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Meta keeps flailing on its hardware projects. Glasses and headsets may be its last chance

June 10, 2022, 4:54 PM UTC

Meta has proven it’s among the best advertising outfits in the world. It’s shown some promise as a software developer.

But as a hardware company? The Facebook parent still has almost everything to prove.

In its pursuit of Apple-type riches, Mark Zuckerberg’s Meta continues to flail as a business that builds actual things, with the latest setbacks arriving this week. 

The Information reported Thursday that Meta “has scaled back its plans to release a series of augmented reality glasses over the next several years,” helping to lower its enormous R&D costs amid an immediate investor push for greater short-term profits. The online news outlet also reported that Meta will halt production of its Portal video-calling hardware, choosing instead to focus on developing conference call–type tools for businesses.

The exclusive followed reports Wednesday that Meta would shelve its work on a smartwatch with two cameras, citing technological hurdles.

For the better part of a decade, Meta has tried and mostly failed at bringing commercially popular hardware to market. Its smartphone bombed spectacularly. Portal never took off. Wearables aren’t yet worn. The company’s most successful hardware, the Oculus/Quest virtual-reality headset, builds off a product originally developed by another company. (Meta acquired Oculus in 2014.)

These failures haven’t rocked Meta’s foundation in the past, the result of superior ad technology and sales that generate 90% of company revenue. But those days are changing, as Fortune’s Jeremy Kahn and Jonathan Vanian detailed Friday

The technology underpinning Meta’s success—the ability to collect and analyze massive amounts of data, then translate that information into microtargeted ads—is under attack. Apple and Alphabet, which own a virtual monopoly on smartphone operating systems, are installing privacy features that make it harder for companies to profit off user data. Policymakers in Europe and the U.S., angered by a rash of Big Tech privacy scandals and anticompetitive practices, are eyeing legal options for harnessing the power of global ad machines. 

At the same time, social media rivals like TikTok are stealing social media market share, prompting a slowdown in Meta’s revenue growth.

Meta officials told Kahn and Vanian that they’re adapting to the times by refining ad practices and developing new features aimed at reigniting buzz around Facebook, Instagram, and WhatsApp. They also remain bullish on the long-term payoff of multibillion-dollar investments in the so-called metaverse, a largely theoretical mix of virtual and augmented reality that likely won’t produce any profits this decade.

“This in a nutshell is Meta’s dilemma: Zuckerberg is trying to drive his company at breakneck speed into the metaverse, but his company’s tires may well run out of tread, if not rupture completely, before it gets there,” Kahn and Vanian wrote. “Even more challenging is that the tech to fully deliver the metaverse doesn’t exist yet.”

In the meantime, Meta could benefit from some much-needed hardware wins. That prospect, however, appears to be dwindling.

As it stands, Meta has nothing on the shelves, short of its Quest VR headset, that owns any significant market share. Meta could try to improve upon popular products, as it attempted to do with its smartwatch efforts, but there’s no evidence to suggest the company has the wherewithal to play catch-up.

The more likely approach involves building off its Quest achievements and charting an augmented glasses future, even with the recent delays. As The Verge reported in April, Meta aims to roll out a few iterations of augmented reality glasses in the next several years, with Zuckerberg envisioning the product as “an iPhone moment.”

Meta faces stiff competition in the AR/VR hardware race, as Apple, Alphabet, Amazon, and others angle to pioneer the market. If Meta can emerge victorious, though, the prize could very well overshadow its history of failure.

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Jacob Carpenter

NEWSWORTHY

Road to recall? Federal transportation officials upgraded a probe into Tesla’s Autopilot driver assistance system Thursday, raising the chances of a recall potentially affecting hundreds of thousands of vehicle owners, the Associated Press reported. The National Highway Traffic Safety Administration said it had converted the inquiry into an engineering analysis—a mandatory step before a recall—after finding several more crashes in which Tesla vehicles hit stationary emergency vehicles, bringing the total number of collisions to 16. Tesla officials have argued in the past that their Autopilot feature makes drivers more safe.

