One ring to rule them all, one rings to find them, one ring to bring them all, and in the darkness bind them; In the land of Mordor where the shadows lie.
J.R.R. Tolkien
Lord of the RingsWhen I started to write this article, my goal was different. I wanted to cover a topic about Meta and their recent events: stocks price dive, releasing Quest Pro and their cooperation with Microsoft and Accenture. But the more I dug into facts and data, the more I discovered various related topics, which all put together in my head the big question mark: what is the reason for this all, the big picture? What is the goal of Mark Zuckerberg, and what’s his ultimate desire? And piece after piece, it came together into one answer. He wants to dominate the future of living (in the next 10-15y), using Metaverse as his exclusive tool to communicate between people and reality. And, of course, ultimately, he wants to own the platform and own all data collected by it. Is he a visionary or simply a person who is trying to protect his empire? My bet is the second one.
But before we go further with this bold statement, let us look at the facts and ask ourselves – why? Why is Mark desperately putting everything into the Meta/Metaverse and his belief that this will be the future?
The simple answer is: He is doing this because he has no other choice. He built the empire, which is collapsing, and Facebook is over. It has been declining slowly for the last 10 years, but its decay is accelerating. The recent Apple update iOS14 was the last nail in the coffin of Facebook. In general, Mark has a tough time with Apple, and I outlined it in a separate section regarding privacy.
Three reasons “Why”:
- The business on Facebook is almost over. Their income Is diving year to year. Facebook is fighting to get back the younger generation, but the reality is – it has already lost its momentum, and there is no chance it will recover to its former glory.
- Meta is (only) a services provider. Facebook, Instagram, and WhatsApp – are just platforms which are dependable on the hardware of other producers. And this is a considerable weakness since they are dependable on other companies’ decisions and strategies. And how hard it could be for Meta Mark saw after releasing a new security patch by Apple in iOS14 (more below).
- There is no other direction where Meta can go if they want to own the whole ecosystem.
- phones are taken by Samsung and Apple,
- personal computers: Lenovo, HP, Dell, Apple),
- search engines are dominated in around 85% by Google
- games – consoles (PS5, Xbox) and PC
- working environment – Microsoft, Apple
So, all the roads are taken all door is sealed. Way ahead of Meta with technology, expertise and know-how.
What Meta is trying to do – they want to create a new ecosystem where they will have ownership. And because right now this ecosystem does not exist, they are in the process to create one and persuade the consumers that it is their “new thing”. New way to live, socialize, consume, and of course at the end spend money. The problem for the Meta is – they are trying to do that without healthy base of day to day business. So they are burning money fast.
1. The business of Meta
Saying that Meta is struggling it’s not saying anything. In the last 2 years, they have suffered massive blows on the market share price. The dream and vision that Mark is trying to sell apparently it’s not enough for investors to believe in the future of the company. February 2022, Meta suffered the most significant one-day wipeout in US corporate history (!). Its valuation lost almost $240 billion, which relates to 26.4% of the stock value. The second earthquake was relatively recent, in October 2022, when the company lost $90 billion of its worth after announcing that Q3 revenue dropped by a whopping 49% (!). That must have been shocking for the investors. So the reality is quite grim – they seem not to care about daily business and started to burn money on Metaverse without securing their business. I marked two places where Meta suffered the most significant decrease in value: February and October 2022.
Update: As I was writing this article – yesterday (09.11.22), Meta announced the massive layoff of 11 000 employees. As it seems the deconstruction of the company continues. The giant is shaking. Having no solid base for the investments, they over-invested in Reality Labs – the division within the company that is taking care of the whole Metaverse concept.
This is all the result of managing the company. If you are still on Facebook, you know what I’m talking about. It’s almost unusable, archaic and not trendy anymore. Not to mention its value for corporate activity. It was a great tool to build reach, but those times are over. Instagram is in better shape, but after the TikTok invasion is getting more challenging to keep a user base and sell advertisements. They are trying to protect their business (primarily by stealing ideas from TikTok), and an example of this is Facebook Reels. Short forms of videos posted by users. But they are not setting the trends anymore but the followers, adapting the ideas of other companies to secure the rest of their business.
2. Service provider
This is what I think bothers Marc a lot. They are dependable on other companies while selling ads. How impactful on their business it can be – they experienced when Apple introduced new privacy rules in iOS14 28th of January 2022, blocking (almost) entirely a collection of all data from Apple devices. Of course, users can decide if they want to share their data with other companies… but who wants to do that with Facebook, whose reputation for spying on people’s privacy is legendary? It was a middle finger from Apple in the direction of Meta and must hurt Mark a lot. According to official data: their business suffered 10 billions only because of this single event! My bet is – that was a pivotal moment for Mark when he decided they needed to own their hardware and platforms to make the rules on their own.
Apple and Meta putting that politely – are not friends. Even their vision of the future of XR is different. Apple’s CEO Tim Cook recently said that one of the reasons he doesn’t believe in Metaverse is because no one agrees on what it actually is, and we don’t know what its purpose is. Not to mention Apple is perceived as Meta’s biggest competitor in the XR field. Rumours about Apple glasses are showing up almost every month. Although recently, analytics say they will be pushed to 2024-26. But they are causing Meta’s executives headaches. Apple knows how to market products, they have the most extensive base of early adopters probably in the world, and they rarely make mistakes launching new products.
3. No way to go
The last reason is even more critical. There is honestly no way to go for Meta. With their business declining. Users are leaving for other platforms – they are desperately looking for a way to build their business.
Mark’s belief is – if they will come up with the Metaverse idea and pump a HUGE amount of money into it – this will give them the advantage to be ahead of each other. They are buying all kinds of companies and startups related to VR with the hope of building momentum and pushing technology to the level it could be monetized.
In total, they have already invested around 36 billion into Reality Lab – a division of Meta that is taking care of the whole Metaverse idea. But… as always – the idea sounded appealing, but the reality is grim. Technology is not ready for it. The Metaverse itself looks like a Nintendo game, facing various problems; the VR hardware is not nearly there. Even the recent release of Oculus Quest Pro doesn’t change the status quo – it’s still a development tool, not ready for market adoption and consumer use. Of course, Meta never said that Oculus Pro would be a mass consumer device, but in my opinion, they failed to communicate to the market properly, and everyone is expecting one.
On the side note
What is essential to understand, though, is that even that Meta is struggling doesn’t mean that the whole idea of Metaverse is wrong. It’s not. I wrote about it in the series of my articles Are we going Meta?. The idea behind it is not impossible to achieve. It’s not a question of Why but rather How we will do it. Technology is not there, but as we know – step-by-step glasses will be lighter, more usable and more powerful.
I still believe the creation of the Meta-universe is possible. What I’m struggling with is the idea that Metaverse can be owned by one entity, one company, or one individual. Looking at the history, it never went well. It should be a shared ecosystem fueled by multiple different points of view, creativity and freedom.
The summary:
Meta is trying to reinvent the company with the Metaverse idea of using XR as technology. Mark has the vision to control the future where everyone uses Metaverse and its products, and they put everything at stake for this belief.
But not having solid business behind it is a risky game. Looking at share prices, investors do not believe in the idea of Metaverse being something sustainable (business way) in the nearest frame of time. So the question arises – what will be the future of Meta? What paths are they taking to achieve their dream, and what kind of problems will they face on their path? That – I will cover in the second part of this article.
Thank you for reading.
