Mark Zuckerberg wants Meta’s AR/VR business “to be as big as our current advertising business within this decade.”
The goal was unveiled earlier this month at a corporate meeting for all hands leaked to The Verge. It was part of a response to an employee who asked how? Apple’s upcoming headset and absence of the Metaverse Standards Forum will affect Meta:
Employee question: Apple is absent from metaverse standards and comes with their own AR glasses. How does that affect Oculus and our ecosystem? Thank you.
Mark Zuckerberg: I think it’s pretty clear that Apple is going to be a competitor for us, not just as a product, but also philosophically. We are approaching this in an open way and trying to build a more open ecosystem. We’re trying to make more things interoperable with Android. We are trying to develop the metaverse in such a way that you can transfer your virtual goods from one world to another. We founded the Metaverse Open Standards Group with some other people you just mentioned, and Apple didn’t join. But I don’t think that’s a surprise. Apple has been the closed supplier of computers for a few generations now.
This is a competition of philosophies and ideas, where they believe that by doing everything themselves and integrating closely, they can build a better consumer experience. And we believe there is a lot to do in terms of specialization at different companies, and [that] will enable a much larger ecosystem.
One of the things I find interesting is that it’s not really clear whether an open or closed ecosystem will be better. If you look back at PCs, Windows was clearly the one that had a lot more scale and became the standard and norm that people used. And Mac was doing fine, but I think PC and Windows were, I think, the most important ecosystem in that environment.
On mobile, I’d say it’s more the other way around. There are more Android devices than iOS devices, but I think in developed countries and places like the US or Western Europe in some kind of high-end, [and] a lot of the culture-setters and developers, I think that leans quite a bit more towards iPhone and iOS. So I’d say on mobile, Apple has really put themselves in a pretty good position, and that’s why they’re the most valuable company in the world, or maybe one of the most valuable companies in the world.
But I just don’t think the future isn’t written here for the metaverse yet. And I think part of our job is to keep doing leading-edge research and pushing it across all levels of the stack. We do VR. We do AR. In principle, we supply our devices at cost price or for a small subsidy, or in some cases slightly more than cost. But the bottom line is that our company isn’t taking a premium on the devices in the first place. We want as many people as possible to interact there. Part of that is that it is an open ecosystem that is interoperable.
Our North Star is: Can we get a billion people in the metaverse doing hundreds of dollars apiece in digital commerce by the end of the decade? If we do, we’ll build a business as big as our current advertising business within this decade. I think that’s a very exciting thing. I think a big part of how you do that is by pushing the open metaverse forward, which is what we’re going to do.
So yes, Apple is going to be a competitor. I think that’s pretty obvious, but it’s actually a very deep competitor. It’s not right [that] they have a device that has a little more features than us. It’s a very in-depth, philosophical contest about which direction the internet should take. And I’m proud of the investment we’re making to push the open metaverse forward in this and hopefully make the next version of computing a little bit more open.
Targeted ads currently make up 98% of Meta’s revenue, bringing in more than $100 billion annually. The massive amount of data the company has about each user is fed into machine learning algorithms that are supposed to display the ad most likely to be clicked. But this revenue model depends on holding the user’s attention – and this is bleeding into competitors like TikTok. Advertising spend is also declining in most sectors during a broader economic downturn.
Since acquiring Oculus in 2014 — reportedly for more than $3 billion — Mark Zuckerberg has slowly prepared to diversify Facebook’s business by “building the next computing platform,” investing tens of billions of dollars for this purpose. Of the rebranding to Meta last year Zuckerberg doubled down on his long-term goal and indicated that he is willing to bet the future of his company on it.
Meta’s AR/VR division brought in just $2 billion in revenue in 2021, but grew 35% year-over-year in the first and second quarters of 2022. 48% respectively. To achieve Zuckerberg’s lofty goal, this growth will need to accelerate, but in the near term, CFO David Wehner told investors he expects Q3 Reality Labs revenue to be lower than in the second quarter. the announcement of the Quest 2 price increase by $100.