Entering text into the input field will update the search result below

Why Facebook's Metaverse Might Be A Big Mistake

Oct. 07, 2021 4:44 PM ETMeta Platforms, Inc. (META)CRM, MSFT, ZM60 Comments


  • Facebook had a tough ride this week with its outage and the whistleblower affair, but in this article, I want to focus on the long-term plans of the company.
  • Mark Zuckerberg thinks that in five years, Facebook will be known as "a metaverse company".
  • But their first step in this direction, Horizon Workrooms, looks more like a VR competitor of Zoom than anything else.
  • Even more important, the very idea of the metaverse seems unlikely to rhyme with Facebook's most valuable asset: its social network.
  • Investors in Facebook should take a good hard look at the diversification plans of the company.
Neon city. Futuristic neon skyscrapers background. Business and technology concept. 3d rendering

Дмитрий Ларичев/iStock via Getty Images

Facebook (FB) has been in the news headlines quite a lot during the last couple of weeks. First, whistleblower Frances Haugen claimed that when there were conflicts of interest between Facebook and the public, the company time and time

This article was written by

I am a private investor from the Netherlands in my mid thirties. I have a very long term view and with my own investments I focus on an awkward combination of stable, dividend-paying investments, cryptocurrency, and growth. My favorite holding period is forever, but I am looking for interesting opportunities which might or might not become a success as well. I am writing for Seeking Alpha because I like to share my insights and enjoy the interaction about investing ideas. My writing is mostly about stocks I own, and others I am interested in.I try to approach every possible investment with a great deal of common sense. Every investment has bulls and bears, and I am always searching for a balanced view, which includes aspects of both. I also try to write balanced articles which provide new insights.On the picture you can see my cat, who sadly died a couple of years ago. I like to think that my investing mimics his behavior: most of the time not doing a lot, finding the best places to lie down (enjoying solid dividend-paying investments). But sometimes for a brief period of time he can become very agile and active, just like what I should do when I notice great investing opportunities (though I'm skeptical about market timing).

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (60)

I can see why Zuckerberg, who closely resembles some kind of cyborg, woul like Horizon Workrooms, which reduces people to cartoon figures.
Great news! In the metaverse actual human interaction will be replaced with machine to machine interaction. Humans won’t need to do anything that requires any thought at all. It will be done for you. Awesome!!
The TLDR version of this is "i dont want to use the Metaverse therefore this is a dumb idea"
Dont underestimate the shifting habits of adults. FB used to be a young persons thing and is now for older people. The metaverse will start young and eventually older people will get used to and get hooked. i dont doubt FB ability to create addictive new products..
The Freak profile picture
@KevjustBrowsing it's not a "dumb idea"... its an idea that has too many potentially perverse outcomes that many who have seen the evolution of Fbook and don't like it want to avoid in their own lives. I think it's brilliant... like Fbook was years ago... but it's also not something I'd like to participate in. good luck trying to maintain control of your life / credit / health information / reputation in the future.
MillionsDollarMan profile picture
FB is doomed in the privacy lock that people will use.
if you don’t like it, don’t use it. that goes for YT and Goog and Twit. don’t give an inch, punch back harder.
10 Oct. 2021
Interesting article!

Although VR/AR is just a part of the metaverse I do think it will be the most important. I think if FB is successful at selling an affordable VR headset that is small, lightweight, 120 degree field-of-view with 4K (real-life) like graphics, etc., look out world it will be a game changer. The technology already exist, its just a matter of miniaturizing it and making it affordable. Until this happens VR will not be successful in the metaverse. I think it's highly likely it will happen, but it may not be in 5 years and it may not be by FB, although they are currently in the lead.

