Facebook plans to spend at least $10 billion this year on Facebook Reality Labs as it looks to build the 'metaverse' - billed to be the next big computing platform.
Facebook Reality Labs is responsible for the company's augmented and virtual reality-related hardware, software and content.
"Metaverse is a major area of investment for us and an important part of our strategy going forward. Our goal is to help the metaverse reach a billion people and hundreds of billions of dollars of digital commerce this decade," Facebook cofounder Mark Zuckerberg said during the company's earnings conference call on Monday.
"We are dedicating significant resources towards our augmented and virtual reality products and services, which are an important part of our work to develop the next generation of online social experiences," the social networking giant said in its earnings release. "We are committed to bringing this long-term vision to life and we expect to increase our investments for the next several years."
Facebook's earnings comes amid one of the most difficult periods in the company's history as a trove of internal documents leaked by a Facebook whistleblower Frances Haugen detail the social giant's various missteps and struggle in moderating content, especially in multilingual countries like India, its biggest market with over 340 million users.
During the earnings conference call, Zuckerberg termed it as a "coordinated effort to selectively use leaked documents to paint a false picture of our company"
He said when they make these decisions, they need to balance "competing social equities" like free expression with reducing harmful content, or enabling strong encrypted privacy with supporting law enforcement, or enabling research and interoperability with locking down data as much as possible.
"It makes a good soundbite to say that we don't solve these impossible tradeoffs because we're just focused on making money, but the reality is these questions are not primarily about our business, but about balancing different difficult social values" Zuckerberg said.
New Financial Structure
In an indication of how important the metaverse unit is becoming within Facebook, the firm is also recasting its financial reporting structure to break out Facebook Reality Labs as a separate reporting segment in its earnings reports from Q4 2021.
"I recognise the magnitude of this bet on the future, and I am grateful for the support of our investors, the creative community, and the thousands of talented people working on this effort inside our company to bring this inspiring future to life," Zuckerberg said.
He said that for the next few years, Facebook will focus on putting "more of the foundational pieces into place", an investment that is not going to be profitable for the company in the near future, but likely to mature over the next few years.
"If we do a good job on this, and I would say later in this decade, is when we would, sort of, expect this to be more of a real business story," Zuckerberg said.
He added that "helping to shape the next platform" would further reduce the company's dependence on delivering its services through its rivals. Apple is one such company which has had a significant impact on the company's advertising business in recent quarters through its new ad-tracking changes in the latest iOS update.
Facebook also warned of significant uncertainty in Q4 due to "continued headwinds from Apple's iOS 14 changes".
"We believe that the metaverse is going to be the successor of the mobile internet," Zuckerberg said. "We think it's going to unlock a massively larger creative economy of both digital and physical goods than what exists today."
Zuckerberg is expected to share more details on the company's vision for the metaverse, apart from new at its annual Connect conference later this week. The company is also planning to rebrand itself that will focus on its work in building the metaverse, according to a The Verge report.
Read: Explainer | What is a Metaverse and why is everyone talking about it?
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