Those pesky Brits. The U.K.’s competition watchdog announced plans Friday to step up inquiries into Apple and Alphabet unit Google, adding to the tech giants’ regulatory headaches abroad, the Wall Street Journal reported. The Competition and Markets Authority said it intends to investigate the power exerted by Apple and Google over web browsers on their respective mobile operating systems. CMA officials also will scrutinize complaints that Apple unfairly controls cloud gaming on its hardware, and review Google’s rules for developers accepting in-app payments in the company’s app store.

No IPO here. Alibaba shares closed down 8% Thursday after the Chinese conglomerate’s financial unit, Ant Group, threw cold water on hopes for an initial public offering, CNBC reported. The prospect of a revived IPO gained steam Thursday after media reports suggested Chinese officials would approve of a public offering, nearly two years after state regulators worked to scuttle the move. However, Alibaba officials said they are focused on mending ties with the Chinese government for now. Alibaba shares were down 1% in midday trading Friday.

Bonded by chips. An unlikely band of Silicon Valley bigwigs is partnering to help the public and private sectors revitalize domestic semiconductor manufacturing, the New York Times reported Thursday. The group, which includes former Google CEO Eric Schmidt and PayPal cofounder Peter Thiel, marks a bipartisan effort to invest in chipmaking companies and lobby legislators to subsidize the industry. The push comes as federal policymakers and semiconductor executives warn that the U.S. has become too dependent on Asian countries for chip manufacturing, which represents an economic and national security threat.

FOOD FOR THOUGHT

Help still wanted. Each day seems to bring a new tech giant scaling back on hiring (this week’s marquee name: Intel). In the bigger picture, though, the tech job market remains surprisingly robust, the Financial Times reported Friday. Data from the nation’s largest recruiters and job-posting companies shows that demand for software developers, engineers, and other high-tech positions still far outpaces supply. While prospective employees might have fewer options on the table—and a handful are seeing offers rescinded—the total tech headcount continues to grow at a steady clip. Longer-term prospects remain a bit murkier, with analysts and executives split on the ultimate depth of the tech industry’s current swoon.

From the article:

Job postings for software developers in the U.S. are up 120% above an early 2020 pre-coronavirus pandemic baseline, according to data from recruitment site Indeed.com. ZipRecruiter, another job listings site, said the number of openings in the tech sector was strong, with about 1.6 jobs for every unemployed person in the industry.

As a result, the tech companies that are hiring are still pulling out the stops, offering signing bonuses and the promise of fully remote work. About 36% of job postings in tech offered the option to work remotely, according to ZipRecruiter, compared with just 12% in 2019.

IN CASE YOU MISSED IT

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“This breaches every principle of human research ethics”: A YouTuber trained an A.I. bot on toxic 4Chan posts then let it loose—and experts aren’t happy, by Sophie Mellor

Disney’s under-pressure CEO just made his biggest power move to date—and it has tanked morale, by Sophie Mellor

Hacker returns about $15 million to Optimism after sending Ethereum cofounder Vitalik Buterin a chunk of the stolen funds, by Taylor Locke

How HP’s board refresh helped lead the company through turbulent times, by Aman Kidwai

Elon Musk wants 80% of Americans to be using Twitter—it’s currently less than 12%, by Belinda Cao, Kurt Wagner, and Bloomberg

NASA is launching a scientific study into the existence of UFOs, by Lindsey Rupp and Bloomberg

BEFORE YOU GO

Bitcoin state of mind. Brooklyn-born Jay-Z is returning to where he’s from, this time with Bitcoin buddy Jack Dorsey by his side. TechCrunch reported Thursday that the crypto-loving duo is helping to host financial education classes—with an emphasis on the digital jungle of Bitcoin—at Marcy Houses, the public-housing complex where Jay-Z grew up. The two have worked together before, with Jay-Z selling a majority stake of his TIDAL music service to Dorsey’s company Block (formerly known as Square). Both also serve as high-profile Bitcoin evangelists, arguing that digital assets offer a path to financial independence for lower-income households. Critics, however, argue that crypto’s volatility makes it an unnecessarily risky proposition for individuals already struggling financially.

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