The MATRIX is coming and people will be addicted to it. If you think FB/Instagram addiction is bad now, wait until they build the MATRIX.
Thank you for your very informative, excellent article. I learned so much about the Metaverse.
Giesbers Investment Strategy profile picture
@SoCalForever Thanks for your comment!
MillionsDollarMan profile picture
@Giesbers Investment Strategy You're learning what Zuck wants you to learn. Which is brain wash you.
Excellent analysis....I hate FB anyway so I hope you are right. I would never buy stock in a company thats main source of income is instagram which feeds on the insecurities of pre teenagers.
The Freak profile picture
@RB Gambler99 I hate fbook also but Instagram isn't their main source of income.
Giesbers Investment Strategy profile picture
@RB Gambler99 Thanks for your comment. I also do not like most of their applications (except Whatsapp, I use it every day), but in a sound financial analysis your opinion about the company should be irrelevant.
Mark Zuckerberg...aka Pollyanna. Good luck with that.
I can't wait to see how this ruins peoples lives.
Zuckerberg is the least useful billionaire, at least Bezos and Elon make something.
Your data and your time are the products Facebook sells.
Have it ever occurred to you that maybe it’s you not getting the idea of metaverse instead of Zack?
Gary J is Rich on AMZN profile picture
@D.Huang Who is Zack?
Giesbers Investment Strategy profile picture
@D.Huang I can interpret this as almost a philosophical question, but yes I always try to question my own ideas. I do think Zuckerberg knows a lot about the metaverse (likely much more than I do), but I think he is naive in assuming that Facebook can build it by itself, top-down. Also, with a lot of his ideas, he's quite late to the party.
Moats and Income profile picture
First, what’s the estimate % of customers that want to detach from reality for hours each day?current FB and Instagram can be used/shared while in reality.

Second, it’s one thing to read a disparaging reply to a FB or Instagram post…it’s another to put on VR glasses and have a mob surround you, yelling at you and doing whatever else negative is allowed in the metaverse game…it will happen…this approach carries an unlimited amount of damaging baggage it’s not worth the effort. Will be much more disturbing to customers than a nasty text-based message..

Mark Z needs to extend Oculus where it can win more…better games and live sporting events…figure out a way to place customers virtually into a live stadium (or concert) and they’ll pay a premium..
Investing For The Future profile picture
@jmerlo Those are some really good points I personally had not considered... yes, the potential for abuse of the technology in a virtual reality environment is immense. Personally, I do not trust Facebook at its current capabilities to be able to effectively moderate such events. Perhaps management will improve and then people will have more confidence in the company and its ability to step up to the challenge / opportunity.
Moats and Income profile picture
@Investing For The Future yes, and if FB tries to tighten the Metaverse behavioral screws too tight, it will be more dull than reality - so there’s really no win..

Alternately, figure out a way to get me to a Premier league match and I’ll pay a kings ransom..:)
Investing For The Future profile picture
@jmerlo It's certainly a very tricky and complex situation for any new company to navigate. An unknown industry and technological revolution with a huge multitude of risks. Fortunes will be made and lost. The question is by who.
The Freak profile picture
Good piece, author.
One look at how this could shake out... with a positive spin:

San Junipero https://g.co/kgs/f6C3jM

Aaaand another... with a decidedly different outcome:

15 Million Merits https://g.co/kgs/Q7ZmRH

Several from the Black Mirror series address the idea of metaverse. People under 30 who are likely to literally fall into the next Facebook thing without thinking critically about how they got there should really check theyself before they wreck theyself... and everyone else in the process. The service that Fbook announced halting temporary just today - having to do with "background scoring" - is just too close to 15 Million Merits for me to ever consider opting in. Unfortunately, when Fbook and Suckerberg position it to the enterprise buyer as a productivity tool (I work in banking) what choice will I have?? My disposition re the topic isn't new and isn't at all political. I voted for Biden... and as a 45 year old city-dweller I'm proud to say I've NEVER established a fbook profile as I never felt the medium was genuine or productive for anyone with a life they were engaged in. Small victory lap taken...
Good piece.
Giesbers Investment Strategy profile picture
@The Freak Thank you for your comment. I love Black Mirror, I watched all the episodes and some of them more than once. I even thought about using some of their episodes as an example instead of the movies (The Entire History of You or Crocodile would also be good ones), but I thought the movies were probably more well known.
You are right that 15 million merits seems in the possible realm of how Facebook would implement a metaverse (of course they would probably have more checks and balances than in the series, but still).
The Freak profile picture
@Giesbers Investment Strategy thx for the discussion 👍🏼
VR headsets are nearly where the iPhone was in 2008. Very-impressive, game-changing technology, but people weren't yet sure where it was headed, much less what games it would change. I agree Horizon falls far short of all that a mature metaverse can offer, but the question I have is, "Who else out there is closer?" For anyone curious about the space, I certainly recommend picking up a Quest 2. $300 is peanuts to pay for real-world (I recognize the irony of the phrasing), hands-on investment research. It's actually pretty fun, to boot.
Giesbers Investment Strategy profile picture
@exufficio A couple of years ago I used an Oculus Rift at a previous job where we would use this technology to create trial versions of haptic simulations (for a simulator), and it is quite cool! You are probably right that Facebook likely is ahead of its game concerning VR, but VR only is not going to be the metaverse.
@Giesbers Investment Strategy I'm interested to see the extent to which 'the oculus store' yields margins for being the largest marketplace for VR apps, whether they be VR-only/games (which I agree is but a limited subset of the MV) or branching out into AR apps to interface with the IoT, for example. Currently, the pass-thru video is too low quality for sustained use, but that is only a matter of tech&time.
Why would anyone want be in a metaverse where some arrogant pricks get to filter what you see, read or say.
@tlapp - This is why it's not going to work for FB. A decentralized version where all people of all beliefs are welcome without being discriminated against will have a significant competitive advantage. FB is also WAAY behind the power curve of what is being created elsewhere. The metaverse is being created in the crypto ecosystem. Things like Decentraland already have live concerts and live art shows that you can attend, have casinos that you can gamble at, and our building out more and more experiences to attract users.

