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.
“We hope to basically get to about a billion people in the metaverse making hundreds of dollars in commerce, each buying digital goods, digital content, different things to express themselves, so whether it’s clothing for your avatar or different 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 the whole metaverse in general,” he said.
Investors have halved the company’s market capitalization this year as growth slowed and the number of daily active users declined sequentially for the first time between the past two quarters. Zuckerberg has increasingly steered the company towards what he sees as the next generation of content, a virtual world where people can buy and sell digital goods to avatars who can communicate with each other. The company’s 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 have not surpassed PC or smartphone shipments. Zuckerberg expressed optimism about the performance of his current-generation Meta Quest 2, which starts at $299.
“Quest 2 was a success,” Zuckerberg told the “Mad Money” host.
“I was really happy with how it turned out. It 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 some time to get there. So that’s the North Star. I think we’ll get there. But, you know, the other services that we run are already on a slightly larger scale today.”
Metaverse experiences can be more immersive than texts, photos or videos, which are pervasive on Meta’s Facebook and Instagram, and so will be a big theme for Meta over the next decade, Zuckerberg said.
Zuckerberg met Cramer in the metaverse. The Facebook co-founder said these experiences can foster a sense of being together, even if people are physically across 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 silent side conversations.
The technology “basically contributes to providing this realistic sense of presence,” he said.
Bringing this to customers over the next few years will require Meta to roll out a stack of hardware, software and experiences.
“We’re at this point, you know, a company that can afford to make some big investments in long-term research, and that’s a big focus,” he said.
He expects the economy around the metaverse to be huge, he said.
Meta Platforms had 3.64 billion monthly active people in its family of apps in Q1, up 6% year-over-year. WhatsApp reached 2 billion users in 2020 and is 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, take our services to a billion, two billion, three billion people, and then basically we scale the monetization after that.” , said Zuckerberg. “And we’ve done that with Facebook and Instagram. WhatsApp is really going to be the next chapter, with business and commerce messaging being a big thing there.”
AI making recommendations, similar to TikTok
In addition to its spending in the metaverse, Meta is investing heavily in the development of artificial intelligence, which can bolster advertising — the source of about 97% of revenue — and the company’s existing apps, Zuckerberg said.
“Basically, we’re moving from having most of the content you see on Facebook and Instagram coming from your friend or follower graph, to now, you know, over time, having more and more content coming from AI recommendations.” said Zuckerberg. “And as AI recommendations get better, you get access to, you know, not just the content of the people you follow, but the whole universe of content out there.”
It’s a concept that TikTok, owned by China’s ByteDance, used to propel itself to one billion monthly active users. Meta sought to respond to rapid growth with the introduction of Instagram’s Reels feature in 2020. Reels represent more than a fifth of the time people spend on Instagram, Zuckerberg told analysts on Meta’s first-quarter earnings call in April. Now he hopes that AI enhancements will make Reels more attractive to Instagram users.
“Our AI system can choose based on what it knows about you and what you personally are going to be interested in and learn, what you want to see,” he said. “So as we get better at that, our engineers are pushing improvements to the models every week. We check something and, you know, the relevance goes up a few percent. And then we repeat and do that the next week. And, you know, that It’s just a big part of what I’ve always focused on running this company, is getting the speed really fast, so we can keep making quick improvements on that.”
Meta is also investing in AI hardware, alongside other big tech companies such as Alphabet and Microsoft.
“We’ve just brought the AI research supercluster online, which, you know, we believe will be the fastest AI supercomputer when it’s fully built later this year, so our researchers can build new and bigger models to do the ranking and recommendations on our social media and advertising services better.”
The company will decrease its investment in AI in the event of a recession, Zuckerberg said.
Comments on Sandberg’s departure
Zuckerberg addressed questions about the departure of Sheryl Sandberg, the company’s chief operating officer. Sandberg built Facebook’s advertising business, making its 2012 initial public offering possible. The Wall Street Journal reported that she left after Meta began reviewing her use of the company’s resources for wedding planning. A spokesperson for Meta told the paper that Sandberg’s internal investigations had nothing to do with her choice to step down.
“I don’t think anything that was reported contributed to her leaving the company,” Zuckerberg said. “Of course, you’d have to ask her about it. But what I can say is that I have nothing but gratitude for the incredible work she’s done at the company. She will remain on our board. She’s a key person. close friend.”
— CNBC’s Jonathan Vanian contributed to this report.
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