Meta spent $10 billion on the metaverse in 2021, leading to lower profits

For years, Meta tried to become less dependent on Apple , which holds the key for iPhone users, and to move away from social media contro...

For years, Meta tried to become less dependent on Apple, which holds the key for iPhone users, and to move away from social media controversies involving misinformation and hate speech. So in October, Mr. Zuckerberg announced that he planned for his company to take a new path to the metaverse. He renamed Facebook to Meta. Since then, the company has embarked on a vast internal transformationis restructuring and encouraging employees to join teams working on augmented reality and virtual reality.

Meta spending is unlikely to drop anytime soon, especially since this is a full-out race against other tech giants claim ground in the theoretical metaverse. Last month when Microsoft said it was buying video game maker Activision Blizzard for nearly $70 billion, the software maker cited the deal as a building block of the Metaverse, even though Activision doesn’t produce VR games. Google has been working on metaverse-related technology for years, and Apple has its own devices in the works.

At the same time, extremely profitable Meta businesses are in a period of change. Sheryl Sandberg, Meta’s chief operating officer, said on the call with investors on Wednesday that Instagram was promoting a video product called Reels, which competes with TikTok. Although Reels is the biggest contributor to Instagram’s growth, it doesn’t make as much money from ads as other Instagram products like Stories and the main photo feed.

In the call, Zuckerberg also pointed to the difficulties of competing with TikTok, which has become increasingly popular with younger audiences. David Wehner, chief financial officer of Meta, added that Apple’s iOS changes have supported Google’s advertising business, which does not depend on Apple for advertising data.

Alphabet, the parent company of Google, Tuesday recorded a 36% increase in profits and a 32% increase in revenue in the last three months of 2021 compared to the previous year.

Yet the number of users of Meta’s social networking applications continued to grow. Monthly active users of Facebook, Instagram, WhatsApp and other apps grew 9% to 3.59 billion in the quarter from a year earlier, the company said. The company added that more than a billion users interact with business accounts using services such as WhatsApp and Messenger every week.

Still, the main Facebook app appears to have bottomed out in at least some markets; the app lost one million users worldwide for the first time in the quarter, down from the previous quarter.

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Newsrust - US Top News: Meta spent $10 billion on the metaverse in 2021, leading to lower profits
Meta spent $10 billion on the metaverse in 2021, leading to lower profits
Newsrust - US Top News
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