- In a year, the metaverse went from Meta CEO Mark Zuckerberg’s obsession to rarely being mentioned.
- Reality Labs is expected to be hit with a new round of layoffs that will affect 10,000 employees.
- AI, which can improve Meta’s advertising business, is now its “single largest investment.”.
Mark Zuckerberg: Around a year ago Meta Chief Executive Mark Zuckerberg couldn’t stop talking about the metaverse. He claimed it was what was in the near future for all of his business. He changed the name of the company in recognition of his goals. It’s now a minor moment when he’s speaking publicly.
In his Tuesday memo on plans to cut down 10,000 employees of Meta which were formerly called Facebook, Zuckerberg mentioned the metaverse twice in nearly 22,000 words, the majority of them concerned with the future of Meta. He spoke about AI 4 times in total, describing the progress of the technology as being now Meta’s “single biggest investment.”
It’s a big change from the previous year when developing the metaverse appeared to be more of a passion for Zuckerberg even as people within the company and those people close to his CEO became worried about its potential business and the lack of a strategy. The metaverse was advertised as an immersive 3D representation of the internet.
Presently, Zuckerberg says AI is being developed “into all of our applications.”
“We have the infrastructure in place to achieve this feat at a massive magnitude and I’m sure the results it can bring will be incredible,” he said of AI in his letter.
Meta is also discussing AI during its fourth quarter and full-year results. Executives spoke about it half a dozen times in a phone call to Wall Street analysts, while Meta’s metaverse was not even mentioned. Meta is already using AI to enhance the ability of its content to be targeted to its users, and more crucially, to improve the targeting capabilities of its enormous marketing business that is recovering from the privacy changes made by Apple at the beginning of this year.
Zuckerberg said on Tuesday that the creation of the metaverse “also is a key element in what the next phase of social connections,” before quickly moving into a discussion about growth in users using Meta’s applications: Facebook, Instagram, and WhatsApp.
It was that simple to the realm of the metaverse. The month before, Zuckerberg and Meta’s new chief financial officer, Susan Li, noted that Reality Labs — the department that is responsible for metaverse projects and projects managed by the chief tech officer Andrew Bosworth — will be subject to similar “efficiency” pressure as the rest of company. This week Li mentioned Reality Lab products such as Portal as an example of a product that is being pushed under the same “efficiency” Portal devices as an instance of projects expected to be cut off this year.
“In the Year of Efficiency, we are focusing on removing projects that are duplicate or less important and making every company as efficient as we can,” Zuckerberg said Tuesday.
It’s a great relief to shareholders and Wall Street analysts, who in the past year were increasingly dissatisfied with Zuckerberg’s uncompromising position on the huge costs of metaverse work. Reality Labs lost nearly $14 billion in its last fiscal year. The company is expected to be losing $15 billion this year and is expected to a cost of $20 billion annually for the next few years. The expectation now is for the outlook to be trimmed.
The shares of Meta have reached their highest point in six months as of Tuesday afternoon, and the stock was climbing by more than 7% at the close of the day.
The outlook for expenses for Meta in 2023 has been reduced in value by 3 billion dollars, bringing it down to the range of $86-$92 billion, down from the previous forecast that ranged from $89-$95 billion. Mark Mahaney, Evercore’s senior managing director, announced on Tuesday.
“The Year of Efficiency is growing better efficient,” Mahaney said. “With the latest, lower expenses guidelines, Meta is declaring that it will be able to grow through de minimis increases in costs. “.