Mark Zuckerberg sees 1 billion people in the metaverse

Metaplatforms CEO Mark Zuckerberg told CNBC’s Jim Cramer on Wednesday that the metaverse could be a significant part of the social network operator’s business in the second half of the decade.

“We’re actually hoping to reach about a billion people in the metaverse doing hundreds of dollars in commerce, each buying digital goods, digital content, different things to express themselves, so whether that’s clothing for their avatar or different digital goods for their virtual home or things to decorate their virtual conference room, utilities to be more productive in virtual and augmented reality and across the metaverse in general,” he said.

Investors have halved the company’s market cap this year as: growth has slowed and the number of daily active users declined sequentially for the first time between the last two quarters. Zuckerberg is increasingly leading the company into what he sees as the next generation of content, a virtual world where people can buy and sell digital goods for avatars that can interact with each other. The company’s ticker symbol changed from FB, a holdover from 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. Have shipments of headsets cannot be surpassed in number shipments from PCs or smartphones. Zuckerberg expressed optimism about the performance of the current-generation Meta Quest 2, which starts at $299.

“Quest 2 is a hit,” Zuckerberg told the Mad Money host.

“I’m really happy with how that turned out. It’s exceeded my expectations. But I still think it’s going to take a while for it to reach the scale of several hundred million or even billions of people in the metaverse, just because it costs some time to get there. So that’s the North Star. I think we’ll get there. But you know, the other services we offer are already on a slightly larger scale.”

Experiences in the metaverse can be more immersive than text, photos or videos, which are ubiquitous on Meta’s Facebook and Instagram, and 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 when people are physically on the other side of the country. He said it is possible to make eye contact, which is not guaranteed with video calls, and to use spatial audio that allows for quiet side conversations.

The technology “basically comes down to giving this realistic sense of presence,” he said.

To bring that to customers in the coming years, Meta needs to release a ton of hardware, software, and experiences.

“We’re right now, you know, a company that can afford to make some big long-term research investments, and this is 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 applications in the first quarter, an increase of 6% year-on-year. WhatsApp reached 2 billion users in 2020, and it’s also an area where Zuckerberg sees growth potential.

“You know, our playbook is services built over time, 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 scale the revenue up after that.” ,” said Zuckerberg. “And we’ve done that with Facebook and Instagram. WhatsApp is really going to be the next chapter, with business messaging and commerce there.”

AI makes recommendations, similar to TikTok

In addition to its metaverse spending, Meta is investing heavily in developing artificial intelligence, which can amplify advertising — the source of about 97% of revenue — and the company’s existing applications, Zuckerberg said.

“We’re basically moving from the fact that most of the content you see on Facebook and Instagram comes from your friend or follows the chart, to now, you know, over time, more and more of that content alone. comes from AI recommendations,” said Zuckerberg. “And as the AI ​​recommendations get better, you get to access, 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 ByteDance in China, propelled itself towards one billion monthly active users† Meta tried to capitalize on the rapid growth with the introduction of its Instagram Roles Feature in 2020. Reels will account for more than a fifth of the time people spend on Instagram, Zuckerberg told analysts about Meta’s first-quarter earnings call in April. Now he expects AI improvements to make Reels more appealing to Instagram users.

“Our AI system can choose based on what it knows about you and what you’re personally interested in and learning, what you want to see,” he said. “So as we get better at that, you know, our engineers make 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, this is just a big part of what I’ve always focused on running this business, getting the speed really fast so we can keep making quick improvements in this.”

Meta is also investing in hardware for AI, in addition to other major tech companies, such as Alphabet and Microsoft

“We just brought online the AI ​​research supercluster, which we believe will be the fastest AI supercomputer when fully deployed later this year, allowing our researchers to build new and larger models to match both the rankings and recommendations in our social media services and advertising better.”

The company will slow its investments in AI in the event of a recession, Zuckerberg said.

Notes on Sandberg’s departure

Zuckerberg answered questions about the departure from Sheryl Sandberg, the company’s chief of operations. Sandberg built Facebook’s advertising business, enabling the 2012 IPO. The Wall Street Journal reported that she left after Meta began an assessment of her use of company resources for wedding planning. A Meta spokesperson told the paper that Sandberg’s internal investigations had nothing to do with her choice to resign.

“I don’t think the things that were reported contributed to her leaving the company,” Zuckerberg said. “Of course you should ask her. But what I can say is that I have nothing but gratitude for the great work she has done at the company. She will remain on our board. She is a key person. She is a good friend. “

— Jonathan Vanian of CNBC contributed to this report.

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