Mark Zuckerberg, the chief executive of Meta Platforms Inc., told employees on Thursday that the company’s next wave of revenue growth will be driven by WhatsApp and Messenger in an effort to alleviate financial stress following its first round of mass layoffs.
A week after Meta said it would lay off 11,000 employees, Zuckerberg responded to hard questions at a company-wide meeting by describing the two messaging apps as being “very early in monetizing” in comparison to its advertising juggernauts Facebook and Instagram.
“We talk a lot about the very long-term opportunities like the metaverse, but the reality is that business messaging is probably going to be the next major pillar of our business as we work to monetize WhatsApp and Messenger more,” he said.
Some consumers may communicate and do business with merchants via chat apps thanks to Meta, including a new feature unveiled on Thursday in Brazil.
After putting a lot of emphasis on investments in extended reality hardware and software since announcing a long-term goal to create an immersive metaverse last year, Zuckerberg’s comments there show a change in tone and emphasis.
Due to Meta’s struggling core advertising business this year, which has caused its stock price to more than halve, investors have questioned the prudence of that decision.
Zuckerberg downplayed how much the company was investing in Reality Labs, the unit in charge of its investments in the metaverse, in his remarks to employees.
People were Meta’s biggest expense, followed by capital expenditure, the vast majority of which went to infrastructure to support its suite of social media apps, he said. About 20% of Meta’s budget was going to Reality Labs.
Within Reality Labs, the unit was spending over half of its budget on augmented reality (AR), with smart glasses products continuing to emerge “over the next few years” and some “truly great” AR glasses later in the decade, Zuckerberg said.
“This is in some ways is the most challenging work … but I also think it’s the most valuable potential part of the work over time,” he said.
Virtual reality accounted for around 40% of Reality Labs’ budget, while futuristic social platforms like the virtual world it calls Horizon got roughly 10%.
Reality Labs’ chief technology officer Andrew Bosworth said in order for AR glasses to attract potential customers and pass a higher standard for attractiveness, they must be more functional than mobile phones.
Bosworth said he was hesitant to create “industrial applications” for the devices, referring to such as “niche,” and instead intended to concentrate on developing for a large audience.