from around $2,000 per person before the pandemic to $4,000 to $6,000 today, said Foo.
“It’s because of the revenge traveling,” Foo said. “They have saved up enough for the past two years.”
Since tourists are spending more time in Singapore, Foo and his team of tour guides are taking clients to places outside the usual tourist itinerary — to the suburbs to watch residents do tai chi and to order coffee at hawker centers “the Singaporean way,” he said.
Joanna Lu of Ascend by Cirium, the company’s consultancy arm, said people are spending more time planning their journeys too. They are “making sure they’re covered for unexpected changes,” she said.

Not your usual tourists

Tourists contacting Foo are from all over the world, especially Southeast Asian countries, he said.
That’s in stark contrast to his pre-pandemic business, when Chinese nationals were among his company’s biggest client groups, said Foo. China continues to “strictly limit” non-essential travel out of the country.

With China largely closed, tourism operators in Southeast Asia will target Japanese, South Korean, and in particular, Indian, tourists to make up for the shortfall of Chinese visitors, said Check-in Asia’s Gary Bowerman.
Sajjad Hussain | Afp | Getty Images

In 2019, visitors from China made up more than 30% of tourists to some Southeast Asian nations, according to the Asian Development Bank, a fact which makes China’s prolonged border closure even more painful for the region.
“The traffic decline in China has deepened in April as strict travel restrictions limit air travel in, to and from the country,” said Lu, adding she doesn’t expect the situation to change soon.
John Grant, chief analyst at the travel data company OAG, said Asia’s travel recovery lags behind other continents’ because of its reliance on international visitors, particularly from China, as well as the varying reopening strategies in the region.
Southeast Asia has about 66% of flight capacity — measured by scheduled airline seats — compared with pre-pandemic levels, according to OAG. Europe and North America are back to around 88% and 90% of pre-pandemic capacity respectively, OAG’s data showed.

Cloudy skies ahead

Southeast Asia’s travel recovery faces other global headwinds too: rising costs and interest rates, inflation and a potential recession.
Jet fuel prices in early June were up 128% from a year ago, according to the International Air Transport Association. Airlines are increasing fares as a result, but “at least to date it does not appear to have impacted demand since people have two years of pent-up demand,” said Grant.
But that could quickly change if fuel surcharges coincide with inflation eating into travelers’ discretionary spending, he said.
Rising interest rates will likely devalue emerging economies’ currencies against the U.S. dollar, making imports more expensive and reducing how much travelers can spend on non-essentials like holidays, said Bowerman.

Despite these forces, travel insiders say most people aren’t canceling their plans just yet.
Expedia’s Asia head of public relations Lavinia Rajaram said Singapore-based travelers are already planning year-end holidays, while others are booking trips for the quieter months of September and October.
Plus, if airlines get their flight capacity back to pre-Covid levels, air ticket prices may normalize, Rajaram added.
Foo said he expects to see more conventions and exhibitions being held in Singapore in the second half of the year, where companies may engage agencies like his to conduct side tours for business visitors.

Where are the workers?

Even if Southeast Asia continues to attract streams of tourists, air carriers may have to turn them away if they cannot find enough workers to service their flights.
Many workers in the air travel industry left or were laid off during the first two years of the pandemic. The aviation industry had 50% fewer jobs at the end of 2021 compared with pre-Covid times — from 87.7 million to around 43.8 million — according to the global air transport association Aviation Benefits Beyond Borders.
Flight cancelations, delays and crowded airports are frustrating the summer travel season in Europe and North America. Low wages have made working at airports and airlines unattractive, and workers in Europe are striking against low pay and poor working conditions.
The travel chaos in other parts of the world that has yet to hit Southeast Asia is a situation officials in the region hope to avert.
Singapore’s Changi Airport Group wants to fill 250 vacancies by year-end, according to the agency. Singapore Airlines has selected more than 800 cabin crew from several thousand applications, which is “three to four times more” than it received in pre-Covid days, the airline said in an email to CNBC.
The Malaysian Aviation Commission told CNBC that local airlines are “actively seeking to recruit,” but “demand for air travel remains uncertain as Malaysia progresses into the endemic phase of Covid-19.”

