by - Meta CEO Mark Zuckerberg has defended for months that he lost tens of billions on his Metaverse ambitions.
- Zuckerberg’s tone has shifted to cost-cutting and “efficiency.”
- Metaverse editions continue, although “we’re constantly changing our execution,” he said.
Meta CEO Mark Zuckerberg has gone from promoting the Metaverse as the future of his company to another long-term project in a matter of months.
The Reality Labs division, which is tasked with building the metaverse, has lost $13.7 billion this year, according to Wednesday’s announcement. Zuckerberg said Meta will focus on “efficiency” going forward, he said on a call with Wall Street analysts discussing fourth-quarter financial results. He added that last year’s layoffs and an ongoing reorganization “surprised” him as they not only reduced costs but also improved communication and progress on future products.
“Reducing management levels will improve the flow of information through the company, and it will help us make better products and attract and retain better employees,” Zuckerberg said on the conference call. “That was a bit of a surprise to me, to be honest — once we started looking into it, the company felt better to me.”
Susan Li, Meta’s new CFO, said on the earnings call that Reality Labs’ losses would “continue” into 2023 because it’s a “long-term investment.” Still, Reality Labs would be subject to the same efficiency boost as other parts of the company, Zuckerberg said.
Previously, Zuckerberg had said several times over the past year that the Metaverse spending was about strengthening the future of Meta, formerly known as Facebook, as well as the “future of the internet,” and that the Metaverse’s construction is proving historic would.
And in October, Zuckerberg struck a defiant tone about spending when discussing third-quarter earnings, particularly those headed towards the Metaverse. David Wehner, then CFO who is now chief strategy officer, said spending for the Reality Labs business would increase “significantly” in 2023.
“I think people will look back decades and talk about the importance of the work that’s been done here,” Zuckerberg said last fall.
Such bragging about the metaverse and the Reality Labs division was nowhere to be found during Wednesday’s discussion of the year ahead. Instead, credit has gone to the growth of business messaging and AI investments, which have begun to improve Meta’s advertising business and user-targeting capabilities. Meta’s stock is up almost 20% in after-hours trading to its highest level in seven months.
While Zuckerberg failed to say outright that the company will scale back spending on the Metaverse, which investors have been demanding for months, he said steps toward efficiency are taking place, including at Reality Labs.
“We’re looking at the signals and learning what makes sense going forward,” Zuckerberg said. “We are constantly changing our execution. Other things like flattening out the organizational structure will impact the entire business, both in Reality Labs and Family of Apps. We want work to be more efficient.”
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