Zukerberg’s Metaverse is Being Sucked Into a Spending Black Hole

The Reality Labs division is raising even more eyebrows with its latest moves.

While Meta META is determined to be the industry leader on what it considers to be the future of social media (according to Mark Zuckerberg, anyway), it seems to be having some struggles lately.

After a Q4 2021 earnings call that revealed that Meta’s Reality Labs division lost $10.2 billion last year and a follow up that it lost another $3 billion in Q1 2022 alone, the future of the metaverse that Zuck keeps hammering away at doesn’t really look that appealing, especially since even virtual reality’s primary audience doesn’t seem to be buying into his big idea.

Investors aren’t going all in on it either. Meta’s stock has taken a big dip since the first loss was announced, dropping from nearly $400 a share in late 2021 to $159.30 as of the time of this writing. 

Zuckerberg has poured too much into his vision to drop it entirely, but it’s clear he is trying to do some damage control for the company. Unfortunately, Meta is asking virtual reality users to pay for its mistakes.


What is Meta Doing with VR?

In its quest to shape the Metaverse, Meta chose to acquire Oculus in 2014, an independent company already developing its own virtual reality headsets. Since then the company has been rolled into Reality Labs, and all Oculus products have been rebranded to Meta.

That includes the Meta Quest 2, which has been the most affordable VR headset on the market since 2020. That is, until this week, when Meta announced it intended to increase the price of the headset by $100, making the base model that previously cost $299 a lot less affordable for all.

“The costs to make and ship our products have been on the rise,” the post explains. “By adjusting the price of Quest 2, we can continue to grow our investment in groundbreaking research and new product development that pushes the VR industry to new heights.”

Offering a free copy of the hit music game “Beat Saber” with each headset added insult to injury, as the game regularly retails for $29.99, which hardly makes up 30% of the new price increase in value.

Folks were understandably incensed, some calling the price hike “pure greed.” One analyst also felt the decision would be a negative one for Meta in the long run.

Meta Gets a Slap From the FTC

Not quite content to just hike its prices on a piece of hardware that’s sold for less for years, Meta also made a move late last year to try to buy a company that’s created the most popular VR fitness game on the market.

Meta offered $400 million for independent company Within, which created an innovative VR experience called “Supernatural” it launched in 2020. The app quickly became a popular way to stay active during the pandemic, drawing hosts of users in a wide range of age groups, including those who had never used VR or played video games in the past.

However, the Federal Trade Commission has put the kibosh on the sale, announcing on June 28 that it intended to block Meta from acquiring the company.

“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 had 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.”

Related Posts

Union Capital Financial Group Ltd, registered in the British Virgin Islands, does not provide investment services inside the United States. The company only provides consulting, advisory and educational services.