A new report from Yahoo Finance details the allegedly fraught conditions within Meta’s Reality Labs division.
The studio focused on augmented and virtual reality has repeatedly lost money for the Facebook company, reportedly due to multiple reorganizations and “top leaders” lacking knowledge of the technology.
It’s been over a decade since Meta (then Facebook) acquired VR developer Oculus for $2 billion. Current and former Meta staff claim things changed after founder Mark Zuckerberg became enamored with the metaverse during the pandemic, which has led to a “pretty chaotic” work culture.
Sources allege regime changes would occur every three to six months, with Meta leadership outside the division brought on to whip Reality Labs into shape. An ex-engineering executive described it as “forklifting [leaders] into any position.”
“They play employee bingo,” said another source. “They move people into AR that don’t really understand it. It’s hardware and experience, not a news feed in your hand.”
There have been “severe doubts” about leadership, said a third source, exacerbated by unrealistic expectations or projects being abruptly canceled.
Zuckerberg’s Meta dreams are colliding with reality
Reality Labs’ woes can be attributed to many sources. Partially, it’s because AR and VR lack much mainstream traction: the company’s 2023 expenses were reportedly $18 billion, and US sales were said to only hit $1 billion.
A repeated issue with many mixed reality products is the price: Meta’s spent two years shifting the prices for its various Quest headsets, while simultaneously launching new headsets geared toward higher-paying clientele.
Zuckerberg also bears some blame. He’s been open about wanting the metaverse to be his new Facebook, and an ex-executive stressed he’s “really big on the notion of an immersive presence across boundaries.”
Per a second executive, Reality Labs gets a budget based on Zuckerberg’s excitement (and ability to get others excited) for a new idea. Once the budget is set, the team “goes off and tries to figure out what the product looks like, over and over and over again.”
His devotion to mixed reality has put Reality Labs in an infamous spot, with analyst Dan Ives calling it Meta’s “black eye of spending.” To him, the division won’t really matter for another decade.
Other analysts speculated to Yahoo that Meta’s losses for this year’s second quarter may amount to $5 billion or more. In the first quarter, it lost $3.8 billion, nearly equal to its revenue over the last two financial years.
Some suggested Meta should put its metaverse infrastructure behind hardware from Apple or Samsung. Others believe Zuckerberg may be vindicated down the line, or is at least trying to seek it eventually.
Speaking to AR glasses Meta developed years ago, the first former executive called the product “a power-hungry thing. But it’s one of those goals [Mark’s] chasing.”
“His bet is that the next thing after phones will be augmented reality glasses,” they said. “Apple is making moves and he’s trying to protect by investing in the future and hoping to own the next platform.”
Yahoo Finance’s full report on Reality Labs and its mixed reality problems (both culturally and financially) can be read here.