Meta Platforms CEO Mark Zuckerberg told CNBC’s Jim Cramer on Wednesday that the metaverse could be a sizable part of the social media operator’s business in the second half of the decade.
“Basically, we’re hoping to reach about a billion people in the metaverse doing hundreds of dollars in trade, each buying digital goods, digital content, different things to express yourself, whether it’s clothing for your avatar or other digital goods for your virtual home. . or things to decorate your virtual conference room, utilities to be able to be more productive in virtual and augmented reality and in the whole metaverse in general,” he said.
Investors cut the company’s market capitalization in half this year as growth slowed and the number of daily active users declined sequentially for the first time in the past two quarters. Zuckerberg has increasingly been steering the company toward what he sees as the next generation of content, a virtual world where people can buy and sell digital clothing and other goods for avatars that can communicate with each other. The company’s ticker symbol changed from FB, a relic of its history as a pure social media provider, to META earlier this month.
But the company’s investment in augmented reality and virtual reality dates back to 2014, when it paid $2 billion for headset maker Oculus VR. Headset shipments haven’t outnumbered PC or smartphone shipments. Zuckerberg expressed optimism about the performance of his current-gen Meta Quest 2, which starts at $299.
“Quest 2 has been a success,” Zuckerberg told the “Mad Money” host.
“I’m very happy with the way it’s gone. It’s exceeded my expectations. But I still think it’s going to take a while to get to the scale of several hundred million or even billions of people in the metaverse, just because things take a while.” time to get there. So that’s the North Star. I think we’ll get there. But, you know, the other services that we operate are already on a somewhat larger scale today.”
Experiences in the metaverse can be more immersive than text, photos or videos, which are ubiquitous on Meta’s Facebook and Instagram, so it will be a big theme for Meta for the next decade, Zuckerberg said.
Zuckerberg met Cramer in the metaverse. The Facebook co-founder said such experiences can foster a sense of togetherness, even if people are physically on the other side of the country. He said it is possible to make eye contact, which is not guaranteed in video calls, and to use spatial audio that allows for quiet side conversations.
The technology “basically adds up to make it provide this realistic sense of presence,” he said.
Bringing that to customers for years to come will require Meta to launch a stack of hardware, software, and experiences.
“We’re at this point, you know, a company that can afford to make huge long-term research investments, and this is a great approach,” he said.
He expects the economy around the metaverse to be massive, he said.
Meta Platforms had 3.64 billion monthly active people on its app family in the first quarter, up 6% year over year. WhatsApp hit 2 billion users in 2020, and it’s also an area where Zuckerberg sees potential for growth.
“You know, our playbook over time has been to build services, try to serve as many people as possible, you know, bring our services to a billion, two billion, three billion people, and then we basically scaled the monetization after that.” Zuckerberg said. “And we’ve done it with Facebook and Instagram. WhatsApp will really be the next chapter, with business messaging and commerce being a big thing there.”
AI making recommendations, similar to TikTok
In addition to its metaverse spending, Meta is investing heavily in developing artificial intelligence, which can power advertising – the source of about 97% of revenue – and the company’s existing apps, Zuckerberg said.
“Basically, we’re going from having most of the content that you see on Facebook and Instagram coming from your friend or follower graph, to now, you know, over time, more and more of that content is coming from AI recommendations.” Zuckerberg said. “And as the AI recommendations get better, you get access to, you know, not just the content of the people you follow, but the entire universe of content out there.”
It’s a concept that TikTok, owned by China’s ByteDance, used to propel itself to billion monthly active users. Meta sought to respond to rapid growth with the introduction of its Instagram Reels feature in 2020. Reels account for more than a fifth of the time people spend on Instagram, Zuckerberg told analysts on Meta’s first-quarter earnings call in april. He now hopes AI improvements will make Reels more engaging for Instagram users.
“Our AI system can choose based on what it knows about you and what you’ll personally be interested in and learn about, what you want to see,” he said. “So as we get better at that, our engineers push improvements to the models every week. We check something and the relevance goes up by a few percent. And then we iterate and do that the next week. And, you know, this is just a A big part of what I’ve always focused on running this company is getting the speed really fast so we can continue to make rapid improvements on this.”
Meta is also investing in AI hardware, along with other big tech companies like Alphabet and Microsoft.
“We just brought online the AI research supercluster, which, you know, we think will be the fastest AI supercomputer when it’s fully built later this year, so our researchers can build new and bigger models to make ranking and recommendations through our social media services and ads better.
The company will reduce its investment in AI in the event of a recession, Zuckerberg said.
Comments on Sandberg’s departure
Zuckerberg answered questions about the departure of Sheryl Sandberg, the company’s chief operating officer. Sandberg built Facebook’s advertising business, making its 2012 IPO possible. The Wall Street Journal reported that she left after Meta began a review of her use of company resources for wedding planning. A spokesperson for Meta told the newspaper that Sandberg’s internal investigations had nothing to do with her decision to resign from her.
“I don’t think anything that has been reported has contributed to her leaving the company,” Zuckerberg said. “Of course, you would have to ask her about that. But what I can say is that I have nothing but gratitude for the incredible work she has done at the company. She will remain on our board. She is a key person.” She is a close friend.”
— CNBC’s Jonathan Vanian contributed to this report.
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