Facebook spends billions to buy the metaverse

subordinate Lots of complaints on Facebook, one comes up constantly: it’s too big. Which is why some critics and regulators want to make it smaller by forcing Mark Zuckerberg to pull back from major acquisitions, such as Instagram.

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

After slowing down briefly in 2018, the year the Cambridge Analytica scandal broke, Facebook has been making steadily large acquisitions — at least 21 in the past three years, per the Pitchbook data service.

Several deals have been announced since December 2020, when the US government first filed an antitrust lawsuit against the company, accusing it of maintaining an illegal monopoly in social networks by buying or crushing competitors. original suit and revised complaint It aims to force Facebook to strip itself from Instagram and WhatsApp.

In the past two years, Facebook’s appetite for deals has spread far and wide cadaverous, which allows you to put funny GIFs in your social media posts, to Client, a business software company for Facebook corporate clients. However, most of them focus on one area: gaming and virtual reality. Which makes sense, given that Zuckerberg has officially announced that gaming, and virtual reality, are bundled into an overarching and hard-to-define title.metaverseIt is the future of Facebook.

Hence the name of the company was changed to Meta. But more important is the promise that Facebook will transfer thousands of its employees to the effort, plans to lose $10 billion this year alone, and much more.”Over the next several years. ”

The day after Facebook announced the name change, the company explained how it would spend some of that money: a Deal to buy inside, the company co-founded by VR pioneer Chris Milk, is best known for its supernatural workout application. People familiar with the deal say Facebook paid more than $500 million to the company.

Other Metaverse-y deals announced this year include second unit games, which makes a “cooperative game creation platform” called Kraita; Bigbox VR, which makes a popular game for Facebook’s Oculus VR glasses; And interactive precipitationAnother VR game maker.

Those were the deals Eyebrows already raised Before Facebook officially announced that they represented the future of the company. So what should we think about now?

This is it: If you think Facebook 2021 needs to break up, in part to undo deals from the past like Instagram ($1 billion, 2012) and WhatsApp ($19 billion, 2014), you also shouldn’t worry about deals Zuckerberg is now building a copy 2031 of his company?

The Facebook representative was happy to explain the difference to me: Unlike social networks a decade ago, Facebook was not the pioneer in virtual/augmented reality/choose a name for it – a lot of large, well-capitalized companies spend a lot of time and money on it. As Zuckerberg explained, he envisions a future in which Facebook simply happens to be one of several companies in the metaverse.

Here is the recorded statement the company provided to Recode explaining the thesis:

“Investing in and building the products that consumers want is the key to success. We cannot build the metaverse on our own – collaborating with developers, creators and experts will be critical. As we invest in the metaverse, we know we face fierce competition from companies like Microsoft, Google, Apple, Snap and Sony. And Roblox, Epic, and many other companies are at every step of this journey.”

Translation: in the near term, Facebook happy who – which Snap keeps trying to sell sunglasses that takes videos and communicates with your phone because these are theoretical competitors to Facebook sunglasses that takes videos and communicates with your phone. And Facebook will also be happy next year, when It is said that Apple will unveil its own virtual reality glassesBecause it will compete with Facebook’s Oculus headphones.

But it’s also hard to imagine Facebook hoping that Apple, Snap, and everyone else will forever be strong competitors. One of the main reasons Zuckerberg is interested in metaverses, after all, is that he imagines it can give him a way to communicate directly with his customers without having to rely on Apple’s phone monopoly and Google.

Facebook’s acquisition spree also highlights the difficulty antitrust regulators face in the face of a fast-moving and unpredictable industry. Even the toughest antitrust measures we’ve seen in the past few years are designed to go back in time and fix supposed bugs.

Or they focus on the present, like a Proposed law It would prevent big platforms like Facebook from making big deals in the industries they do currently dominate.

So how do you look into the future and guess that Facebook – not Google, Epic Games, Roblox, or a startup you’ve never heard of – will end up dominating the metaverse? Especially when the metaverse doesn’t exist, may never end, or could end up in a completely different form than the Zuckerberg, science fiction writers, tech CEOs and investors imagine that day?

I’ve asked the Federal Trade Commission, the agency that is currently suing Facebook for its Instagram and WhatsApp deals, what they think of Facebook’s convergent ambitions and purchases, but I don’t expect to receive a response—in part because the agency doesn’t want to talk about Facebook while it’s in a long battle with Facebook, but Also because he probably doesn’t know what he’s thinking.

It’s worth noting here that the government doesn’t necessarily have to win a lawsuit or pass a law to slow or stop Facebook’s ambitions. Some tech investors I’ve spoken to say they think Facebook is – temporarily, at least – out of the market for social networking-related acquisitions, simply because there’s been so much scrutiny and hassle.

“It feels like it would be very difficult for Facebook in particular to get anything in the social space,” says one enterprising investor who has sold companies to Facebook in the past.

And that may apply not just to big acquisitions, but even to “small business owners” — deals for disappointing companies made just to get their engineers and other employees onto Facebook’s payroll.

Washington has already indicated that it wants to pay more attention to small deals: in September, it was The FTC released an analysis Of the 616 transactions conducted by Facebook, Google and other major tech companies over the past decade were not large enough to trigger regulatory oversight.

But the report’s presence makes it clear that regulators believe they should scrutinize more deals, not less. FTC Commissioner Rebecca Slaughter put it more clearly: “I think of serial acquisitions as a Pac-Man strategy.” She said when the report was released. “It may not appear that each individual merger looked at independently has a significant impact, but the collective impact of hundreds of small acquisitions can lead to monopolistic behaviour.”

You can debate whether Facebook has a monopoly on social media networks today — the company is happy to point to the nearly overnight success of TikTok to say it isn’t. But there is no question about her immense wealth and power. The real question: Are we going to let it use these resources to expand its power in the future?

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