Singapore Airlines said passenger capacity averaged around 61% of pre-pandemic levels in the first quarter and expects a rise to 67% in the second quarter of 2022, the airline said in a statement in May 2022.
Roslan Rahman | Afp | Getty Images

But there were signs of cracks. In April, Changi Airport Group had to retime some flights over a four-day long weekend because of a staffing shortage, according to local media reports.
Malaysian media reported that about 1 in 10 domestic flights that flew during the Hari Raya Aidilfitri celebratory period in late April and early May were delayed, partly because of a lack of workers.
Mayur Patel, OAG’s regional sales director for Japan and Asia-Pacific, said airlines have been denied additional slots to land or take off because airports did not have enough manpower to accommodate the extra flights.
“I think the plan is to get back to pre-Covid levels but with [the] China uncertainty, this will be … tricky,” said Patel. More

Sustainable Energy

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With concerns about sustainability mounting, marine-based transport operators will need to find new ways of reducing their environmental footprint.
The idea behind the hybrid ships is that they can run on liquefied natural gas (a fossil fuel), battery power or a combination of the two.
Brittany Ferries said the Saint-Malo vessel would have a battery capacity of 11.5 megawatt hours, “approximately double that typically used for hybrid propulsion in marine vessels.”

An artist’s impression of the Saint-Malo at sea. According to Brittany Ferries will have a battery capacity of 11.5 megawatt hours.
Brittany Ferries

A ship set to carry passengers between the U.K. and France in the next few years will be the largest hybrid-vessel ever built, according to operator Brittany Ferries.
In a statement Tuesday, the company said the Saint-Malo vessel would have a battery capacity of 11.5 megawatt hours. This, the firm added, was “approximately double that typically used for hybrid propulsion in marine vessels.”

Brittany Ferries said the ship is set to be delivered in 2024. A second hybrid will join its fleet shortly after, traveling between Portsmouth and Caen.
The idea behind the hybrid ships is that they can run on liquefied natural gas (a fossil fuel), battery power or a combination of the two.
Brittany Ferries said a total of three hybrid ships were being built by Stena RoRo using hybrid technology from Finnish firm Wärtsilä.
“The extensive battery size will allow the vessels to operate with full power, using both propellers and all thrusters to manoeuvre emissions-free in and out of ports, even in bad weather,” Hakan Agnevall, the Wartsila CEO, said.

Read more about electric vehicles from CNBC Pro

Marine-based transport is no different to other types of mobility in that it has a considerable environmental footprint.

According to Transport & Environment, a campaign group headquartered in Brussels, ships represent “a significant source of oil consumption and emissions in the EU.”
Citing analysis of data from Eurostat, T&E adds that 2019 saw EU shipping consume “12.2% of all transport fuel.”
Elsewhere, the International Energy Agency says international shipping was responsible for around 2% of the planet’s energy related carbon dioxide emissions in 2020.
With concerns about sustainability mounting and major economies and businesses around the world looking to cut emissions and meet net-zero targets, the sector will need to find new ways of reducing the environmental footprint of its operations.
The task is huge. Earlier this year, the CEO of shipping giant Moller-Maersk admitted to CNBC that shifting to “green” fuels would come at a cost, but emphasized the importance of focusing on the bigger picture rather than short-term pain. 
Soren Skou’s comments came a day after his company said it wanted the entire business to reach net-zero greenhouse gas emissions in the year 2040, 10 years ahead of its previous goal. More

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CNBC’s Jim Cramer on Wednesday said bitcoin could experience a rally over the next few months, though it could be years before it reaches its old highs.
“The charts, as interpreted by Tom DeMark, suggest that bitcoin could have a nice relief rally over the next few months,” the “Mad Money” host said.

CNBC’s Jim Cramer on Wednesday said bitcoin could experience a rally over the next few months, though it could be years before it reaches its old highs.
“The charts, as interpreted by Tom DeMark, suggest that bitcoin could have a nice relief rally over the next few months, even if he doesn’t see it revisiting its old highs for years or even decades,” he said.

