Facebook to spend around $ 10 billion on its metaverse division in 2021

Facebook plans to spend at least $ 10 billion this year on Facebook Reality Labs, its metaverse division tasked with creating AR and VR hardware, software, and content.

"We are committed to bringing this long-term vision to life and we expect to increase our investments for the next several years," the company wrote in its third-quarter earnings release this afternoon. Facebook sees AR and VR as being core to "the next generation of online social experiences."

The division, which already makes the Oculus Quest headsets and the Portal line of devices, is clearly positioning itself as the next big thing on Facebook. For one thing, CEO Mark Zuckerberg has been talking non-stop about the metaverse for the past few months. Facebook said it will start reporting earnings specifically for its Reality Labs segment, while Facebook's main ad business - a staggering $ 28 billion in this last quarter alone - will be reported in another segment. It's a signal to investors that the Reality Labs business is important and should be judged separately from how they value Facebook today.

It is also a move to, perhaps, distract from what is happening in Facebook's earnings today. The company fell short of revenue expectations of around $ 1 billion (this isn't much, exactly, on Facebook's scale), which speaks to some of the company's struggles at the moment. Facebook blames several factors for this: COVID-19, the economy, and Apple's recent ad tracking changes - something we saw last week when Snap also reported earnings.

Apple updated iOS in April with a new privacy feature that requires users to actively opt-out to allow apps to track them on other apps and websites. Initially, social media companies said they weren't sure how much it would affect their ad business, which relies in part on that tracking to measure the effectiveness of the ads.

It's been a difficult few weeks for Facebook. A series of stories in The Wall Street Journal detailed major mistakes by the company, including restraint issues and concerns about the mental health of younger users; the whistleblower who leaked those documents later testified before Congress; And just this morning, a media consortium, including The Verge, published dozens of stories covering even more problems for Facebook, including concerns about declining usage among teens. Plus, in the midst of all that, Facebook apps were down for a good chunk of a day in early October.

In a call with investors Monday, CEO Mark Zuckerberg took a defiant tone about the leaked documents, saying they were part of a "coordinated effort" to "paint a false image of our company." He then quickly switched to talking about Facebook's work to woo young people and build the metaverse, reinforcing the idea that the company would like to push something new where, just maybe, it can escape scrutiny.