Things are not looking good for Meta in 2022. In an earnings call held yesterday, CEO Mark Zuckerberg announced that the company’s Web3 division suffered losses worth $2.81 billion in the second quarter.
On the same day, the FTC also filed a lawsuit to stop Meta's acquisition of V.R. company, Within Unlimited, a move that is expected to hinder Meta's web3 expansion. Here’s a look at both these events and what they mean for Meta’s future.
Losses mount for Facebook’s metaverse division
It's been a dismal year for Facebook's web3 division, Facebook Reality Labs (FRL). After factoring in the latest Q2 figures, FRL's year-to-date losses amount to a dizzying $5.77 billion.
As per the company's earnings call, FRL saw revenue worth $452 million in Q2 of 2022. That’s a drop of more than 35 percent from its Q1 revenue of $695 million. The firm also offered a worrying forecast for Q3, predicting further losses. If this is true, FRL is on track to blow past its annual loss of $10.2 billion from 2021.
However, the social media giant registered $28.82 billion in total sales with an operating income of $8.36 billion in the same quarter. In light of these figures, FRL's losses are significant but seem manageable.
"This is obviously a very expensive undertaking over the next several years," said Zuckerberg acknowledging the loss and reemphasizing his commitment to the sector. The company is betting big on Web3, and Zuckerberg is confident of long-term success. “I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars, if not trillions, over time,” he went to explain in the earnings call.
Meta dealt another hefty blow through FTC lawsuit
On the same day as Meta's earnings call, the U.S. Federal Trade Commission (FTC) also filed an injunction to block the company's acquisition of Within Unlimited, a V.R. fitness app maker.
The FTC states that Meta is looking to create a monopoly within the V.R. industry. Instead of competing with independent and innovative studios, the social media giant is opting to purchase such firms, thereby stifling competition within the space.
"Instead of competing on the merits, Meta is trying to buy its way to the top," said FTC Bureau of Competition Deputy Director John Newman.
"Meta already owns a best-selling virtual reality fitness app, and it has the capabilities to compete even more closely with Within's popular Supernatural app. But Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief," he explained.
The lawsuit signals a shift in how the FTC approaches tech deals in the future, and Meta is not taking it lying down. The social media giant posted a response on its blog, calling the lawsuit a "chilling message to anyone who wishes to innovate in V.R.", stating that it was "based on ideology and speculation, not evidence."
Last year, Meta announced that it would acquire Within for an undisclosed sum. The deal would boost Meta’s web3 ambitions, which the FTC’s lawsuit now stands to hinder.
(Edited by : Sangam Singh)
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