Facebook spent billions to buy the metaverse

In those Lots of complaints about Facebook, one passes constantly: It’s just too big. That’s why some critics and regulators want to make it smaller by forcing Mark Zuckerberg to unwind on big acquisitions, like Instagram.

Zuckerberg’s response: Let’s grow by buying more things.

After slowing down for a while in 2018, the year the Cambridge Analytica scandal erupted, Facebook continues to make huge claims-at least 21 in the past three years, per Pitchbook’s data service.

Many of the deals have been announced since December 2020, when the U.S. government first filed an antitrust lawsuit against the company, accusing it of maintaining an illegal social networking monopoly by buying or crushing competitors. The original suit and a revised complaint aimed at forcing Facebook to remove itself from Instagram and WhatsApp.

For the past couple of years, Facebook’s appetite for deals has run from root Giphy, which allows you to put funny GIFs in your social media posts, at customers, a business software company for Facebook corporate clients. Most of them, however, are concentrated in one area: games and virtual reality. Reasonably, since Zuckerberg formally announced that game and virtual reality, combined with the broad and hard-to-define rubric of “the metaverse, ”Is the future of Facebook.

So the company name was changed to Meta. But more important is a promise that Facebook will mobilize thousands of its employees into the effort, and plans to lose $ 10 billion of it this year alone, and many more ”for the next few years. ”

The day after Facebook announced the name change, the company illustrated how some of that money was spent: a deal to buy Inside, the company co-founded by VR pioneer Chris Milk, is best known for it Beyond nature exercise app. People familiar with the transaction say Facebook paid more than $ 500 million for the company.

Other Metaverse-y deals announced this year include Unit Games 2, creating a “collaborative game creation platform” called Crayta; Bigbox VR, which created a popular game for Oculus VR goggles on Facebook; and Interactive rain, another VR game-maker.

Those are deals the eyebrow was raised before Facebook formally announced that they represented the future of the company. So what should we think of them now?

That is: If you think 2021 Facebook should be dismantled, in part to undo deals from the past like Instagram ($ 1 billion, 2012) and WhatsApp ($ 19 billion, 2014), then don’t you also should worry about the deals Zuckerberg is making now to build the 2031 version of his company?

A Facebook representative was pleased to explain to me the difference: Unlike social networking a decade ago, Facebook is not the leader in virtual reality/augmented reality/choosing a name for it – many big, good capital companies spend a lot of time and money on it. And, as he tries to point out, Zuckerberg envisions a future where Facebook will happen to be one of the many companies in the metaverse.

Here is the on-the-record statement provided by the Recode company explaining the thesis:

“Investing and creating the products that consumers want is the key to success. We can’t do the metaverse alone – the collaboration of developers, creators, and experts can be critical. As we invest in the metaverse, know we know we face stiff competition from companies like Microsoft, Google, Apple, Snap, Sony, Roblox, Epic, and many more at every step of this journey.

Translation: In the near term, Facebook is happy that Snap continues to try to sell sunglasses taking videos and communicating on your phone because those are theoretical competitors Facebook sunglasses taking videos and talking on your phone. And Facebook will be happy next year, too, if Apple is reportedly unveiling its virtual reality headset, because it will compete with Facebook’s Oculus headsets.

But it’s also hard to imagine that Facebook expects Apple, Snap, and everyone to be strong competitors forever. One of the main reasons Zuckerberg is interested in the metaverse, after all, is that he can imagine it would give him a way to directly connect with his customers without having to rely on Apple and Google’s phone duopoly.

Facebook’s acquisition spree also highlighted the difficulty antitrust regulators have in fighting a fast-moving and unpredictable industry. Even the most aggressive antitrust measures we’ve seen in the last few years are designed to turn back time and fix mistakes.

Or they are focused on the present, such as a proposed law to prevent big platforms like Facebook from making big deals in the industries they do at present modominar.

So how do you look to the future and predict that Facebook – not Google or Epic Games or Roblox or a startup you’ve never heard of – will end up dominating the metaverse? Especially without the metaverse, it could exist forever, or it could end up in a form very different from Zuckerberg, science fiction writers, and tech execs and investors who thought it could. now?

I asked the Federal Trade Commission, the agency that is now suing Facebook over the Instagram and WhatsApp deals, what they think of the metaverse ambitions and purchases on Facebook, but I didn’t expect to hear – in part because it wasn’t like the agency. to talk about Facebook as it is in a long war with Facebook, but also because it probably doesn’t know what it thinks.

Here it is worth pointing out that the government does not have to win a lawsuit or pass a law to slow down or stop Facebook’s ambitions. Other tech investors I’ve talked to say they believe Facebook is-temporarily, at least-out of the market for social networking-related claims, simply because there’s too much scrutiny and hassle.

“It feels very difficult for Facebook especially to get anything in the social space,” said an investor who has sold companies on Facebook in the past.

And that could apply not just to big tickets, but even small “acqhires” – deals for bad companies made just to bring their engineers and other staff to Facebook’s payroll.

Washington has already signaled that it wants to pay more attention to small deals: In September, the The FTC released an analysis of 616 transactions made by Facebook, Google, and other major tech companies in the past decade that were not large enough to prompt regulatory oversight.

But the existence of the report makes it clear that regulators think they need to scrutinize more deals, not less. FTC commissioner Rebecca Slaughter made this even clearer: “I think of serial acquisitions as a Pac-Man strategy,” he said when the report was released. “Each individual partnership viewed independently seems to have no significant impact, but the collective impact of hundreds of small claims can lead to a monopolistic nature.”

You can debate whether Facebook has a monopoly on social networking today – the company is happy to point to TikTok’s nearly overnight success to argue that it doesn’t. But there is no question about its immense wealth and power. The real question: Will we allow it to use those resources to expand its power into the future?

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