As anticipation builds around artificial intelligence ahead of Big Tech earnings, Meta Platforms (META) finds itself in the spotlight. The company’s Reality Labs division, which specializes in augmented reality (AR), virtual reality (VR), and metaverse technologies, has lost nearly $45 billion since its inception in 2020.
Yahoo Finance senior reporter Yasmin Khorram offers an in-depth analysis of Meta’s Reality Labs unit, recounting testimonials from former employees and executives on the division’s financial performance and overall lack of direction and vision from leadership.
Meta is currently scheduled to report earnings next Wednesday, July 31.
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This post was written by Angel Smith
Video transcript
Turning now to a big another big tech name is Meta with big tech earnings on deck.
A lot of the focus for meta and other companies in this sector has turned to A I Artificial Intelligence.
Meanwhile, hype around the metaverse, the inspiration for the company’s name change.
Well, that has dwindled Yahoo.
Finance senior reporter Yasmin Cora Mahat took a deep dive into Meta’s Reality Labs unit which focuses on A RVR and the Metaverse and Yasmin, I know you’ve been spent hours and hours and hours digging into this, speaking with hundreds of former employees, what did you find?
Yeah.
So Meta’s reality lapse has been this divisive division.
Let’s take a look at their financial performance over the last three years.
Total revenue is around 5 billion.
Meanwhile, expenses around 45 billion, meaning this division has lost around $40 billion in just the last three years.
Now, analysts and investors may assume that that amount of spending is the cost of developing breakthrough technology.
But insiders, I have been speaking to tell me what’s really to blame here is this mismanagement at reality labs, namely this constant reorganization.
I’m told happens every 3 to 6 months in the installation of leaders that really don’t have the expertise of A RVR.
We spoke to a dozen former reality labs employees, many of whom were at the executive level, all of whom left within the last three years.
And the thing that I kept hearing about was this promotion of quote, local heroes, individuals who were successful in the family of apps, whatsapp, Facebook, Instagram are being moved over to reality labs to replicate that success.
That’s not what’s happening though.
For example, a former executive told us, quote, it creates this really weird dynamic where the people in the trenches doing the work don’t have respect for the senior leaders and the senior leader don’t really speak the language of the technology.
They’re building the other common thread I heard about was this lack of clear vision within reality labs.
Several insiders we talked to said they had quote anti confidence in the road map or quote severe doubts about leadership.
Another example was that they had 24 hardware products on a road map for 18 months hardware.
They were working on a wristwatch sunglasses, new controller models, new a new our experiences.
Another example was this development of their own in house chips for these Ray ban smart glasses only for that to be scrapped a year into production and go and for them to go back to these Qualcomm chips that I told were much more costly.
One executive perhaps summed it up best for me saying, quote, everyone rallies around what Zuck gets excited about.
Then reality labs had.
Andrew Bosworth gets a budget based on Zach’s excitement and they go off and try to figure out what this product looks like over and over and over again and quote.
It’s also important to note here that we did reach out to meta multiple times for this story did not hear back from them.
We also offered head of Reality Labs and company CTO Andrew Bosworth an interview and did not hear back from him.
All right, Yasmine, great reporting then certainly important for investors to keep in mind here ahead of their earnings results that are coming up shortly.
All right, Yasmin, thanks so much.
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