Mark Zuckerberg wants his employees to know that he hasn’t forgotten how to make money.
The CEO, who spent the better part of the last 12 months burning through billions of dollars to transform your empire into a metaverse company, reversed course slightly this week, saying that WhatsApp, not the land of avatars, is likely to drive sales growth for years to come. Comments made to Meta employees during a company-wide meeting, reported by Reuters, come weeks after a round of mass layoffs that affected 11,000 employees at the company, causing concern to workers and investors alike.
Zuckerberg responded to questions from employees by saying that commercial messaging on WhatsApp and Messenger is “probably the next big pillar of our business.” Monetization on those two apps compared to the more mature apps, Facebook and Instagram, he said, is still at a relatively early stage. WhatsApp is by far the messaging app most used in the world with a estimated than 2 billion users by 2020. Although WhatsApp’s previous owners had a mantra: “no ads, no games, and no gimmicks,” Meta has spent years tinkering with ways to gradually integrate advertising through the platform in the coming years.
At the same time, Zuckerberg appeared to be trying to downplay his massive bet on metaverse products. When asked about the company’s expenses, Zuckerberg said employees were the biggest expense, followed mostly by infrastructure support for his ad family. Oh, and yes, 20% of the company’s spending went to Reality Labs, the segment that oversees its metaverse ambitions. 40% of Reality Labs’ budget goes to virtual reality products, while another 10% goes to metaverse-like social platforms, Zuckerberg said.
Meta did not immediately respond to a request for comment from Gizmodo.
Criticism of the commitment to the metaverse within Meta
While Zuckerberg isn’t giving up on the metaverse, recent comments suggest he’s starting to take employee and shareholder criticism of the company’s recent business strategy a bit more seriously.
Meta’s Reality Labs segment has already lost $9.4 billion this year alone. Revenue at Reality Labs was also down nearly 50% year-over-year in the third quarter, despite Meta owning Quest 2, which is the consumer VR headset best seller in the world. However, rather than buckle down in the face of this year’s shakier VR sales, Zuck and his team opted to release some $1500 eye-tracking mixed reality glasses. And they likely have more metaverse-related operational losses right around the corner.
“We anticipate Reality Labs operating losses to grow significantly in 2023,” Meta said in a statement. announcement to CNBC after announcing its third-quarter earnings. “Beyond 2023, we hope to accelerate Reality Labs’ investments in such a way that we can achieve our goal of increasing the company’s overall operating income over the long term.”
Meta investors seem increasingly upset at the prospect of some long-term bets without certain benefits. In early November, the company’s stock price had collapsed more than 72% since January, when Zuckerberg reaffirmed the company’s commitments to the company.
“If any other company had done this, there would be activist investors writing letters, proposing alternate director lists, demanding change.”said Jim Tierney, AllianceBernstein’s director of funding for US development. USA al Financial Times at the beginning of this year. AllianceBernstein is a shareholder of Meta. “I think Mark heard very clearly what investors wanted. He has made his decision”.
But hey, at least the avatars of the metaverse now they have legs!