Meta exhaustingly tries to merge the metaverse and AI

With each Meta earnings call comes a new challenge: How many times the company can say AI. On its latest earnings call, the company and investors mentioned “AI” a record 100 times. “Metaverse,” the virtual reality endeavor that prompted the company to change its name from Facebook to Meta, only surfaced four times. A few years ago these terms enjoyed equal frequency.

Talk of the Metaverse has come to have a distinctly bad effect on the stock price, as investors worry it’s an expensive a road to nowhere. AI on the other hand, has generally been catnip to them (even if it too ultimately ends up being an expensive road to nowhere). Hence the pivot to talking about AI instead of the Metaverse.

This time, though, copious mentions of the tech buzzword didn’t seem to enthrall Wall Street, which instead focused on the company’s growing capital spending. The stock was down more than 15% after hours.

Perhaps, though, investors didn’t quite buy what founder and CEO Mark Zuckerberg was trying to sell. During the earnings call Zuck tried to thread a strange needle. He mentioned that both the Metaverse and AI are part of the company’s longterm focus. He also tried to make them seem like they’re working together.

“In addition to our work on AI, our other long term focus is the metaverse. It's been interesting to see how these two themes have come together,” he said. “This is clearest when you look at glasses.”

Here Zuck referred to Meta’s Ray-Bans, which the company announced last week now include Meta AI with Vision, which lets you ask your glasses what you’re seeing — Alexa for glasses on the go.

I used to think that AR glasses wouldn't really be a mainstream product until we had full holographic displays — and I still think that will be awesome and is mature state of the product. But now it seems pretty clear that there's also a meaningful market for fashionable AI glasses without a display. Glasses are the ideal device for an AI assistant because you can let them see what you see and hear what you hear, so they have full context on what's going on around you as they help you with whatever you're trying to do

It seems he considers such AI-assisted glasses to be augmented reality and a stepping stone on the way to virtual reality.

It does bear repeating that this man runs a social network that has a very successful advertising business. That’s what the company is. The whole holograms in glasses thing, it’s all likely a pipe dream.

Reality Labs, the division formed with the Meta rebranding that focusses on the Oculus VR headsets, the gateway to the Metaverse, is also working on AI.

One strategy dynamic that I've been reflecting on is that an increasing amount of our Reality Labs work is going towards serving our AI efforts. We currently report on our financials as if Family of Apps and Reality Labs were two completely separate businesses, but strategically I think of them as fundamentally the same business with the vision of Reality Labs to build the next generation of computing platforms in large part so that way we can build the best apps and experiences on top of them. Over time, we'll need to find better ways to articulate the value that’s generated here across both segments so it doesn't just seem like our hardware costs increase as our glasses ecosystem scales but all the value flows to a different segment.

Sure.

During the Q&A, Bank of America analyst Justin Post asked, “Is there any way you could kind of use some of the Metaverse spend over into AI?”

Zuckerberg, I think, said no:

[O]n on the question of shifting resources from other parts of the company. I would say broadly, we actually are doing that in a lot of places in terms of shifting resources from other areas, whether it's compute resources or different things in order to advance the AI efforts. For Reality Labs specifically, I'm still really optimistic about building these new computing platforms long term. I mentioned in my remarks up front, that one of the bigger areas that we're investing in Reality Labs is glasses. We think that that's going to be a really important platform for the future. Our outlook for that, I think, has improved quite a bit because previously we thought that that would need to wait until we have these full holographic displays to be a large market. And now we're a lot more focused on the glasses that we're delivering in partnership with Ray-Ban, which I think are going really well. And so that, I think, has the ability to be a pretty meaningful and growing platform sooner than I would have expected. So it is true that more of the Reality Labs work, like I said, is sort of focused on the AI goals as well. But I still think that we should focus on building these long-term platforms, too.

On one hand, this could be the meandering talk of an executive that has lost track of what exactly the money he makes comes from.

On the other, maybe it’s the rest of us who can’t understand why the metaverse (whatever that is) fueled by AI (whatever that is) will change the way an advertising company makes money.