Meta’s $42 Billion Loss on Reality Labs is Marie Antoinette Moment for Tech

If the guillotine ever makes a comeback it will most likely be used on people who buy MR headsets because, obviously, they don’t need their heads. Meta’s Reality Labs, which focuses on developing VR and AR technologies for the metaverse, reported over $1 billion in sales for the fourth quarter or 2023. Despite this revenue, the unit experienced a significant operating loss of $4.65 billion, which exceeded analysts’ expectations of a $4.26 billion loss. This loss marks the unit’s largest to date and contributes to a cumulative loss of more than $42 billion since the end of 2020. The revenue Reality Labs generated was higher than analysts had predicted, with forecasts around $768.2 million.

Despite the financial losses, Meta remains committed to its vision for the metaverse, viewing it as the “next frontier” and a successor to the mobile internet. The company expects operating losses to increase as it continues to develop products in AR/VR and invests in scaling its ecosystem.

So, is the new paradigm for giant tech companies one in which the company that can afford to lose the most money on AR/VR, and still make enormous profits elsewhere, is the best or toughest around? It’s unlikely that Apple is going to have as greater a loss on the Vision Pro but it is definitely a battle of microdisplay technologies as loss leaders. For what is anyone’s guess. Nevertheless, both Apple and Meta are selling a couple of billion dollars worth of hardware with integral microdisplay technologies and that’s going to consume the focus of startups and established players like Samsung on supplying to whatever AR/VR follies are being conjured up by both companies.

Imagine what could have been achieved in display technology if a fraction of Reality Labs’ losses had been invested in microdisplay startups. Now that would have been something. As it stands, the best that microdisplay startups can hope for is crumbs from the table. Let them eat cake.