Meta continues to push its way into the metaverse world with mergers and acquisitions

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Even after spending billions of dollars on developing the infrastructure, Meta’s metaverse dream is still a few years away from becoming a reality. During the first three quarters of 2022, Meta’s metaverse division spent over US$9.4 billion on research and development, with the investment expected to go over US$13 billion by the end of the year. The massive spending on the future of the internet, as stated by Mark Zuckerberg, however, has not resulted in much for the firm to show yet.

But Meta announced that it will continue to invest in the metaverse, with the spending expected to reach approximately US$100 billion over the next five years. The announcement comes at a time when the firm has experienced a dramatic downturn in revenue. The macroeconomic factors, increasing competition, and declining ad revenue meant that the firm reported a second straight quarterly revenue decline, with a forecast that the revenue will drop further in Q4 2022.

With the firm losing revenue at a significant pace, Meta also announced that the firm will lay off over 10,000 employees, which makes it 13% of the total workforce. However, it also announced that the firm will continue to keep pushing its way into the metaverse world. This is reflected in the strategic acquisition announced by Meta on the same day when it announced the layoffs. For instance,

• In November 2022, Meta announced that the firm is acquiring Audio Analytic, a United Kingdom-based startup, to further its push into the metaverse world. Notably, Audio Analytic builds AI-driven sound recognition software. While the acquisition amount is not declared by the two firms, Audio Analytic will join Meta’s Reality Labs division.
• The acquisition will assist Meta to develop realistic sounds and speech for the metaverse. Notably, Meta can use spatial sound to further immerse VR players. Prior to the acquisition, Audio Analytic raised a total of US$25 million from investors, including National Grid Partners.

Notably, this is not the only acquisition made by Meta to further its ambition of creating the future of the internet. For instance,

• In September 2022, Meta announced the acquisition of Lofelt, a Berlin-based haptic startup. Unlike other haptic solutions, Lofelt has developed small, discreet wearable devices which consumers can use all day long. Notably, it is just the kind of technology, which is needed, if Meta is looking to have users spend an extended period in the virtual world.

While Meta is expected to further enter into acquisition deals to better position the firm for the metaverse revolution, investors and shareholders have started to question the metaverse bet by Mark Zuckerberg. The announcement that the firm will continue to invest billions in the metaverse over the next few years also meant that the share price declined 24% on the day. This extended the slump in Meta’s share price to over 70% for the year.

Notably, the widespread adoption of the metaverse is also a big question now, especially in developed countries where consumers could not afford expensive headsets. While there are a lot of uncertainties surrounding the metaverse industry, Meta is not the only player investing in the technology. Firms operating in the areas of the data center, cloud computing, artificial intelligence, and network infrastructure are all investing in the metaverse ecosystem. The likes of Amazon, Microsoft, Alphabet, Qualcomm, and Nvidia, are among the many who have invested in the development of the metaverse.

While the future of the virtual worlds will largely depend on the big corporations and the investment coming from these players, startups are also expected to play a big role in the future of the metaverse, as they build atop the infrastructure created by these large firms. Notably, the growing ecosystem of startups in the metaverse sector will further lead to more mergers and acquisition opportunities, as big players seek to improve their metaverse offerings. Consequently, TechInsight360 expects the trend of mergers and acquisitions to further continue over the next three to four years.