On its Q1 2022 earnings call Wednesday (April 27), Meta CEO Mark Zuckerberg discussed the current roadblocks and the challenges ahead for the Metaverse and FB's ads business. Meta's first-quarter profits were $7.5 billion, a 21% decrease from the previous year. Revenue increased by 7% to $27.9 billion, the slowest growth rate since the business went public a decade ago. It has reduced its anticipated expense range for 2022 by $3 billion.
While discussing the challenges, Zuckerberg mentioned how the short video format has remained far from monetization and recent IOS updates, including Apple's App Tracking Transparency, caused a loss of $10 billion in revenue. In addition, regulators have thwarted Zuckerberg's capacity to make significant, transformative social media acquisitions that may re-ignite growth.
"I talked last quarter about some of the near-term challenges facing our business. Some are specific to Meta, like our transition to short-form video, which doesn't monetize as well for now but which we're quite optimistic about over the long term." - Mark Zuckerberg, CEO Meta.
"I talked last quarter about some of the near-term challenges facing our business. Some are specific to Meta, like our transition to short-form video, which doesn't monetize as well for now but which we're quite optimistic about over the long term. Some are specific to our industry, like signal loss resulting from Apple's iOS changes, which is a meaningful headwind, but we also expect that with the right technology, investments will navigate OK over time. Other challenges are broader macro trends, like the softness in e-commerce after the acceleration we saw during the pandemic." Mark Zuckerberg, CEO Meta.
Meta COO Sheryl Sandberg further addressed the challenges raised by the privacy regulations.
"We're working with European regulators on these rules. They are largely in the range of what we were expecting, but the final text has not been released yet, and the details on this will matter. But overall, the regulatory environment is a real challenge for our industry. One, we think we are well set up to meet working closely with regulators and doing things in our technology like privacy-enhancing technologies to do more with less data." Sheryl Sandberg, Meta COO.
Zuckerberg mentioned that Meta has prioritized strengthening AI infrastructure, business platform, and Reality Labs by making substantial investments in these areas.
"However, based on the strong revenue growth that we saw in 2021, we kicked off a number of multiyear projects to accelerate some of our longer-term investments, especially in our AI infrastructure, business platform, and Reality Labs. These investments are going to be important for our success and growth over time, so I continue to believe that we should see them through." Zuckerberg said.
Going further Meta's focus will be in the area of personalized advertising. Meta currently is working with advertisers to make the effective utilization of the new landscapes.
"… .we're encouraging partners to integrate with our conversions API to create a direct, reliable, and privacy safe connection between their marketing data and Meta. And we've recently introduced a faster and easier way for SMBs to integrate with it called the Conversions API Gateway."
While commenting more about how Meta is helping advertisers, Zuckerberg talked about streamlining the process by providing "better insights with less data is with conversion modelling", Zuckerberg added, "We're also helping businesses connect directly with customers and grow more on-site data conversions through products like click-to-message ads. This is where you click on an ad on your Facebook or Instagram feed and it opens a chat with the business in Messenger, Instagram Direct, or WhatsApp."
Coming to Metaverse, Meta CEO is very dedicated to this behemoth of the project. Zuckerberg spends billions of dollars every year developing gadgets and software for the Metaverse, a notion he believes will one day be as large as the mobile internet. Meta's Reality Labs subsidiary, which manufactures the Quest VR headset and upcoming AR glasses, employs around 17,000 people and lost nearly $3 billion in the latest quarter alone.
Horizon is one of the early players to get the taste of Metaverse and develop a gateway for the users. Meta is looking forward to launching a web version of Horizon, enabling users to enter the platform without using a VR headset.