Meta Reality Labs posts worst quarter ever: losses hit $6 billion, pushing total to $80 billion

[midian182]

Facepalm: If there's one reassuringly familiar sight every time companies release their financial results, it's Meta's Reality Labs posting operating losses in the billions of dollars. The fourth quarter was no different, with losses growing 21% year over year to a massive $6.02 billion. It means Reality Labs has now burned through at least $80 billion since 2020.

Reality Labs' $6.02 billion operating loss was even worse than the $5.67 billion analysts had been expecting. The segment managed to record $955 million in sales, which was at least better than the $940.8 million that had been predicted.

The recent quarter saw Reality Labs' largest loss since Meta started reporting the division's revenue in Q4 2020. It was 21% higher than the same quarter a year earlier, though sales were up 13% during the same period.

Most CEOs would have stepped in before a division racked up $80 billion in losses, but Mark Zuckerberg had an unwavering faith in his vision of a shared virtual metaverse – he even renamed his company after the concept.

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The CEO repeatedly said that the industry would be worth billions or even trillions of dollars after 2030 – Meta even commissioned a report in 2023 that claimed the metaverse could contribute $760 billion to the US GDP by 2035.

But Zuckerberg's confidence started to wane when the generative AI revolution began. Most people were indifferent at best to the idea of a metaverse, and the rise of artificial intelligence pushed it even further into the background.

December brought reports that Zuckerberg had decided to cut his losses and slash Reality Labs' budget by 30% while making extensive staff reductions.

Credit: App Economy Insights

Those reports proved accurate when the Reality Labs cuts were confirmed earlier this month as the company laid off over 1,000 employees from the division.

A spokesperson said that the company was shifting some of its investment from the Metaverse group toward AI glasses and wearables as it looked to capitalize on the "momentum" in the segment.

Andrew Bosworth, Meta's chief technology officer, said last week that the company was still continuing to invest heavily in the VR space, but admitted that the area was not growing as quickly as executives hoped.

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Meta Reality Labs posts worst quarter ever: losses hit $6 billion, pushing total to $80 billion

 

[Str8Shot]

When in doubt, just add “AI” to your branding or project timeline and all is swell again.

 

[ScottSoapbox]

Meta's duopoly-driven revenue is over $40B a quarter so $6B spent on securing a monopoly position on the next platform is simply a logical strategy.

Zuck will continue to point that money at whatever is the most likely next thing until the next platform arrives.

(edited to duopoly)

 

[Theinsanegamer]

Meta's monopoly-driven revenue is over $40B a quarter so $6B spent on securing a monopoly position on the next platform is simply a logical strategy.

Zuck will continue to point that money at whatever is the most likely next thing until the next platform arrives.

what monopoly does Meta have, exactly? Social media? nope. The Metaverse? Unbelievably, nope.

 

[ScottSoapbox]

what monopoly does Meta have, exactly? Social media? nope. The Metaverse? Unbelievably, nope.

Fine. Technically they have a Duopoly on online advertising with Google. The two of them control the majority of ad revenue. Google through search and FB through people too dumb to use the real internet.

But when referring to such things it is still common to call it a firm's monopoly power.

 

[Lounds]

I don't even understand how they've managed to mess up so badly when their Meta Quest market still is booming and has plenty of developers and users. They've clearly squandered the money on R&D to a point that it's not sustainable.

Still waiting on GTA SA VR... Thanks Zuck

 

[brucek]

Is there a product users can see yet? What did the $80 billion buy? I can't recall ever hearing about this from friends or colleagues, or even seeing a review. I'm pretty hazy on what it even is?

 

[Theinsanegamer]

Fine. Technically they have a Duopoly on online advertising with Google. The two of them control the majority of ad revenue. Google through search and FB through people too dumb to use the real internet.

But when referring to such things it is still common to call it a firm's monopoly power.

Well yes, people misuse words all the time. A duopoly is not a monopoly, and given Google controls 80% of the market labeling Facebook as a monopoly is just.....wrong. Amazon advertising, for example, half the size of Meta and growing at roughly the same rate.

so now we're at a triopoly, which is just a market. It isnt even correct to say Google has a monopoly but at least it's closer to the definition.

If meta is spending billions of dollars to secure second place in another market, that's not establishing a new monopoly, that's just regular business. And not being done well if Meta's losses are anything to go by.

Is there a product users can see yet? What did the $80 billion buy? I can't recall ever hearing about this from friends or colleagues, or even seeing a review. I'm pretty hazy on what it even is?

It bought a lot of money laundering. There's no real explanation as to where all this money is going.

 

[Dreadcthulhu]

Is there a product users can see yet? What did the $80 billion buy? I can't recall ever hearing about this from friends or colleagues, or even seeing a review. I'm pretty hazy on what it even is?

They do have headsets you can buy (the Meta Quest series) and made software that works with it, but yeah, for what kind of product those are it seems absolutely absurd that they needed to spend $80 billion dollars to develop it. Incredibly lazy workers who just show up for a paycheck, incredibly lazy management who lets workers get away with that, and some flavor of money laundering and/or embezzlement must be going on.

Seriously, with $80 billion Facebook could have literally bought Ford with tens of billions to spare and then stuck Facebook stuff & ads in every F-150. Or developed semi-reusable rockets & launched thousands of internet satellites (and made Facebook the default home page). Or bought Nintendo or Roblox, to pull in a younger audience into their ecosystem. Any of those would have made more sense than spending $80 billion for some headsets and crappy software.

 

[NumberNine]

They can pivot to whatever industry they want but the outcome will always be the same because of the facebook mentality.

 

[bviktor]

Please don't kill the Quest. Please don't kill the Quest. Please don't kill the Quest.

 

[AnilD]

The interesting part is that the spending wasn’t just wasted on headsets, it was an attempt to will an entire new platform into existence. Meta bet that people would naturally move into virtual worlds… but it turns out most people barely want to attend Zoom meetings, let alone live in VR.

 

[ScottSoapbox]

Well yes, people misuse words all the time. A duopoly is not a monopoly, and given Google controls 80% of the market labeling Facebook as a monopoly is just.....wrong. Amazon advertising, for example, half the size of Meta and growing at roughly the same rate.

so now we're at a triopoly, which is just a market. It isnt even correct to say Google has a monopoly but at least it's closer to the definition.

If meta is spending billions of dollars to secure second place in another market, that's not establishing a new monopoly, that's just regular business. And not being done well if Meta's losses are anything to go by.
It bought a lot of money laundering. There's no real explanation as to where all this money is going.

As someone who teaches this at the university level, you are incorrect on the usage of monopoly power. It does not only mean 100% market share.

Second, the US digital ad market in 2024:

• Google: 25.6% market share
• Meta: 21.3% market share
  Both of which are down from previous years as mobile grows.
  
  Third, Meta spent money trying to create the hardware and software (and buying companies that do) for the "metaverse" of AR/VR. They currently own that market despite Apple's overpriced attempt. It's a simple and quite publicly known explanation.

 

[toooooot]

Simply insane. I wonder if it was Zackerberg's personal decision.
If so, may it be a good lesson for him.

 

[Alfonso Maruccia]

A couple years from now: "Meta is scaling back its AI ambitions to shift focus to quantum uber fantasy neverending story cloud robotics".

We are essentially in the post-meme economy already :-D

 

[daffy duck]

Wow finally a piece of good news. I won't be popping my champagne though until they are bankrupt and the POS F#ckerberg is rotting in jail.