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| Facebook invests billions in Metaverse efforts |
Facebook has announced that it has begun publishing the financial results of its augmented and virtual reality labs as a separate division as it has invested billions of dollars in its ambitions to build a meta-universe as its core advertising business has faced significant skepticism.
The company reported a 17% profit increase in the third quarter and warned that new privacy changes from Apple in the current quarter will affect its digital business.
The social media company said its quarterly earnings were below market expectations, and COO Shirley Sandberg told analysts that this was due to changes in iOS.
Facebook Chief Financial Officer David Weiner (David Weiner) said that the company expects its investment in the Reality Labs hardware unit to reduce its total operating profit by about $10 billion in 2021.
The financial commitment for this material-focused division, which targets the ambitions of the Metaverse, comes from the company being in a quagmire to cover up documents leaked by former Facebook employee Frances Huggin.
The leak shows that the company preferred to win over user security. CEO Mark Zuckerberg defended the criticism of the documents, saying the documents painted a bad picture for our company.
The CEO said that the company will not be seen as a social media company but as a company focused on the metaverse for the next several years.
The term refers to a shared virtual environment that can be accessed by people using different devices.
This is due to the slowdown in advertising activity
Facebook has invested heavily in virtual reality (VR) and augmented reality (AR), including the acquisition of companies like Oculus, and formed a product team this year to develop the Metaverse.
The company announced this month that it plans to hire 10,000 people in Europe over the next five years to complete the programme.
“This investment will not pay off for us in the near future,” Zuckerberg said. But we basically think Metaverse is the successor to the mobile internet.
Weiner said Reality Labs will be a separate part of the suite of apps in Facebook's report from the fourth quarter of 2021.
In the third quarter, the company had 2.91 billion monthly active users, an increase of 6% year over year. But it is below analysts' estimates.
Executives emphasized that the company is working to attract young people, including through its short videos.
“We are reorganizing our team to make youth work a milestone,” Zuckerberg said. Instead of improving it for more seniors. This transition will take years, not months, to be fully implemented, he said.
Leaked documents show that the company has raised concerns about its appeal to younger users, given that competitors like TikTok are popular with teens.
It also illustrates the difficulties the company faces in dealing with users who create multiple accounts on multiple platforms.
Facebook expects fourth-quarter revenue to be between $31.5 billion and $34 billion. The company's total revenue increased to $29.01 billion for the third quarter from $21.47 billion for the same period last year.