A sign is posted in in front of Meta Reality Labs on February 02, 2023 in Burlingame, California. Facebook's parent company Meta reported better-than-expected fourth quarter earnings with $32.17 billion in revenue. The company's stock surged 23 percent for its best trading day in close to a decade. Justin Sullivan/Getty Images
Meta's Reality Labs division, dedicated to advancing augmented reality (AR), virtual reality (VR), and the metaverse, has reported $45 billion in losses over the past four years, as reported by Yahoo Finance.
Insiders reveal that this massive cash burn is less about pushing boundaries and more about a chaotic management culture within the division.
According to former high-level employees, Reality Labs' operational struggles stem from frequent leadership changes and a lack of expertise in AR and VR among top executives. Meta CEO Mark Zuckerberg has warned that losses in Reality Labs are expected to "increase meaningfully."
Former staff members, who spoke on the condition of anonymity due to nondisclosure agreements, cited poor management and a lack of clear direction as key factors behind the financial setbacks.
Earlier this year, CNBC reported that Reality Labs has also faced criticism for poor internal management, including frequent reorganizations and the promotion of leaders without AR or VR expertise. Employees report a lack of respect between new managers and existing staff, with some leaders being promoted based on unrelated past successes.
In 2023 alone, Shacknews shared that Reality Labs reported a $16 billion loss, following a $13 billion loss in 2022 and a $10 billion loss in 2021. The first quarter of 2024 alone saw a $3.8 billion loss, with analysts predicting even steeper losses for the second quarter.
This raises concerns about how Meta can balance its spending on Reality Labs with its investments in artificial intelligence, especially after a 20% drop in Meta's stock value following its latest earnings report.
Despite its ambitious goals, Reality Labs has struggled to gain traction in a competitive market that includes companies like Apple and Snap. AR and VR device sales remain sluggish, with a significant 67.4% drop in global shipments in early 2024. Meta's product lineup, which includes the Quest 3 and Quest Vision Pro headsets, has yet to capture mainstream interest.
Analysts and investors are divided, with some viewing Reality Labs as a financial disaster and others as a necessary investment in Meta's future.
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