Decentraland is just one of many metaverse ecosystems that is being built in the crypto ecosystem. There are several others.

While i find my oculus fun to use on occasions, it is just the beginning of the technology. Also, everything that is fun to do on it is not built by FB. Unless FB plans to be the AAPL of AR/VR headsets, I don't know what it is doing in the space, and agree with the author on his assessment.
Giesbers Investment Strategy profile picture
@tlapp Well, there are still people on Facebook or Instagram..
Doc 224899 profile picture
I don't want the ideology thugs at Facebook cancelling the true history of everything, just to validate a temporary anomaly in academic narratives that has been imposed upon us by a small minority of individuals with severe personality disorders.
The Freak profile picture
@Doc 224899 great comment 💥
@Doc 224899 Senior ------WELL SAID--------BUT sadly this is not temporary-------the "Cultural Marxists" have breached the gates and there is NO turning back. Just sit back and enjoy the ride over the next 15 years because there will be a reckoning for sure!!
@kevinconnolly - I have more faith in humanity than you do apparently. The more the Woke Marxists open their mouths and say what they actually believe the more every day folks, who aren't paying attention, will have to realize who these people are and what they actually believe.

They will be studied and regarded by future generations similar to others, such as the Klan, who also advocated for treating people differently based on the color of their skin or sexual orientation. Their children will be even more embarrassed as there will be detailed records, and the internet will have records of what all of these people said and did. Last names will be changed to escape the shame.
If are looking for reasons to sow doubt - just fixate on a metaverse with a lousy user experience with the examples you posted.

FB has 10,000 very smart people working on their metaverse.

The reason I believe FB could be successful is
(1) They can start small and quickly get massive feedback to improve the product. Think about where FB was 15 years ago and how much FB has improved because of user feedback.
(2) FB has massive financial resources which will enable them to power through many failures and wrong turns.

With Mark at the helm, they stand a good chance of being able to pull it off - but it's not guaranteed, and it could go wrong for them.
@SeeAroundTheCorner actually there is only one team working on it, the marketing one.
Doc 224899 profile picture

They only listen to a small minority of the feedback they get, and cancel the rest.

They discourage most of the mature, conservative feedback they might get from those with impressive academic and professional achievements.

For me (3 degrees from an Ivy League University), my attitude has become "Why bother?"
@Doc 224899 are your degrees in accounting?
Investing For The Future profile picture
@Giesbers Investment Strategy Thank you for the call-out and for your excellent article! Very well researched, eloquently written, and presented in a way that does not bash FB yet nonetheless alerts investors to the need to be watchful of the CEO's vision and FB's diversification efforts into the Metaverse.

I honestly don't understand FB's marketing strategy for investors... a lot of it appears to be focused on generating as much hype as possible about the company's future products, before they are even fully developed, released or tested.

I rolled my eyes when I read FB's Q2 2021 FY Earnings transcript because so much that FB announced is already standard business practice for many leading SaaS firms. E-commerce? Creator economy? The next computing platform?

