Meta, AKA Facebook, is laying off another 10,000 employees in preparation for Zuckerberg’s “year of efficiency.” This is after an 11,000 employee layoff in November 2022. The stock market rewarded Meta’s cost cutting with a 7% increase in its stock price. Meta hired perhaps more people than it needed during the pandemic so some cost cutting was probably in order. Now we are concerned about the fallout from Meta layoffs in terms of its various divisions and especially in terms of its position in development of the Metaverse.
What Functions Is Meta Cutting With Its Layoffs?
Many are concerned that as Meta cuts staff that oversight of social media will suffer. Who will be keeping a lid on hate speech? Will fewer Meta employees mean that Russia, China, Iran, North Korea and whoever else wants to mess with the USA will be working to influence the next set of elections in the USA? When a company cuts staff it invariably cuts funding of R&D as well. Will Zuckerberg’s pet project, the Metaverse, get less funding at a time when AI is attracting so much interest and offers new ways to make the Metaverse itself more functional?
Has Meta Overspent on Metaverse Development?
Protocol looked at the situation with back to back Meta layoffs and noted that job cuts appeared to be spread across many divisions at Meta. The cuts included divisions responsible for Metaverse development. It may well be that Meta has been spending too much on Metaverse development when their investment is compared to financial returns that they might realize in the near term (5 years). Zuckerberg might well be right that the Metaverse is the “holy grail” of social media.
Image Courtesy Unbox Diaries
Will the Tortoise or the Hare Win the Metaverse Race?
The old fable notes that while rabbits (hares) run fast, they are not distance runners and while a turtle (tortoise) is slow, it keeps plodding along and will win the race with the rabbit. Meta has been pouring money into Metaverse development with virtual reality, alternative reality, mixed reality, and even brain-computer interfaces. Something that happens again and again in technology is that new tech emerges that makes a previously difficult task much easier and cheaper. Thus, all too often R&D gets wasted on dead ends when a company is racing to beat the competition in bringing out new and profitable products.
Who Gets to Define the Metaverse?
Investing in the Metaverse today is a bit like investing in the internet back in the 1970s. Some tech is in place but much of what will likely constitute the backbone of the Metaverse is not yet invented or, as in the case of the networks needed for an advanced Metaverse, not available to enough people in enough locations. Zuckerberg’s vision of the Metaverse may be right on track but if he is a generation early, someone else might be the one, or ones, who get to define the Metaverse in its eventual form and reap the profits. If Meta can reign in its expenses and keep developing the tools to make the Metaverse work it may still be the leader in the end. We doubt that Meta (Zuckerberg) is going to pull out of the Metaverse race but they may need to adjust their pace in order to simply stay ahead of the pack instead of trying to outdistance everyone in every aspect of development.
Enthusiasm Versus Rationality in Developing the Metaverse
Meta has reported losses of $9 billion and $10 billion year after year in its Reality Labs division which is where they are working on everything Metaverse. Meta expects losses in the Reality Labs division to be even greater for the next year or so. What they say that they expect is that products and services coming out of that division will begin to show profits after 2023. The cost cutting going on in all divisions seems to be designed to give the company financial breathing space until their Metaverse efforts start to pay off.
Who Will Profit from the Metaverse?
Charles and Frank Duryea made the first successful gasoline powered automobile in America in 1893 but it was Henry Ford who invented the assembly line in 1913 and who reshaped both the auto industry and the face of America. Critical inventions for a viable Metaverse may not even be imagined today. As such, knowing who will profit from the Metaverse in the long run is still a bit of a guessing game despite Meta’s early lead and massive spending on the project.