According to Meta’s Q2 earnings report, Facebook Reality Labs (FRL) has suffered its seventh consecutive loss, generating only $452 million in revenue, down 35% year-on-year. Reality Labs lost $10.2 billion last year but its losses look likely to continue to grow.
Reality Labs is a business of Meta platforms that produces virtual reality and augmented reality hardware and software, founded by CEO Mark Zuckerberg with the ambition to conquer the Metaverse space. The division posted a loss of nearly $3 billion last quarter. That puts the division’s year-to-date at $5.77 billion.
Despite the huge loss, Meta CEO Mark Zuckerberg has remained steadfast in investing in this sector: “This is obviously a very expensive undertaking over the next several years. I’m confident that we’re going to be glad that we played an important role in building this.”
After changing its name from Facebook to Meta last year, the American billionaire has reoriented the entire company’s ethos towards dominating the metaverse: an immersive version of the internet navigated by digital avatars that Zuckerberg bet will become the center of commerce, work, entertainment, and social interaction.
Although the multibillion-dollar metaverse platform “Horizon Worlds” launched by Reality Labs last year hasn’t contributed much to the company’s revenue yet, Zuckerberg is still trying to reassure shareholders that it’s a smart long-term strategy. He said:
“By evolving these platforms, we will have the freedom to build these experiences in the way that we and the overall industry believe will be best, rather than being constrained by the limitations that competitors place on us. Now I feel more strongly that developing these platforms will unlock hundreds of billions of dollars, if not trillions, over time.”
The loss is said to be mainly due to iOS 14’s update in which Facebook Ads functions were limited. Another reason is high inflation that caused many businesses to cut advertising costs. The company’s overall revenue also improved only 3% this quarter to $28.82 billion, lower than expectation of $28.94 billion. Even so, after the Q2 financial report was revealed, the company’s stock has increased by 11% and is trading at $169.58 at the time of writing. In other news, Meta is being sued by the US Federal Trade Commission (FTC), accusing the media giant of “trying to buy its way to the top” rather than compete on the merits in the VR-dedicated fitness app market.
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