Why Reality Labs Will Continue to Spend Billions While Meta Makes Its Deepest Cuts Ever

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Last Updated on November 18, 2022 by Bitfinsider

This is not the time for IT investors to wager on Meta Platforms achieving cost reductions in relation to heavy spending on virtual reality. The market has been preoccupied with the billions that Mark Zuckerberg is investing in Reality Labs and his vision of a future internet and social connections changed by the concept of the metaverse. Reality Labs is currently losing more than $10 billion each year.

Amid a volatile stock market and a sluggish economy, investors want to see Big Tech curb on its spending. Alphabet is under cost-cutting pressure. Amazon is conducting layoffs, with the majority occurring in corporate areas where risky ventures have failed to pay off. The sentiment of investors was summed up in an October letter from Altimeter Capital to Mark Zuckerberg’s business’s leaders, which stated that the company had “drifted into the region of excess.”

He emphasized that the degree of spending is a direct result of the company’s desired level of transformation.

Jhaveri estimates he spends one to two hours per week in virtual reality team meetings.

“It’s truly about the future iteration of the internet, what technology can do to link us and make us feel more present compared to what we can do now, and with an app or a website, you can only get so connected,” he said. Because of this, we are so invested in the space.

The letter from the top executive of Meta VR reaffirmed the stance taken by Zuckerberg during the company’s most recent earnings call. At the time, Reality Labs’ annual operating losses totaled $9.4 billion, and the CEO predicted that they would increase dramatically in 2023.

However, some investors are skeptical about Meta’s commitment to this message. Zuckerberg has stated that it will take up to a decade for the notion to become widely accepted, though he anticipates that expenditure will level down in the coming years.

“He must state, ‘We are so devoted to this… this could take ten years… this could cost billions of dollars.

She cited the layoffs at Meta and the recent sale of real estate as evidence that Reality Labs may yet encounter spending restraint that the firm refuses to acknowledge today.


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