Mark Zuckerberg says WhatsApp business chat will boost revenue and downplay billions spent on VR

Meta’s Mark Zuckerberg said WhatsApp and Messenger would drive the company’s sales growth — despite the company having invested at least $36 billion in the metaverse.

In a company-wide meeting on Thursday, he described the two apps as “very early monetizers” compared to the massive cash flow generated by advertising on Facebook and Instagram

The CEO sought to address employee fears and deal with sharp questions a week after the tech giant laid off 11,000 workers.

“We talk a lot about the very long-term opportunities as the metaverse, but the reality is that business messaging is probably going to be the next big pillar of our business as we work to monetize WhatsApp and Messenger more,” he said, according to comments heard by Reuters.

Meta enables some consumers to talk and shop with merchants through the chat apps, including a new feature announced Thursday in Brazil.

His comments are a complete reversal from his focus over the past year on making massive investments in, and publicly touting, the company’s plans for virtual and augmented reality hardware for the metaverse.

The fully digital world that doesn’t yet exist is supposed to be a place where people can shop, live and work one day by accessing it with AR and VR devices — and Zuckerberg has previously said he wants there to be a billion people spending money on digital goods eventually.

Wall Street has questioned the wisdom of that decision as Meta’s core advertising business has struggled this year, halving its share price and prompting some critics to call for Zuckerberg to step aside.

In his comments to employees, Zuckerberg played down how much the company was spending on Reality Labs, the unit responsible for its metaverse investments.

People were Meta’s biggest expense, followed by capital expenditures, the vast majority of which went to infrastructure to support its suite of social media apps, he said. About 20% of Meta’s budget went to Reality Labs.

Within Reality Labs, the entity spent over half its budget on augmented reality (AR), with smart glasses products continuing to appear “over the next few years” and some “really amazing” AR glasses later in the decade, Zuckerberg said.

“This is in some ways the most challenging work … but I also think it’s the most valuable potential part of the work over time,” he said.

Chief Technology Officer Andrew Bosworth, who runs Reality Labs, said AR glasses need to be more useful than mobile phones to appeal to potential customers and meet a higher demand for attractiveness.

Bosworth said he was wary of developing “industrial applications” for the devices, describing it as “niche” and wanted to remain focused on building for a broad audience.

Meta still faces plenty of headwinds in the wake of its first widespread layoffs.

According to documents seen by the Wall Street Journal, Meta is struggling to meet its goals.

The company planned to reach 500,000 users of its virtual reality platform, Horizon Worlds, by the end of 2022. At the time of writing, the number is less than 200,000, still well short of a revised target of 280,000 by the end of 2022.

The documents also reveal that the majority of these 200,000 users do not return after entering the system once, and many complain that most areas are bereft of other users.

These documents also reveal: Since the spring of 2022, the number of users of Horizon Worlds has decreased. Less than ten percent of the worlds in the Metaverse receive more than 50 visitors, and the majority of these worlds receive zero visitors.

The disappointing performance comes as Meta grapples with slowing global economic growth, competition from TikTok, privacy changes from Apple, concerns about massive spending on the metaverse and the ever-present threat of regulation.