This year, Facebook plans to spend at least $ 10 billion on Facebook Reality Labs, its division of the metaverse, tasked with creating AR, VR hardware, software and content.
“We are committed to implementing this long-term vision, and we expect to increase our investment over the next few years,” the company wrote in its third-quarter earnings report this afternoon. Facebook sees AR and VR as the basis for the “next generation of social media.”
The department, which is already releasing the Oculus Quest headset and the line of devices for calling Portal, is clearly positioned as the next big thing on Facebook. First, CEO Mark Zuckerberg has spoken continuously about the metacosm over the past few months. And today, Facebook said it will start reporting earnings specifically for its Reality Labs segment, while Facebook’s core advertising business – a staggering $ 28 billion in this last quarter alone – will be displayed under a different bucket. This is a sign to investors that the business of Reality Labs matters and should be valued separately from how they value Facebook today.
It’s also a step to possibly distract from what’s still happening in Facebook’s profits today. The company is ahead of expected profits by about $ 1 billion (not that much on a Facebook scale), which speaks to some of the company’s problems now. Facebook blames a number of factors for this: COVID-19, the economy, and Apple’s recent changes in ad tracking are what we saw last week when Snap also reported earnings.
In April, Apple updated iOS with a new privacy feature that requires users to actively allow apps to track them in other apps and on websites. Initially, social media companies said they were not sure how much this would affect their advertising business, which relies in part on this tracking to measure the effectiveness of advertising.
It’s been a tough few weeks for Facebook. A series of stories in The Wall Street Journal details the company’s significant mistakes, including moderation issues and concerns about the mental health of younger users; the informant who drained these documents then testified before Congress; and just this morning, a consortium of news, including The Verge, published dozens of stories that highlighted even more issues for Facebook, including concerns about declining use among teens. Also, in the middle of it all, in early October, all Facebook apps didn’t work for one day.
Speaking to investors on Monday, CEO Mark Zuckerberg expressed a bold tone about the leaked documents, saying they were part of a “coordinated effort” to “paint a false picture of our company.” He then quickly moved on to talk about Facebook’s work to woo young people and create a metaverse, reinforcing the idea that the company would like to move to something new where it might avoid some attention. (Facet)