Meta loses $2.8 billion in Q2 as the tech giant fights claims of industry dominance
Meta’s metaverse specific division has reportedly suffered losses of $2.8 billion this quarter. CEO Mark Zuckerberg says the division could be worth trillions in the long term. The company is also being sued by authorities over monopolizing the metaverse industry.
Social media giant Meta’s ‘Facebook Reality Labs’ (FRL) – metaverse development division, generated $452 million in revenue this quarter, down 35% from the Q1 2021. This has resulted in an overall loss of $2.8 billion for the division alone.
As of now, FRL has posted year-to-date losses at $5.77 billion, and the division is currently on track to exceed its annual loss of $10.2 billion from last year.
Last fall, when Facebook changed its name to Meta, Zuckerberg restructured the company’s entire ethos towards developing the metaverse. The CEO believes the metaverse will become central to commerce, work, entertainment and social interactions in the future.
“This is obviously a very expensive undertaking over the next several years. But as the metaverse becomes more important in every part of how we live, I’m confident that we’re going to be glad we played an important role in building this,” said Mark Zuckerberg.
Though the company’s multi-billion dollar metaverse bet is yet to pay off, Zuckerberg is trying hard to convince shareholders that the loss-heavy division could be worth trillions in the long run.
“By helping to develop these platforms, we’re going to have the freedom to build these experiences the way that we and the overall industry believe will be the best, rather than being limited by the constraints that competitors place on us,” said Zuckerberg. “I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars, if not trillions, over time.”
On Wednesday, the Federal Trade Commission (FTC) filed a suit to stop Meta’s acquisition of ‘Unlimited’, the company behind virtual reality fitness app Supernatural. The U.S antitrust agency alleges that with the acquisition, the company is trying to monopolize and dominate the metaverse industry.
“The agency alleges that Meta and Zuckerberg are planning to expand Meta’s virtual reality empire with this attempt to illegally acquire a dedicated fitness app that proves the value of virtual reality to users. Meta would be one step closer to its ultimate goal of owning the entire ‘Metaverse’.”
“As Meta fully recognizes, network effects on a digital platform can cause the platform to become more powerful – and its rivals weaker and less able to seriously compete – as it gains more users, content, and developers. The acquisition of new users, content, and developers each feed into one another, creating a self-reinforcing cycle that entrenches the company’s early lead,” the FTC stated in a press release.
The FTC has long taken an issue with Facebook’s business practices, suing the company for similar behavior in the past with acquisitions of Instagram and WhatsApp.
Despite losses to the metaverse division, the company’s overall revenue improved by 3% this quarter, posting profits of $28.8 billion.
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