Zuckerberg says calm about $2.8 billion deficit in second-quarter metaverse break up
The Facebook co-founder remains optimistic about the company’s shift of focus to the metaverse and says it’s a “high-cost venture”
Meta’s virtual reality (VR) and metaverse division, Reality Labs, reported its seventh straight quarter of losses, but CEO Mark Zuckerberg remains steadfast in investing in the technology, which he calls a “huge opportunity.”
During Meta’s second-quarter earnings call on Wednesday, Zuckerberg acknowledged that these losses could continue for several years until VR apps and its metaverse platform are mature enough to take advantage of the “big opportunity” worth “hundreds of billions of dollars:”
“The metaverse is a great opportunity for several 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 for the next few years,” Zuckerberg added, “I am confident that we will be happy that we played a major role in building this.”
The extent of operating losses for Reality Labs was revealed in Meta’s second-quarter earnings report earlier in the day. Such losses are not uncommon for divisions undergoing research and development.
Reality Labs creates VR and augmented reality (AR) apps to help Meta users connect across their various social platforms, including the Metaverse, with the Oculus line of VR headsets.
In addition to the losses, Reality Lab’s revenue has been down since 2021 and its operating margin has been down since 2020. The $11.1 billion revenue and 29% margin recorded in Q2 2022 are the lowest in last seven quarters.
Reality Labs reported $2.9 billion in losses in the first quarter. Zuckerberg also noted that a “challenging macro environment” could be exacerbating losses.
He said the economic situation is now worse than it was a quarter ago, and his view is borne out by the fact that the Federal Reserve raised interest rates by 0.75 percentage point for the second time in a row on Wednesday before the release. of the Meta balance sheets, adding:
“It appears that we have entered an economic crisis that will have a broad impact on the digital advertising business. In this environment, we are focused on making a long-term investment that positions us to come out stronger.”
Despite the economic woes, Zuckerberg is confident that his company and its subsidiaries will emerge from the current economic downturn as “a stronger, more disciplined organization.”
He attributed that confidence to the investments his company is now making to ensure it is able to remain a leader in an industry that may be undergoing a shift to accommodate more metaverse platforms.
Meanwhile, the United States Federal Trade Commission (FTC) has filed a lawsuit against Meta, claiming that the company intends to monopolize the entire metaverse market. The complaint claims that Meta’s movements within the space impede innovation and “competitive rivalry” between US-based companies looking to build platforms and applications for the metaverse.
Source: Cointelegraph Brazil