Is Facebook's Metaverse Turning Into a Ghost Town?

Does anybody use it? Does anybody talk about it? Does anybody care?

When Facebook changed it’s name to Meta back in 2021, I made a gloomy prediction:

“Meta is for losers,” I announced. “Mark Zuckerberg is betting his company on a new idea—but this is a wager he will almost certainly regret.”

I revisited the situation in December, and pointed out all the ways Meta wasn’t just dying in the metaverse. It was also ruining its base business, the Facebook platform.

The company kept making the same mistake as so many other aging websites—instead of serving users they want to control them. The end result is a seeming paradox: the more money the company spends, the worse the user experience becomes.

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In the article, I gave a dozen examples—and after it was published many readers shared their own horror stories.

Here’s just one anecdote, out of many:

Try to sign up for Facebook Dating and then try to leave. They won’t let you. A friend of mine recently used it, and now is unable to remove herself totally from the feature. She was allowed to remove all of her pictures, however, she was not permitted to remove her dating profile and picture, which really distressed her. She didn’t want any record of it.

What a great concept. You can meet somebody special, fall in love, get married, and raise a family—but years later you’re still on the Facebook dating app.

It seems ridiculous. But Meta really, really doesn’t like you to opt out of features. Their dream is to operate a virtual Hotel California, where—as the lyrics warn, “you can check out any time you want, but you can never leave.”

Hey, maybe that’s why Mark Zuckerberg won’t let you have legs in his metaverse.

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“Most new participants in the metaverse quit after a month….Even the people working on the project at Meta don’t want to use it.”

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Why isn’t this bold new strategy working? It certainly isn’t for lack of investment. Meta is reportedly spending one billion dollars per month on the project.

But sometimes you can fail even with the right concept—simply because the technology just isn’t ready for the mass market.

Consider the case of the Plato computer learning system from 1960. This anticipated almost every key element of remote learning today—but still failed. The world just wasn’t ready for this approach sixty years ago.

Or marvel at the Vis-O-Matic system of 1950, which anticipated Amazon. What could be more convenient than browsing and shopping via a screen? All the biggest retailers rely on that approach nowadays, but consumers rejected the concept back then.

More recently, the developers of the Palm Pilot understood the potential demand for handheld devices. But they were still too early, and the technology just wasn’t ready. (I know because I used one.)

Will Zuckerberg’s metaverse suffer the same fate?

A year-and-a-half after his corporate makeover, the situation at Meta is more dire than ever. Back in October 2021, Facebook shares were trading above $340, but now they are below $200—that’s a loss of around $300 billion in market value.

But here again, the real problem is the user experience.

“On my initial visits, the metaverse seems sort of desolate, like an abandoned mall,” writes Paul Murray in New York magazine.

But maybe it’s better to be alone in this alternative world. Murray continues:

While some people have experienced harassment in Horizon Worlds, the major problem is kids. Under-13’s aren’t supposed to use the headset, but the app is overrun with children occupying their parents’ avatars, meaning that conversations are constantly interrupted by (1) apparent adults asking you in high-pitched voices if you like poop and (2) polls to decide if the poop person should be removed.

Even when Murray encountered another adult, the situation was bizarre. “Ooh, you are naughty,” a woman told him in his second metaverse conversation. But it turned out that she was actually talking to her dog at home.

Perhaps that’s the price you pay for being in two places at once. But the bottom line is that this expensive alt reality toy is a snooze. “I’m bored!” Murray finally admits to himself. “When was the last time I was truly bored? I don’t think I’ve felt like this since I got a smartphone.”

This is very different from the magical alternative world that Zuckerberg promised. But even he must have started to wonder whether adults will linger in this crude playground. Mr. Z is clearly now eager to enlist teenagers in his scheme—so much so that members of the US Senate have warned him against this move.

You can’t blame them. The metaverse has already gotten a reputation for sexual harassment and inappropriate behavior.

But Zuckerberg’s metaverse might die on its own, without politicians lifting a finger. In its current guise, the platform is less a tech utopia, and more like a ghost town.

For a start, let’s ask the obvious question. How many people actually visit it?

Ghost town in South Dakota (Peter Unger/Getty Images)

Back in February 2022, the company announced that it already had 300,000 monthly users. That might seem like a large number. But when 3 billion people use Facebook, that represents a infinitesimal conversion rate of one-hundredth of one percent.

Yet even that low participation rate may have been unsustainable. A few months later, the Wall Street Journal stated that the platform only had 200,000 regular users, and that most new participants quit after a month.

Yet the most damaging assessment of all came from internal memos. These admit that even people working on the project at Meta don’t want to use it.

“Why is that?” Vishal Shah, VP of Metaverse, asked employees. “Why don’t we love the product we’ve built so much that we use it all the time? The simple truth is, if we don’t love it, how can we expect our users to love it?”

But there are so many obstacles to adoption—and not just missing legs and other system constraints. Even after the recent price slashing, the headset is still expensive—$999.99 for Meta Quest Pro and $429.99 for Meta Quest 2. For a company built (like most web platforms) on giving services away for free, this business model is uncharted territory.

And even the name is stodgy. Zuckerberg calls it “Horizon Worlds”—which sounds like a retirement community to me. Oh no—the kids think I’m too old, and are sending me off to Horizon Worlds

All this would be bad enough—except that while Zuckerberg was spending billions on the metaverse, the real buzz in tech turned out to be AI. Even Mark Zuckerberg is talking about AI now, while he is increasingly quiet about the future of Horizon Worlds.

"Our single largest investment is in advancing AI and building it into every one of our products," he proclaimed a few days ago in a Facebook post.

But this AI hype coming out of Meta HQ has to be a bluff, no? I’m sure it’s painful for Zuckerberg to watch from the sidelines, while Google and Microsoft exploit the fashionable AI market. But even if Meta wanted to compete aggressively in AI, the company’s profit margins and cash balances have been shrinking due to the boss’s pet project.

This red pill may be too painful for Meta to swallow

Faced by this ugly situation, Zuckerberg has found that the most reliable way of improving profitability and cash flow is to lay off employees. But the 11,000 people he got rid of in November (13% of the headcount) wasn’t enough. A few days ago, the company announced plans to get rid of another 10,000 workers.

At this rate, Meta’s head office will also soon resemble a ghost town.

But a bad corporate strategy can’t get fixed by headcount reductions—unless you fire the person who makes all the bad decisions. But could that really happen? Could Mark Zuckerberg get replaced at the company he founded and built into a juggernaut?

Probably not. Zuckerberg holds on to Class B shares with enhanced voting rights. Those shares aren’t traded on the stock exchange—and they get 10 votes while the more widely-owned A shares only come with one vote.

In this situation, Mark Zuckerberg can’t get fired by the Board, because he controls it. But this enhanced power has come at the cost of his reputation. There are worse fates than getting fired by your Board—Steve Jobs not only survived that, but eventually turned it into part of his legend when he came back to Apple in triumph.

Mark Zuckerberg seems hellbent on pursuing an even more embarrassing fate. His bet on the metaverse may turn into the biggest cash sinkhole in the history of capitalism. Already the Edsel and New Coke look like tiny peccadilloes by comparison.

Even if he keeps his job, he may want to go hide. Fortunately, he has a huge metaverse at his disposal where that has become surprising easy to do.