Meta had a tough year.
In 2022, the company saw its stock price fall to an all-time low, laid off 11,000 of its employees, and faced intense skepticism from impatient investors about the feasibility of its futuristic metaverse vision. But that won’t convince the tech giant to change its plans.
In a memo to Meta staff also posted on social media, one of Meta’s top executives, CTO Andrew “Boz” Bosworth, spoke on Monday about the difficult time the company finds itself in. He clarified that the company would double down on its plans to develop new AR/VR technologies, including those that power the Metaverse, which is a series of immersive 3D virtual worlds where people can socialize, work and play using digital avatars of themselves.
“We never thought it would be easy or simple, but this year has been even harder than we expected,” Bosworth wrote. “The economic challenges around the world, combined with the pressures on Meta’s core business, have created a perfect storm of skepticism about the investments we are making. These are times that really test people’s faith in the future.
Bosworth’s memo explained why employees — and the public — should believe in the company’s $10 billion-a-year investment in developing new technologies like AR/VR, eye-tracking and graphics processing.
“This post is my attempt to set the record straight,” Bosworth said in an interview with Recode last week, addressing critics who think Meta is spending too much on new technologies that haven’t yet caught on. on the same scale as social media. . . “There has been a very bad misunderstanding about the business and that 80% of the investment we make is investment in the core business. And if you ask the average person, isn’t it reasonable for a company to invest a certain percentage, maybe even 20%, in its future?
Meta CEO Mark Zuckerberg believes the Metaverse will be the next iteration of the Internet, a mobile phone-like technological shift. But even in the best-case scenario for Zuckerberg, it will take time to realize that vision – according to his estimates, as long as 10 years. Meanwhile, some investors have grown wary. A recently called Meta’s kept spending on it “terrifying” in a recent open letter urging the company to cut spending.
In his memo, Boz objected to Meta caving in to this kind of market pressure.
“In boom times, it’s easy to make big, ambitious investments in what’s to come. But when economic conditions turn, it’s just as easy to turn the other way: scale back your ambitions, stick to what’s safest and most profitable today, and get the most out of it. Bosworth wrote.
The executive argued that there are “disastrous consequences for this kind of short-term thinking”, saying it results in “hollowed-out companies that gave up on innovating a long time ago, just turning the corner. crank out an existing business until it ceases to operate.”
Bosworth’s comments come at a time when Silicon Valley has long been waiting for a major game-changing invention. It has been years since any of the reigning tech giants – Apple, Google or Meta – have launched technology as transformative as their predecessor products like the mobile phone, online search engine, personal computer or a social media platform like Facebook. . . For the past year and a half, Meta has positioned itself as a potential leader on this front.
And while Apple and other tech giants are also investing in AR/VR tech, Zuckerberg is in a unique position: He’s the only remaining big tech CEO who’s also the company’s founder, with control of the board of directors and essential immunity from dismissal. It also released several iterations of AR/VR headsets before Apple even launched a single product in this space, giving Meta a head start in development.
But Meta still has to keep making money by expanding its core business: selling social media ads. The company is still recovering from a blow to its advertising business after the launch of Apple Application Tracking Transparency Tool to iPhones that limited Meta’s ability to target ads – the company predicted it would lose 10 billion dollars because of these changes in 2022 alone. This year, Facebook also reported its first-ever decline among global users in the last quarter of 2021 as it faces increasing competition from TikTok. This is a signal for some that the platform was losing its relevance, especially with younger users and in developed countries like the United States. Bosworth argued in his memo that his critics “misunderstood” some trends here. He pointed out that Facebook’s engagement is growing in the third quarter of 2022 and that Meta-owned WhatsApp is seeing the strongest growth in North America compared to other regions.
Bosworth also gave some insight into what Meta plans to focus on in its AR/VR efforts going forward.
This year, Meta released a $1,500 “mixed reality” headset called the Quest Pro. Mixed reality means that instead of being completely immersed in a virtual environment, you can see virtual reality projected onto your surroundings. The Quest Pro is marketed to professional customers such as architects, clothing designers, and other professionals who use 3D modeling for their work.
Meta’s older, more affordable Quest 2 virtual reality headsets are more popular with regular consumers (they’re the first mainstream VR headset), but the technologies are still niche compared to Facebook’s scale or Instagram belonging to Meta. In comparison, Meta sold around 14.8 million Quest 2 headsets since their launch, according to analyst firm IDC, while Facebook has almost 3 billion monthly active users.
This is largely because VR products are bulky and difficult to wear on your face for more than a few hours at a time. And while they’re fun for games and virtual hangouts, they’re not essential tech like a laptop or phone.
Meta hopes that more people will eventually use AR/VR products as they become more lightweight and technologically sophisticated.
“It won’t be long before a VR headset is able to emulate a powerful home computer setup, from a device that fits in a backpack and can be used anywhere,” wrote Bosworth.
While Meta’s ambitions for AR/VR are bold, it sometimes struggles to sell parts of its vision to the public, and even some of its own employees. Meta’s flagship metaverse social platform, Horizon Worlds, was not used enough by its own employees, in part because it was too buggy, as The Verge reported in October. Virtual reality industry titan John Carmack, who was an executive consultant on virtual reality for Meta, left the company on Friday, saying in a farewell note now public that if he believed in potential of Meta’s VR products, he wonders about the company’s efficiency in building them. Outside of the VR world, many social media commenters have criticized the appearance of Meta’s virtual avatars in its AR/VR products – screenshot by Mark Zuckerberg Avatar has been widely mocked on Twitter and other platforms for being legless and cartoonish (in response, the tech CEO demo of an updated avatar a week later).
Bosworth told Recode the company has a “real problem” getting people to understand the value of Metaverse’s products when they’re not wearing a VR headset and getting the full experience, but instead they see a flattened 2D screenshot of it on a cell phone or computer. He said his teams are working on improvements to the technical systems that power the avatars to make them more “robust”.
But in the end, avatars are only a small fraction of how Meta spends its $10 billion annual budget on the futuristic technologies that make up its “Reality Labs” division. The company invests about half of its Reality Labs budget in augmented reality, for example, including the development of new hardware peripherals, Bosworth said. Bosworth said that over time, Meta hopes to prove its critics wrong by making products that people actually use.
“The path for this to become a more ubiquitous device is to make it more valuable to more people.” he said. And that’s what we’re trying to do.
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