How is any of this new? Innovation and product feature improvements to FB's existing social networks / platforms, sure, but what is the probability of outright success against many other incumbent S&P 500 leaders in these areas?

How many would choose Facebook over Adobe as a creator? Or even Apple / Google?

How many would choose Facebook over Amazon, Google, Alibaba, Target, Walmart, Adobe, Shopify, and countless other e-commerce companies?

How many would choose Facebook over Amazon, Microsoft, Google, Snowflake, Palantir, or other computing platforms / digital lakehouses?
@Investing For The Future all I'm gonna say is, QVC reloaded combined with a creator economy and Facebook is the curator using its network and user data to not only advertise the product but sell it directly to you. Making its share of the profit even bigger. The video is streaming and with one click you bought it directly out of the video. Beating Amazon's one click.
Investing For The Future profile picture
@Daniel San Hey! Thank you for your comment and for engaging with helpful / relevant commentary. It is much appreciated.

While I can see some people purchasing products this way, I think most prefer to still use a website / not time sensitive platform for purchasing decisions?

What you propose would seem to require a user to make a split second decision to purchase a product while the video is streaming, correct? Or otherwise pause the video to go research the product more?

Most people usually research a product or groups of products before making a purchasing decision, at least based on my observations.
Gary J is Rich on AMZN profile picture
@Daniel San

Except Amazon already has this.
Investing For The Future profile picture
Best comment ever:

"Well, Mark, I hate to pop your bubble, but this already happened. In 2020. And with tools other than Horizon Workrooms. The application seems to answer a customer need that is already being met by video conference calls, just not in VR yet."
@Investing For The Future anything that involves wearing a cumbersome headset will be a niche product, until they can figure out a jack direct into the optic nerve (Musk?)
Investing For The Future profile picture
@Edison Ford In the future it is augmented reality, not virtual reality, that will most likely win out. Sleek augmented reality glasses with the following use cases (once refined to the point of mass production):

1. Ability to use "eye tracking" to allow the user to surf the web, pick options, "click" buttons, etc. Certainly people won't especially want to use a paired product of glasses and "wrist watch" unless absolutely necessary. Internet connectivity is a must, obviously.

2. Real-time useful advertisement / selection options. For example, if you're driving into a new town and you're hungry / want hotels, reliable options should be suggested "on demand" or gently pushed. Any advertisements will need to be very, very carefully curated and not overly pushy or overwhelming.

3. Ability to call / video chat if possible, which will be difficult to implement, but not impossible. Calling at a minimum will be an option. Texting might becoming more difficult, so use cases / alternatives will need to be thought off. Probably voice-commanded speech recognition to dictate messages.

4. Computing / analytic features that allow the glasses the perform at least basic computing functions and run sophisticated enough algorithms to accommodate all the various applications / features / use cases we have with smartphones or even some tablet computers.

5. Navigation features would be very helpful, in any situation. This alone would be immense (hard and annoying to use a phone to navigate while on foot or bicycle, glasses would solve this challenge).

6. Digital security and privacy will be paramount. Eye recognition / retina software would need to be installed to preclude others from using or hacking your device (unless you "open" it and let them test / use it). Any online / internet activity would need to be anonymized if possible and secure, inclusive of any digital transactions, of course.

7. Sunglass / tinting features would be lovely. For example, in the dark, if the glasses can make it easier to see - big feature! If it's sunny, if the glasses can adjust to the optimal frequency / wavelength of light to make it comfortable for the user - another amazing feature!

8. Foldable design if possible - e.g. to prevent unnecessary damage - the glasses must not be so fragile as to easily break considering the likely user cost and must be able to be folded or tucked away easily and safely to carry in one's pocket, perhaps.

9. The battery must be small enough not to weigh down the entire set and should be rechargeable, preferably magnetically / wirelessly.

10. Must function despite extreme temperatures, which will be very, very tricky.
The Freak profile picture
@Edison Ford I hate to be a broken record here buuut...

The Entire History of You https://g.co/kgs/VxAbYD

If you haven't seen this,it's some of the best TV produced in 20 years.
Gary J is Rich on AMZN profile picture
Besides in person there is my version of the metaverse - telephone, messaging and conferencing. All are real time and all I need and want when not in person.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About META

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on META

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.