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Meta Fate
Facebook owner Meta has burned an astronomical amount of cash developing its augmented and virtual reality products — but none of them have really caught on yet.
As Yahoo Finance reports, the Mark Zuckerberg-led social media giant has spent almost $50 billion in just over four years, a staggering sum given that the products' pitiful revenues have barely made a dent in their soaring costs.
According to insiders, the massive spending has been due to a "chaotic" culture and mismanagement, marked by a revolving door of upper executives who often lacked any experience in the field.
While Zuckerberg has pulled the purse strings tighter lately, promising investors a "year of efficiency" starting in 2023, the company's Reality Labs has continued bleeding billions of dollars.
And now that the CEO has fully committed the company to developing AI tech, investors are left wondering: can Meta support both AI and Reality Labs without spending more than it can afford?
Reality Problems
Since 2020, spending on Reality Labs — which includes the development of the company's virtual reality headsets and its lackluster "metaverse" experience — has grown steadily, with reported expenses ballooning from $7.7 billion in 2020 to a whopping $18 billion in 2023. Meanwhile, revenue failed to breach $2.3 billion in 2021 — and sank to just $1.9 billion last year.
Insiders who spoke with Yahoo recalled that "local heroes" were promoted within Reality Labs, despite lacking any understanding of VR or AR tech.
"In software you can get away with that because you make mistakes and change things all the time," one former employee, who called the situation "pretty chaotic," told the outlet. "In hardware, you’re stuck with your mistakes for a long time."
"They play employee bingo," another employee added. "They move people into AR that don’t really understand it. It’s hardware and experience, not a news feed in your hand."
Zuckerberg's "metaverse," a virtual playground advertised to allow remote workers to be in the same virtual room, has also seemingly been a flop.
Analysts have also been unimpressed, with Deepwater Asset Management cofounder Gene Munster calling Reality Labs a "disaster from a financial perspective" in an interview with Yahoo.
In short, Zuckerberg's bet on the metaverse has so far been an unmitigated disaster — and given his newfound obsession with AI, it just might be an experiment he eventually abandons.
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