Meta, the parent company of Facebook, Whatsapp, and Instagram, appears to be digressing toward artificial intelligence (AI).
Experts in the tech industry see the move as an admission of a strategic error when Meta went full blast for the metaverse about a year ago.
Mark Zuckerberg, Meta’s CEO, was all about the metaverse to the extent of referring to the idea as the future of the entire firm, while the company was renamed as a show of commitment.
Fast-track to a year later and Zuckerberg rarely mentions the metaverse.
Meta Laying Off 10,000 As Zuckerberg Changes The Tune To AI
Earlier this week, Meta announced the planned layoff of 10,000 employees as well as closing around 5,000 job postings.
The social media company axed another 11,000 employees – which at the time equaled 13% of its entire staff – in November last year.
This week’s layoffs will see Meta incur between $3 billion and $5 billion in restructuring costs, citing unfavorable economic conditions likely to last “many years.”
“Here’s the timeline you should expect: over the next couple of months, org leaders will announce restructuring plans focused on flattening our orgs, canceling lower priority projects, and reducing our hiring rates,” Zuckerberg said in a statement directed to employees but also posted on Meta’s blog.
Although the Meta CEO referred to 2023 as the firm’s “year of efficiency,” as it works toward developing into “a stronger and more nimble organization,” he only mentioned the metaverse twice in his more than 2,000 words.
His message to employees and the world mainly focused on the future of the company, where he mentioned AI four times as though to stress Meta would be focusing on the technology as its “single largest investment.”
The change of tone from the metaverse has raised questions among tech experts because Zuckerberg seemed to have an obsession about a year ago. This worried investors, as concerns started coming from within the company, with some employees openly casting doubt on business prospects of the metaverse and the possible lack of strategy.
While the metaverse was presented as an immersive 3D version of today’s internet, Zuckerberg reckoned that AI is already being engraved “into every of our products.”
“We have the infrastructure to do this at unprecedented scale and I think the experiences it enables will be amazing,” the CEO said while referring to AI in his note.
Signs of Meta abandoning the Metaverse in favor of AI have also been popping up in related company discussions. In a call with Wall Street analysts, AI was mentioned about 12 times while no reference was made to the metaverse.
Meta is also open to discussing artificial intelligence during its Q4 as well as full-year earnings calls.
The Facebook parent company is not new to AI either, considering it utilizes the technology to improve targeting content to users and above all, the targeting ability of Meta’s advertising business, which is yet to recover from Apple’s move that altered privacy conditions.
In an attempt to convince the world, employees, and stakeholders of Meta’s commitment to the metaverse, Zuckerberg said it “also remains central to defining the future of social connection.” However, he quickly and swiftly moved to user growth on the company’s three leading apps: Facebook, Instagram, and Whatsapp.
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Meta To Focus On Canceling Duplicative Projects In 2023
Zuckerberg barely discussed the metaverse in his note on Tuesday but seemingly put a lot of emphasis on AI.
In February, Zuckerberg and Meta’s recently hired chief financial officer, Susan Li, stated that Reality Labs, which is responsible for metaverse-related work and projects supervised by the company’s chief technology officer, Andrew Bosworth, would be subjected to the same drive for efficiency as the rest of the firm.
Li recently cited products from Reality Labs, such as the Portal device, as an instance of the projects that will be terminated this year.
“In our Year of Efficiency, we are focused on canceling projects that are duplicative or lower priority and making every organization as lean as possible,” the CEO outlined in his note.
Meta Investors Relieved
Investors and Wall Street analysts could be the biggest winners as Zuckerberg gradually shelves his earlier plans for the metaverse.
Stakeholders in Meta became increasingly frustrated with the CEO’s move to strongarm everyone to buy the metaverse idea even when cost implications were proving to be unsustainable.
Meta’s Reality Labs lost almost $14 billion in 2022 and is on the path to losing another $15 billion this year. Kept unchecked Reality Labs could cost the company $20 billion going forward.
Following Zuckerberg’s note on Tuesday, Meta’s share price rose to a six-month high. According to Yahoo Finance, Meta Platforms, Inc. (META) is trading 0.68% down on the day at $192.74 on Wednesday.
According to Evercore’s senior managing director Mark Mahaney, Meta has revised its estimated expenses for 2023 to a reduced range of $86 billion to $92 billion, a decrease of $3 billion from the earlier projected range of $89 billion to $95 billion.
“The Year of Efficiency is becoming more efficient. With the new, lowered expense guidance, Meta is declaring that it can recover to growth with de minimis growth in expenses,” Mahaney said.
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