“I can’t countenance buying crypto here, but if you still own some and you want out, I’m betting that from this, if you’re another dip down, you might get a better price to get out,” he added.
The cryptocurrency market has had a rough year as investors spooked by inflation and the Federal Reserve’s interest rate hikes have sold off their assets, leading the crypto market to downturn. Bitcoin, the world’s largest cryptocurrency, has fallen far from its highs reached last November, with some predicting it will plunge even further.
According to the “Mad Money” host, DeMark has a 13-step buy and sell countdown that helps him identify tops and bottoms in bitcoin. A certain number of sessions go in the same direction and eventually the buying or selling exhausts itself, he said.  
In his breakdown of DeMark’s analysis, Cramer examined the daily chart of Bitcoin from April of last year through today. Here’s the chart:

Arrows pointing outwards

Cramer said that a notable aspect of the chart is that bitcoin never had a downside retracement of more than 50% on a closing basis since 2020 – until a few months ago.

“According to DeMark, when you get a decline this ugly … it often does structural damage to the asset in question,” he said. “If you’re thinking long-term, DeMark says that it could take many years for bitcoin to come near its old highs, maybe even decades. It’s possible we’ll never see them again,” he added.
However, that doesn’t mean bitcoin can’t bounce, according to Cramer.
For more analysis, watch the video of Cramer’s full explanation below.

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Mark Zuckerberg told CNBC’s Jim Cramer that Meta Platforms is in a position to spend extensively on long-term research.
The metaverse should usher in a massive economy, he said.

Meta Platforms CEO Mark Zuckerberg told CNBC’s Jim Cramer on Wednesday that the metaverse could be a considerable part of the social network operator’s business in the second half of the decade.
“We hope to basically get to around a billion people in the metaverse doing hundreds of dollars of commerce, each buying digital goods, digital content, different things to express themselves, so whether that’s clothing for their avatar or different digital goods for their virtual home or things to decorate their virtual conference room, utilities to be able to be more productive in virtual and augmented reality and across the metaverse overall,” he said.

Investors have cut the company’s market capitalization in half this year as growth has slowed and the number of its daily active users declined sequentially for the first time between the last two quarters. Zuckerberg has been increasingly directing the company toward what he views as the next generation of content, a virtual world where people can buy and sell digital goods for avatars who can communicate with one another. The company’s ticker symbol changed from FB, a relic of its history as a pure social media provider, to META earlier this month.
But the company’s investment in augmented reality and virtual reality dates back to 2014, when it paid $2 billion for headset maker Oculus VR. Shipments of headsets have failed to outnumber shipments of PCs or smartphones. Zuckerberg expressed optimism about the performance of its current-generation Meta Quest 2, which starts at $299.
“Quest 2 has been a hit,” Zuckerberg told the “Mad Money” host.
“I’ve been really happy with how that’s gone. It has exceeded my expectations. But I still think it’s going to take a while for it to get to the scale of several hundreds of millions or even billions of people in the metaverse, just because things take some time to get there. So that’s the north star. I think we will get there. But, you know, the other services that we run are at a somewhat larger scale already today.”
Experiences in the metaverse can be more immersive than text, photos or videos, which are pervasive on Meta’s Facebook and Instagram, and so it will be a big theme for Meta over the next decade, Zuckerberg said.

Zuckerberg met with Cramer in the metaverse. The Facebook co-founder said such experiences can foster a sense of being together, even if people are physically on the other side of the country. He said it’s possible to make eye contact, which isn’t guaranteed on video calls, and use spatial audio that allow for quiet side conversations.
The technology “basically adds up to making it deliver this realistic sense of presence,” he said.
Bringing that to customers over the next several years will require Meta to release a stack of hardware, software and experiences.
“We are at this point, you know, a company that can afford to make some big long-term research investments, and this is a big focus,” he said.
He expects the economy around the metaverse to be massive, he said.
Meta Platforms had 3.64 billion monthly active people across its family of applications in the first quarter, up 6% year over year. WhatsApp reached 2 billion users in 2020, and it’s also an area where Zuckerberg sees the potential for growth.
“You know, our playbook over time has been build services, try to serve as many people as possible — you know, get our services to a billion, two billion, three billion people, and then we basically scale the monetization after that,” Zuckerberg said. “And we’ve done that with Facebook and Instagram. WhatsApp is really going to be the next chapter, with business messaging and commerce being a big thing there.”

