The $36b number appeared to be extremely bogus when I looked into it the other day after seeing it on Twitter. I couldn’t believe it was that large—even FB doesn’t have that much money to burn each year on just one thing like Metaverse—and figured it had to be something like ‘all Metaverse expenditures to date’ or something else.
It was given without a source in the tweet I was looking at & here. So where does this ‘$36b’ come from? It appears to first actually be FB’s total‘capex’ reported in some earnings call or filing, which means that it’s covering all the ‘capital expenditures’ which FB makes buying assets by building datacenters or underseas fiberoptics cables; $36b seems like a pretty reasonable number for such a total for one of the largest tech companies in the world which is doing things like cables to Africa, so nothing odd about it. Techcrunch:
Meta also noted in the 8-K that it is narrowing capital expenditures for 2023 by $2 billion at the top end. Capex estimates are now between $34 billion and $37 billion, versus $34 billion and $39 billion previously. Meta doesn’t detail here which areas will be hit by those cuts — capex can include any number of things such as data centers and network infrastructure and AI, but not strictly Meta’s costly “metaverse” effort (which may have server and AI investments but is mostly an R&D investment, as Ben Thompson notes). It does note that the latter of these is not looking very bright.
Then second, if you wonder what it means that capex doesn’t “strictly include” Metaverse “but is mostly [something else]”, and ask how much of that is ‘Metaverse’ as an upper bound, apparently the answer is ′ as low as $0′, because R&D is defined by the US GAAP financial accounting standard to not be ‘capex’ but a different category altogether, ‘opex’: it’s treated as an operating expense you incur, not as purchasing an asset. (Many argue that R&D is in fact more like ‘buying an asset’ than ‘spending money on operating normally’ and should be under ‘capex’ rather than ‘opex’ - but AFAICT, in the numbers FB is reporting, it would not be.) So “$36b” is not only not just the Metaverse expenses, it’s none of the Metaverse expenses by definition.
(The actual Metaverse number is something like $10b/year, IIRC. Which is pretty staggering on its own—as more than one person has asked, where is it all going? - but a lot smaller.)
The $36b number appeared to be extremely bogus when I looked into it the other day after seeing it on Twitter. I couldn’t believe it was that large—even FB doesn’t have that much money to burn each year on just one thing like Metaverse—and figured it had to be something like ‘all Metaverse expenditures to date’ or something else.
It was given without a source in the tweet I was looking at & here. So where does this ‘$36b’ come from? It appears to first actually be FB’s total ‘capex’ reported in some earnings call or filing, which means that it’s covering all the ‘capital expenditures’ which FB makes buying assets by building datacenters or underseas fiberoptics cables; $36b seems like a pretty reasonable number for such a total for one of the largest tech companies in the world which is doing things like cables to Africa, so nothing odd about it. Techcrunch:
Then second, if you wonder what it means that capex doesn’t “strictly include” Metaverse “but is mostly [something else]”, and ask how much of that is ‘Metaverse’ as an upper bound, apparently the answer is ′ as low as $0′, because R&D is defined by the US GAAP financial accounting standard to not be ‘capex’ but a different category altogether, ‘opex’: it’s treated as an operating expense you incur, not as purchasing an asset. (Many argue that R&D is in fact more like ‘buying an asset’ than ‘spending money on operating normally’ and should be under ‘capex’ rather than ‘opex’ - but AFAICT, in the numbers FB is reporting, it would not be.) So “$36b” is not only not just the Metaverse expenses, it’s none of the Metaverse expenses by definition.
(The actual Metaverse number is something like $10b/year, IIRC. Which is pretty staggering on its own—as more than one person has asked, where is it all going? - but a lot smaller.)