Meta has spent tens of billions of dollars in the AR field in three years. The core reason is the result of "chaotic" culture.

Meta has spent tens of billions of dollars in the AR field in three years. The core reason is the result of "chaotic culture"

2024-07-24

Leidi.com Lotte July 24

The Reality Labs division of social media Meta (mainly focusing on augmented reality (AR), virtual reality (VR) and metaverse products) has lost more than US$50 billion in the past four years, becoming the "culprit" that drags down Meta's net profit growth.

Among them, Meta's Reality Labs department lost US$6 billion in 2020, US$10 billion in 2021, US$13 billion in 2022, and US$16 billion in 2023. This means that in four years, Meta's Reality Labs department lost as much as US$45 billion, equivalent to the combined market value of Snap (SNAP) and Pinterest (PINS).

By 2024, Meta reported a loss of $3.8 billion and expected a loss of nearly $5 billion in the second quarter.

During the same period, Meta's Reality Labs division's revenue continued to decline.

Analysts believe that Meta’s Reality Labs division’s staggering cash burn is not the cost of innovation, but the result of a “chaotic” culture characterized by frequent reorganizations and the appointment of senior leaders without AR or VR expertise.

Meta CEO Mark Zuckerberg has warned that Reality Labs’ operating losses will only continue to “increase substantially.”

A dozen former senior employees, mostly executives or managers in a variety of departments including engineering, research, product management, hardware, content and operating systems, said a lack of clear vision and mismanagement were the main reasons for Reality Labs’ financial difficulties.

Some blame Reality Labs’ dysfunction and cash burn on what they say is a chain-of-command reorganization that takes place every three to six months. That involves promoting “local heroes” — or individuals who have achieved success elsewhere within Meta, such as at Instagram or Facebook — and then asking them to replicate those results inside Reality Labs. Lack of familiarity with the technology often leads to tension between new managers and existing employees.

"It was pretty chaotic," said one former employee who worked on the research team, adding that leaders were often transferred from the apps division and had little VR experience. "On the software side, you can get away with it because you make mistakes and keep changing. On the hardware side, you're stuck with mistakes for a long time."

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Meta has spent tens of billions of dollars in the AR field in three years. The core reason is the result of "chaotic culture"

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