On Thursday, Meta’s chief executive, Mark Zuckerbrg issued a statement outlining seven major investment priorities for 2022. Meta opened the month of February with a huge loss that has rattled the company and its shareholders.
On Wednesday, Facebook’s shares dipped 22%, wiping more than $200 billion off the company’s value. Zuckerberg has anticipated some revenue loss since last year when Apple announced iOS policy change that gives iPhone users the right to reject being tracked across web by Facebook for targeted ads. But no one knew it would be this huge.
Facebook’s revenue is ad-based and has been under attack recently, with the UK and Europe tightening their privacy policies in addition to Apple’s ad-unfriendly policy. The threat to Facebook’s future has never been this real, and Zuckerberg knows Meta will need to change its business model to scale. He thus has, among other plans, outlined seven investment priorities; Reels, community messaging, commerce, ads, privacy, AI, and of course the metaverse, to ensure growth for his social media behemoth in 2022.
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Read his statement below:
I just shared an update on our company strategy and results on our earnings call. I talked about the areas we’re investing in to build the future and lay the foundation for the metaverse. Here’s what I said:
This was a solid quarter for our products and business. It was also an important one for our company. In October, we announced that “Meta” would be our new name and laid out our vision for the metaverse. When we shared our plans at Connect, I said this is not something we’re going to do on our own. The metaverse will be built by creators and developers, it will be interoperable, and it will touch many different parts of the economy. In the months since, it’s been exciting to see lots of other companies share their own plans for the metaverse and how their experiences and products might show up too. And I look forward to partnering with many of them as we all work to bring this to life together.
If last year was about putting a stake in the ground for where we’re heading, this year is going to be about executing. Today I’m going to discuss our seven major investment priorities for 2022: and they’re Reels, community messaging, commerce, ads, privacy, AI, and of course the metaverse. These are the areas that we’re putting a lot more talent and budget towards.
Before I get to that, I want to briefly touch on our Q4 results, which I know Sheryl and Dave are going to go deeper on. I’m proud of the work our teams did here. We shipped products, our community continued to grow, and businesses of all sizes turned to us to help them reach people. But there are two things that I want to call out that are having an impact on our business.
The first is competition. People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly. And this is why our focus on Reels is so important over the long-term. As is our work to make sure our apps are the best services out there for young adults, which I spoke about on our last call.
The second area, and related to this, is that we’re in the middle of a transition on our own services towards short-form video like Reels. So as more activity shifts towards this medium, we’re replacing some time in News Feed and other higher monetizing surfaces. So as a result of both competition and this shift to short-form video as well as our focus on serving young adults over optimizing overall engagement, we’re going to continue to see pressure on impression growth in the near term. Now I’m confident that leaning harder into these trends is the right short-term tradeoff to make in order to get long-term gains. We’ve made these types of transitions before with mobile feed and Stories, where we took on headwinds in the near-term to align with important trends over the long term. And while video has historically been slower to monetize, we believe that over time short-form video is going to monetize more like feed or Stories than like Watch – so I’m optimistic that we’ll get to where we need to be with Reels too.
Ultimately, our continued success relies on building products that people find valuable and enjoy using. And in a competitive marketplace, we’re focused on understanding the areas we need to deliver on for people and executing against our strategy.
Dave is going to share more on these impacts to the business in a minute. But before we get to that, I want to discuss our investment priorities for 2022.
First is Reels. It’s clear short-form video will be an increasing part of how people consume content moving forward, and Reels is now our fastest growing content format by far. It’s already the biggest contributor to engagement growth on Instagram and it’s growing very quickly on FB too. As we continue to improve tools for creators, ranking for the people watching, and as we roll out the product everywhere across the world, we expect that this will continue growing quickly. So looking ahead, we’re investing in simplifying video across Instagram, building more great creative and monetization tools for creators, and helping more people discover and interact with relevant Reels.
The next investment priority is community messaging – which is about chatting with groups of people that you have something in common with, whether that’s a shared community, experience or interest. We already run some of the world’s most popular messaging platforms where people connect 1:1 or in groups with friends, family and colleagues. And we’re seeing people increasingly want to share more things in messages that they would’ve previously maybe posted to feed. I think the popularity of apps like Slack in the workplace, or Discord or Telegram reflects this trend too. So we’re going to help people on WhatsApp better organize their group chats and make it easier to find information for the communities they’re part of – like parent groups or neighborhoods. And we’re also building Community Chats on Facebook and Messenger for real-time conversations within those groups and communities.
I also want to call out business messaging too, since it’s an area where there’s real momentum. We estimate more than 1 billion users are connecting with a business account across our messaging services every week. And we’re partnering with companies like Uber and Jiomart to help people book a ride or have their groceries delivered right from a chat. And we’re building new tools to make buying online better for people and easier to manage for businesses. And we believe this can be an important business for us in the years to come.
