Meta invested 80 billion dollars in “Metaverse” and failed: “disconnected from the understanding of the user”

Rose, an entrepreneur, venture capital investor and host of the “Owl” podcast, points to Meta’s announcement a few days ago about a significant reduction in activity around Horizon Worlds and the diversion of resources to other areas, primarily artificial intelligence. “This is no longer a routine strategic adjustment, but a rare moment in which one of the most powerful companies in the world signals that its main bet of the last decade failed to materialize as it expected.”

Rose explains that the failure was mainly due to a gap between vision and market need. “Meta looked at Apple and Google, who dominate the mobile world through their operating systems, and drew the obvious, but wrong, conclusion. Zuckerberg wanted to be the owner of the house, not just the tenant. The Metaverse was supposed to be the ‘operating system of life’: an environment where Meta controls the hardware, the app store, and the user economy. But instead of growing out of a real need, this vision was imposed from above,” he explained.

“Meta tried to get ahead of demand, dictate new habits and build an entire ecosystem before users even asked for it. The result was a product that asks the world to adapt itself to it – instead of adapting itself to the world,” Rose added.

Rose also points to relatively high entry barriers. “While the digital world was moving towards minimalism and accessibility, Meta went in the opposite direction. It asked users to go through an ‘entry ceremony’: wear heavy glasses, isolate themselves from the physical environment and make complex settings. In a market where every second of delay in loading a page causes abandonment, the demand for such a dramatic physical and psychological change just to ‘meet’ was a complete disconnection from the user’s understanding.”

In addition, according to him, the platform struggled to generate clear value for users. The experience did arouse initial interest, but did not provide a consistent reason to return. In the absence of a clear need or clear advantage over existing alternatives, use remains limited.

At the same time, the rise of artificial intelligence changed the focus of the industry. While the Metaverse requires investment, equipment and time, AI tools integrate into existing systems and offer an immediate improvement in productivity. “Meta’s aggressive turn now towards AI is an admission of two mistakes: that the market prefers tools that improve the existing world over escaping to new worlds, and that the huge investment in Reality Labs has left Meta at a disadvantage in the real arms race of the decade – the race for the mind and not the eye.”

Rose points out that this move is not unique to the meta. Microsoft, Amazon and Disney have experienced similar moves in the past where an attempt to promote a product or platform without sufficient adaptation to the needs of users led to a retreat and a change of direction. “It is important to understand that the 80 billion dollars did not completely evaporate. Meta now owns patents, advanced optics technology and experience that no other company has. But as history shows, the one who develops the technology is not always the one who reaps the rewards,” he explains.

“Meta’s mistake was not the dream, but the pretense of thinking that money and data can change human nature,” he concludes. “The users don’t want to live inside the computer, they want the computer to help them live better outside it. Meta is now going back to the basics, to AI, hoping that this time it will meet the users where they really are – and not where it imagined they would be.”