Quick take:
- Mark Zuckerberg is still optimistic about the metaverse.
- The Meta CEO says only 20% of the company’s resources are dedicated to building hardware and software for the metaverse.
- The larger portion, 80% is still devoted to Meta’s legacy apps including Facebook, Instagram and WhatsApp among others.
Mark Zuckerberg is convinced the metaverse will pay off in the long term despite experiencing some technological bottlenecks in the early stages.
Speaking at the DealBook Summit on Wednesday, the Meta Platforms Inc. (NASDAQ: META) CEO said “the scepticism doesn’t bother me that much.”
Zuckerberg expects his company’s massive investment in the industry to start paying off in a five-ten-year time frame, emphasising that “the way [people] communicate gets richer and more immersive,” which paves the way for global adoption of the metaverse.
Meta’s huge criticism is mainly focused on the amount it has spent on the metaverse rather than the decision to invest.
Therefore, looking at things closer, critics aren’t as much against the idea that the metaverse could be the future of human interactions as they are against betting billions of dollars whilst the industry is at its nascent stage.
Zuckerberg’s woes have also been compounded by the fact that global markets have plummeted due to rising interest rates and high inflation. To bring things into perspective, while Meta’s metaverse spending is estimated to be about $36 billion so far, the company has lost hundreds of billions in market value.
The stock has fallen by more than 60% over the past 12 months while Alphabet’s shares fell barely 44% between January and November 3, 2022. The latter has barely spent on the metaverse, although its venture arm and some of its legacy products have fully embraced web3.
Zuckerberg realises that Meta would need to be more responsible when making its bets on the metaverse going forward if he is to continue receiving backing from shareholders. He said the company will need to operate with “more efficiency and discipline” amid the current macroeconomic conditions.
The social media conglomerate recently laid off 11,000 employees, representing 13% of its workforce amid growing financial pressure and complaints from shareholders. A few days before announcing the layoffs, the company had received an open letter from a shareholder asking it to scale down on metaverse spending and workforce.
Although some critics have attributed Meta’s problems to its investment in the metaverse, Zuckerberg revealed on Wednesday that only 20% of the company’s resources are devoted to building hardware and software for the metaverse, adding that 80% of the time is focused on its legacy apps including Instagram, WhatsApp and Facebook, among others.
Zuckerberg also believes that whilst the company awaits the metaverse to pay off in the long term, WhatsApp and Messenger, two of the company’s leading social media platforms will drive sales sooner.
“We talk a lot about the very long-term opportunities like the metaverse, but the reality is that business messaging is probably going to be the next major pillar of our business as we work to monetize WhatsApp and Messenger more,” Zuckerberg said in November.
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