Technology

Facebook is going into Google’s ‘fall down’?


Google’s business bets have cost the company billions of dollars, Meta seems to be repeating this with metaverse projects.

Will changing the name change luck?

In 2015, Google announced it would change its name to Alphabet to expand its business beyond advertising. Google executives say the decision is aimed at creating an ecosystem of thriving tech businesses. At the time, this move was supported by investors, causing the company’s shares to increase 4%.

Alphabet consists of two main segments: including advertising businesses like YouTube and Google-branded hardware, in addition to “moonshot” bets – investing in disruptive technologies but with risks. High risk is also something that Google loves.

Facebook is going into Google’s ‘fall down’?

Investors envisioned Google becoming a tech giant that would dominate a wide range of industries beyond search. However, that hope did not come true. In 2021, Google lost $5.3 billion on moonshot investments and made just $753 million in this segment.

In the past six years, since Google changed its name to Alphabet, it has lost $23.4 billion on another bet and generated only a fraction of that revenue, without any breakthrough success. any.

According to Morgan Stanley, during the height of the self-driving car advertising cycle, Waymo – Google’s self-driving car company achieved an estimated valuation of $175 billion, however the figure was $30 billion. in 2021.

While the rebranding to Alphabet aims to help the company grow into other areas, for now Google’s business is still clearly driven by advertising, which accounted for more than 80% of revenue in 2018. 2021.

In October, Facebook announced it would change its name to Meta, signaling its intention to “encroach” into areas other than social media. The company’s most obvious ambition is to be at the forefront of the metaverse.

However, Reality Labs – the company’s metaverse research division lost $ 10.2 billion in 2021 and expects this number to increase in 2022. This loss is twice what Alphabet is experiencing. with venture capital and Meta seems to be just getting started.

Lessons from Google

Building a new business is always an uphill challenge, but Alphabet is one of the world’s largest companies with a dominant search market share in most of the world and huge profits. That sets the stage for the company to boldly put money down on business bets, but in general it would be better if Google focused its efforts on profits instead of “throwing money out the window”.

The same seems to be true for Facebook. Going too far from Facebook’s core strength in social media can be costly, especially as the money spent on virtual reality labs is growing rapidly.

While there are many similarities between the Meta and Alphabet brands, there is one key difference: parent company Facebook doesn’t launch a bunch of startups with a variety of goals, it’s specifically focused on the metaverse. Facebook isn’t the only tech giant paying attention to this trend. Microsoft acquired Activision Blizzard, in part to include it in the metaverse. Apple is also eyeing the virtual reality space. Chip giant Nvidia also focuses on building software for virtual universes.

Instead of thinking that Meta is playing a gamble, think of it as if the Internet was in its infancy back in 1994 or 1995. Internet usage was then a fraction of what it is today, but convenient. Its utility has greatly increased with the advent of mobile networks and smartphones. Companies like Amazon are starting to launch their online businesses for the first time, and investors are increasingly pouring billions of dollars into the sector.

Whether the metaverse becomes the next version of the Internet is a matter of waiting. What we can see most clearly right now is Facebook’s intention to invest heavily in real labs, along with challenges in the advertising business that will hold back Facebook’s profitable growth in the future. at least the next year or two.

Huong Dung(According to The Motley Fool)

Facebook's 'sad' numbers

Facebook’s ‘sad’ numbers

Facebook has had a ‘wake up’ in the past week with not so bright numbers.

.

Leave a Reply

Your email address will not be published. Required fields are marked *