Meta’s Metaverse Division Suffered a Huge Loss in Q2
- Meta has been accused of monopolizing the metaverse space and crippling competition.
- Mark Zuckerberg remains hopeful that Meta’s investment in the metaverse will eventually pay off once its products are in high demand.
Mark Zuckerberg’s firm Meta, formerly Facebook, has been heavily invested in the metaverse space and set up a division to oversee its metaverse-based investments. However, things have not gone as planned as the company’s metaverse department reportedly suffered a loss of about $2.8 billion. This puts the division’s year-to-date losses at an alarming $5.77 billion. The revelation was made during Meta’s Q2 earnings call, where the company discussed its financial activities during the second quarter.
Meta’s metaverse division, known as, Facebook Reality Labs (FRL), is separate from the company’s other departments such as WhatsApp, Instagram, Messenger, and Facebook. The Facebook Reality Labs (FRL) is responsible for developing the hardware, software, and information necessary for Meta’s foray into the metaverse.
FRL recorded $452 million in revenue during the second quarter, down 35% from Q1. The division reported a startling $10.2 billion yearly deficit in 2021 and it seems certain to surpass that amount in 2022.
Zuckerberg Undeterred by Meta’s Loss
The metaverse is an immersive, future version of the internet that is accessed by digital avatars, and which Zuckerberg predicts will become the center of business, work, recreation, and human engagement in the near future. Zuckerberg showcased his faith in the virtual world when he renamed Facebook to Meta last year and refocused the company’s ideology towards becoming a key leader in the metaverse.
During the earnings call, Zuckerberg tried to persuade shareholders that the company’s investment in the metaverse was a smart long-term plan, regardless of the recurring losses. He, however, conceded that the ongoing losses might continue for some years before its VR applications and metaverse ecosystem are developed enough to take advantage of the huge opportunity in the metaverse, which, according to the Facebook founder, is worth hundreds of billions of dollars. He said,
The Metaverse is a massive opportunity for a number of reasons. I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars if not, trillions over time. This is obviously a very expensive undertaking over the next several years. I’m confident that we’re going to be glad that we played an important role in building this.
Zuckerberg further stated that Meta’s metaverse ambition would grant it the freedom to build its own virtual experiences, which would eventually become a standard in the industry. The Facebook CEO believes that its early venture into the developing virtual world will put it miles ahead of its competitors.
Reacting to the recurring loss of its metaverse department, Zuckerberg noted that a difficult macro environment could be worsening the situation. According to the billionaire, the current state of the economy is significantly worse than it was a quarter ago. The 38-year-old said,
We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. In this environment, we’re focused on making a long term investment that will position us to come out stronger.
Despite the financial difficulties, Zuckerberg is optimistic that Meta will emerge from the current recession as a better and more focused organization. Zuckerberg believes the company’s ongoing investment in key areas will guarantee its place as one of the leaders in the tech world.
Meta is Sued by the FTC
Zuckerberg’s ambition to dominate the metaverse has been seen as an attempt to monopolize the sector. The Federal Trade Commission (FTC), recently filed a lawsuit against Meta, claiming the company’s aim to control the market hinders innovation and competition.
Other key industry players have also expressed their concerns about Meta’s centralized approach to the metaverse. However, Meta dismissed such claims, stating that such rumors lacked credibility.
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