Reality Labs, Meta's virtual reality (VR) and metaverse division, has posted its seventh consecutive quarter of losses, but CEO Mark Zuckerberg remains committed to investing in the technology, which he describes as a "massive opportunity."

During Meta's second-quarter earnings call on July 27, Zuckerberg admitted that such losses could continue for several years until VR applications and the Metaverse platform mature enough to capitalize on the "massive opportunity" worth "hundreds of billions of billions of dollars."

"For a variety of reasons, the Metaverse represents a massive opportunity." I am even more convinced that developing these platforms will unlock hundreds of billions of dollars, if not trillions, over time."

"This is obviously going to be a very expensive undertaking over the next several years," Zuckerberg added, "but I'm confident that we'll be glad that we played a role in building it."

Reality Labs creates virtual reality (VR) and augmented reality (AR) applications to help Meta users connect with the Oculus line of VR headsets via its various social platforms, including the Metaverse.

Aside from the losses, Reality Lab's revenue has been declining since 2021, and its operating margin has declined since 2020. The $11.1 billion in revenue and 29 percent margin recorded in the second quarter of 2022 are the lowest in the previous seven quarters.

According to Zuckerberg, a "challenging macro environment" could exacerbate the losses.

He stated that the current economic situation is worse than it was a quarter ago, and his viewpoint is supported by the fact that the Federal Reserve raised interest rates by 0.75 percentage points for the second time in a row on July 27, prior to the Meta earnings call, adding:

"We appear to have entered an economic downturn that will have a wide-ranging impact on the digital advertising industry." In this environment, we're focused on long-term investments that will position us to emerge stronger."

Despite the current economic downturn, Zuckerberg is confident that his company and its subsidiaries will emerge as "a stronger and more disciplined organization."

He attributed his company's current confidence to its investments to ensure its ability to remain a leader in an industry that may be shifting to accommodate more Metaverse platforms.

Meanwhile, the FTC has filed a lawsuit against Meta, alleging that the company is attempting to monopolize the entire Metaverse market. According to the complaint, Meta's actions in the space stifle innovation and "competitive rivalry" among US-based companies looking to build Metaverse platforms and applications.


Jul 28, 2022
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