We’re also making good progress on our broader commerce efforts. We already help a lot of businesses reach new and existing customers with personalized ads, and our commerce tools are an extension of that – it’s a seamless experience for people and businesses to buy and sell through our apps. Our strategy since introducing Shops a year and a half ago has been to make it as easy as possible for people to make a purchase after discovering a new brand or product, without having to switch over to a browser or re-enter their payment info. Sheryl will share more about our progress here, including some of the success we saw over the holidays.
Next up is ads. With Apple’s iOS changes and new regulation in Europe, there’s a clear trend where less data is available to deliver personalized ads. But people still want to see relevant ads, and businesses still want to reach the right customers. So we’re rebuilding a lot of our ads infrastructure so we can continue to grow and deliver high-quality personalized ads.
The next two priorities I want to discuss focus on the infrastructure that underpins all our products. First is privacy. We’ve made huge investments in strengthening our approach to privacy, including rebuilding our privacy program and our privacy review process. We made updates to bring greater privacy to our products, including end-to-end encrypted backups and disappearing messages on WhatsApp, and end-to-end encrypted voice and video calling on Messenger. Over the next few years, we’re focused on building out a major privacy infrastructure project that will encode our privacy commitments at a deeper level of our technical foundation to make them more durable and make product development faster in this evolving environment.
Now onto AI. This is one of the areas where we’ve routinely seen stronger returns on our investments over time than we’ve expected. Advances in AI enable a lot of the experiences I’ve spoken about so far – it enables us to deliver better ads to people while using less data; its core to all of our safety and security work; it’s meaningfully improved the relevance of Reels and overall content ranking in general; and it plays a big role in our commerce efforts.
Artificial intelligence is also going to play a big role in our work to build the metaverse. We just announced our AI Research SuperCluster, which we think will be the world’s fastest supercomputer once it’s complete later this year. This is going to enable new AI models that can learn from trillions of examples and understand hundreds of languages – which will be key for the kinds of experiences that we’re building.
Looking ahead, we’re focused on further scaling our computing power and transforming our AI infrastructure through advances in foundational research, as well as improvements to data center design, networking, storage, and software.
Now the last investment priority here is the metaverse. We’re focused on the foundational hardware and software that are required to build an immersive, ??embodied internet that enables better digital social experiences than anything that exists today.
On the hardware front, we’re seeing real traction with Quest 2. People have spent more than $1B on Quest store content, helping virtual reality developers grow and sustain their business. We had a strong holiday season and Oculus reached the top of the App Store for the first time on Christmas Day in the US. We’re working towards a release of a high-end virtual reality headset later this year and we continue to make progress developing Project Nazare, which is our first fully-augmented reality glasses.
As for software, Horizon is core to our metaverse vision. This is our social VR world-building experience that we recently opened to people in the US and Canada. And we’ve seen a number of talented creators build worlds like a recording studio where producers collaborate or a relaxing space to meditate. And this year, we plan to launch a version of Horizon on mobile too, that will bring early metaverse experiences to more surfaces beyond VR. So while the deepest and most immersive experience are going to be in virtual reality, you’re also going to be able to access the worlds from your Facebook or Instagram apps as well, and probably more over time. This will enable us to build even richer social experiences where you can connect with friends in the metaverse whether they’re in VR or not.
We’re also focused on avatars, which will be how you represent yourself in Horizon and across other developers’ experiences in the metaverse. In December, we rolled out our Meta Avatars SDK to all Unity developers on Quest, Rift and Windows-based VR platforms, letting developers bring Meta Avatars to their own VR experiences. We just announced an update that lets you further customize your avatar to better express yourself – and we’re introducing digital clothing too, starting with an NFL partnership so you can cheer on your favorite team. You can use your avatar across Quest, Facebook, Instagram and Messenger. So it serves as another bridge between our 2D social apps and 3D immersive virtual reality experiences. We have a bunch of work ahead of us to make avatars as expressive and high-fidelity as they need to be to fully represent us and help us feel present with one another. But I’m very excited for the advances we’re making here.
Making meaningful progress across all seven of these areas is going to improve the services we offer today and will help power a more social, intuitive, and entertaining metaverse, where people, businesses and creators can all thrive. This fully realized vision is still a way off, and although the direction is clear, our path ahead is not yet perfectly defined. But I’m pleased with the momentum and progress we’ve made so far and I’m confident these are the right investments to take us forward.
2022 is the first page of the next chapter for our company. I’m grateful for all the talented teams at Meta and our partners for executing on this important work. And of course for all of you who are on this journey with us.