While Zuck foil-surfs toward the metaverse—an immersive internet that could be built over the next 10+ years—Meta’s losing its balance in the here and now. Revenue fell year over year for the first time in the company’s history last quarter, Meta revealed in yesterday’s earnings report.
One major pain point for Zuck is competition from TikTok. Anyone who’s spent their Friday night watching “What’s inside that rock?” knows that TikTok is taking up an increasingly large portion of users’ screen time—and with it, advertising dollars.
And if you can’t beat ’em, join ’em: Instagram CEO Adam Mosseri confirmed on Tuesday that Instagram is testing updates that prioritize short-form videos from people you don’t follow over your little cousin’s prom pics. “I do believe that more and more of Instagram is going to become video over time,” he said.
Mosseri’s comments were basically his way of saying “sorry, not sorry” to complaints that Instagram was abandoning the photo-sharing features that made it so beloved in the first place. A post that went megaviral this week read: “MAKE INSTAGRAM INSTAGRAM AGAIN. (Stop trying to be TikTok I just want to see cute photos of my friends),” and was shared by major Instagram influencers like Kylie Jenner and Kim Kardashian.
But TikTok isn’t Meta’s only thorn. An Apple privacy update that allows iPhone users to opt out of targeted advertising has cost Meta $10 billion in ad revenue since Apple rolled it out last year.
So, as it tries to fight through these headwinds in the present…
Meta’s shifting its resources from meatspace → metaverse
Zuckerberg’s taking what metaverse guru Matthew Ball calls “an existential bet” on the future of social media, and he’s putting a lot of chips down.
You already know Zuckerberg changed Facebook’s name to Meta last year, but since then he’s also shaken up its workforce from the top down. Sources told the NYT that Sheryl Sandberg stepped down as COO after 14 years in June because she wasn’t interested in building the metaverse, and thousands of employees throughout the company have been moved into metaverse-related roles.
But so far, the metaverse is just a moonshot for Meta. In yesterday’s earnings call, Zuck revealed Meta’s virtual reality division lost $2.8 billion last quarter. His justification from last quarter’s call: “This is laying the groundwork for a very successful 2030s.”