AI making recommendations, similar to TikTok

In addition to its metaverse spending, Meta is investing heavily in the development of artificial intelligence, which can bolster advertising — the source of around 97% of revenue — and the company’s existing applications, Zuckerberg said.
“We’re basically shifting from having most of the content that you see in Facebook and Instagram come from your friend or follow graph, to now, you know, over time, having more and more of that content just come from AI recommendations,” Zuckerberg said. “And as the AI recommendations get better, you get access to, you know, not just the content from the people who you follow but the whole universe of content that’s out there.”
It’s a concept that TikTok, owned by China’s ByteDance, used to propel itself to a billion monthly active users. Meta sought to respond to the rapid growth with the introduction of its Reels feature of Instagram in 2020. Reels makes up over one-fifth of the time people spend on Instagram, Zuckerberg told analysts on Meta’s first-quarter earnings call in April. Now he expects AI enhancements to make Reels more compelling to Instagram’s users.
“Our AI system can choose based on what it knows about you and what you personally are going to be interested in and learn about, what you want to see,” he said. “So as we get better at that, you know, our engineers are shipping improvements to the models every week. We check something and, you know, relevance goes up by a few percent. And then we repeat and do that the next week. And, you know, this is just a huge part of what I’ve always focused on in running this company, is getting the velocity to be very quick, so we can keep on making fast improvements to this.”
Meta is also investing in hardware for AI, alongside other large technology companies, such as Alphabet and Microsoft.
“We just brought online the AI research supercluster, which, you know, we believe is going to be the fastest AI supercomputer when it’s fully built out later this year, so that our researchers can build new and bigger models to both make the ranking and recommendations across our social media services and ads better.”
The company will slow its investment in AI in the event of a recession, Zuckerberg said.

Comments on Sandberg’s departure

Zuckerberg addressed questions around the departure of Sheryl Sandberg, the company’s operating chief. Sandberg built up Facebook’s advertising business, making its 2012 initial public offering possible. The Wall Street Journal reported that she left after Meta began a review of her use of company resources for wedding planning. A Meta spokesperson told the newspaper that internal investigations of Sandberg didn’t have anything to do with her choice to step down.
“I don’t think any of the stuff that’s been reported contributed to her leaving the company,” Zuckerberg said. “Of course, you’d have to ask her about that. But what I can say is that I have nothing but gratitude for the amazing work that she’s done at the company. She’s going to stay on our board. She’s a key person. She’s a close friend.”

— CNBC’s Jonathan Vanian contributed to this report.
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American Airlines says it will drop service to Islip, N.Y., Ithaca, N.Y., Toledo, Ohio, and Dubuque, Iowa.
The airline cited a pilot shortage for its decision.
United and Delta have also trimmed service to some smaller cities recently.

American Airlines Embraer ERJ-145 regional jet aircraft as seen on final approach landing at New York JFK international airport in NY, on February 13, 2020.
Nicolas Economou | Nurphoto | Getty Images

American Airlines plans to drop service to four U.S. cities in September, including Dubuque, Iowa, which will lose scheduled commercial air service altogether.
The Fort Worth-based carrier blamed the service cuts on a shortage of regional pilots. American, United Airlines and Delta Air Lines have each scaled back service between some smaller cities and their hubs, citing a lack of aviators.

The four cities — Toledo, Ohio; Islip, N.Y.; Ithaca, N.Y., and Dubuque — will each lose service from American on Sept. 7, after Labor Day.

“We’ll proactively reach out to customers scheduled to travel after this date to offer alternate arrangements,” American said in a statement.
The airports were served by American Airlines’ regional airline subsidiaries. Last week, those carriers jacked up pilot wages in an effort to stem the shortfall, which comes after several airlines shed aviators during the pandemic only to be caught flat-footed when travel demand snapped back.
Holly Kemler, spokeswoman for Eugene F. Kranz Toledo Express Airport, said the airport staff “are incredibly disappointed” by American’s decision.
“Please note, this decision was made solely by the airline, primarily due to a shortage of regional pilots,” she said. “Unfortunately, we understand this is a current continued trend in the aviation industry.”

Kemler said the airport is still served by sun-seeker-focused airline Allegiant.
American Airlines said the cities will still be served by flights at other airports that are between 45 miles and 120 miles away.

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