Why FB is investing so heavily into VR (if it isn’t obvious by now)

They have no control over the OS right now. iOS (Apple) and Android (Google) can do whatever they want at the OS level.

Without control at the OS level. FB can't do the following:

  • Create an app store and charge 30% for transactions like Apple and Google does
  • Control its own destiny. Right now, Apple and Google control FB's destiny just as much as FB itself does. Ex: Apple deciding to take away app tracking. Android could do it eventually as well because Google now knows less tracking drives more advertisers to Google search.
  • Market its own products and services over Apple and Google's. For example, Youtube is preinstalled on Android and Apple's app store ads compete with FB's.

FB is hellbent on having its own OS and controlling its own destiny in what they think is the next mass-market device: VR.

FB is early in the VR push. It's early because it wants a seat at the table when VR is mature. But being early is expensive and they're not guaranteed to beat Apple, Google, Microsoft, Amazon, or some Chinese/unknown company.

That's why FB is willing to lose $10b/year on VR. Do I think it's the right strategic decision? I don't know. Am I surprised that they're willing to lose $10b/year on VR? Not at all. Not one bit. I think Zuckerberg, with his full control, would drive Meta to bankruptcy before giving up on it.

Additional commentary:

While I think Zuckerberg truly believes in the “metaverse” future, I think the recent push into VR is somewhat fueled by the inability to innovate inside FB. Think about it. When was the last time FB launched a hit app? Whatsapp and Instagram were purchased. The best IG features were copied from Snap (Stories) and Tiktok (Reels). Besides the traditional social media apps, people are also spending more time on other networks like Reddit, Discord, Twitch, Clubhouse. FB can't innovate.

They've built a culture of optimization, not creation. Because of this, they can't make something to capture the attention of the younger generation. As we all know, each generation has its own set of social media apps because kids don't want to use the same social network as their parents. FB will eventually die out because of this lack of innovation. The “metaverse” is kind of like Zuckerberg's hail mary. If he can create a platform, he can be the Apple or Google by controlling the OS. He won't have to worry about a new cool app that steals users away from FB/IG/Whatsapp because that app will be on his own platform.

Let me ask you this: if TikTok was invented by Facebook, would they still go all in on the meta verse right now?

Disclaimer: I don't own any FB stocks. I actually dislike the company a lot and wouldn't buy their stocks out of principle. But it makes total logical sense to me why FB is investing so heavily into VR.


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