Metaverse is causing Meta to lose billions – and it’s becoming a problem

Mark Zuckerberg continues to experience a public fall from grace after losing billions of dollars and being forced to shed 11% of its workforce to keep his dream of connecting people in virtual worlds alive. But as Zuckerberg's path to the metaverse keeps losing money, how long until shareholders step in to save him from himself?

Once again, we are approaching the time of the year when self-proclaimed futurists are filling our newsfeeds with predictions about the tech trends that will dominate 2023. But maybe we should reflect on how many tech evangelists failed to predict the increasing decline of Mark Zuckerberg's social media empire and other tech trends this year.

We began 2022 with the brave and bold predictions that the metaverse will be a $760 billion business by 2026 and how Mark Zuckerberg will be leading the way with Meta. But as we approach the end of the year, and after investing $36 billion into bringing the metaverse to life, the social media behemoth has already lost $30 billion of it. Facebook has also lost $88bn of its $125bn treasure chest since 2021 and laid off more than 11,000 employees.

The losses are the result of several growing challenges for Zukerberg. Privacy policy changes by Apple have hit Facebook's advertising revenue, and the new kid on the block, TikTok, has managed to capture users' attention worldwide. With Facebook's old business model destined to fail in a Web3 world, heavy investment in the metaverse was seen as a way of protecting its future by swimming with the tide rather than against it.

There are a few parallels with the arrival of the home internet in the nineties when visionaries would ask for patience while building the super information highway. The problem is that users struggle to understand how avatars without legs solve real-world issues. Rather than starting with the problem, developers are being asked to create metaverse applications fit for business, entertainment, education, and communication. Ultimately, technology looking for a solution.

Rumours that even Meta employees avoid using its VR social network Horizon Worlds is also a concern for shareholders. According to the Verge, METAs VP of metaverse Vishal Shah asked his team in a leaked memo, "Why don’t we love the product we’ve built so much that we use it all the time? The simple truth is, if we don’t love it, how can we expect our users to love it?”

As Meta shares continue to plummet amid a series of bad investment choices, many are beginning to blame Zuckerberg. The continuous mocking of Meta's strategy or apparent lack of it, combined with the Quest 2 being described as its most intrusive product yet, is prompting analysts to predict the CEO's vision for the future vision is destined to fail.

A solution nobody asked for

During the global lockdowns caused by the pandemic, Facebook enjoyed a considerable increase in revenue growth. Something that arguably prompted Zuckerberg to believe that this migration to a virtual world would continue forever. Going all in on the metaverse was a brave and bold gamble that is in danger of leaving the much-maligned CEO desperately trying to bluff his way out of a losing hand.

Humans are indeed social creatures, and after two years of being kept away from our friends, family, and work colleagues, people wanted to get away from their screens and back to spending time in person with each other. Zoom fatigue further ensured we craved human connections and the great outdoors rather than strapping a headset to our faces and living in a virtual world. In hindsight, this is a relatively easy prediction to have made.

Shareholders armed with virtual torches and pitchforks, watching hopelessly at headlines of around the first massive staff cull in Facebook's 18-year history and loss of billions of dollars, are already looking for someone to blame. As we approach nine years since Zuckerberg shared his vision of connecting every human on the planet to Time Magazine, the king of social media is beginning to look vulnerable as he shuffles uncomfortably on his throne.

Keeping it real

There is a war for our attention, and the social media giant has moved away from buying dominance or warding off competition that threatened to take people away from its platforms. A quick look online also reveals that younger users are increasingly mocking that Instagram Reels is becoming a graveyard for old TikTok videos and that Meta's identity crisis could be its ultimate downfall.

Ultimatley, Zuckerberg's infatuation with the metaverse has blinded him from the reality that his audience is not buying into his vision. However, we have been here many times with AOL, Yahoo, Friends Reunited, MySpace, and Second Life, all suffering a dramatic fall from grace.

There is an argument that the last year's events are no longer about Mark Zuckerberg or the metaverse. As a global recession hits, maybe we have fallen out of love with social media and become exhausted at the pretense of sharing a highlight reel that suggests we are living our best life.

With Facebook and Twitter hitting newsfeeds for all the wrong reasons, we can expect further questions about the future of social media in 2023. However, moving away from the endless scroll and connecting with each other without algorithms, screens or headsets feels like something we should celebrate rather than fear.