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Facebook owner Meta to lift veil off its metaverse business

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(Last Updated On: January 31, 2022)

Since October, Facebook has renamed the company, articulated a vision of the internet where people can digitally connect through virtual-reality avatars or teleport to see places like ancient Rome, and helped trigger the metaverse investment craze.

When the company, now Meta Platforms Inc, reports fourth-quarter results on Wednesday, investors will get a new window into the financial impact of CEO Mark Zuckerberg’s current passion.

Meta plans to break out the results of its augmented and virtual-reality hardware unit, Reality Labs, for the first time, an investment the company previously warned would cause a $10 billion hit to 2021 profit and would not be profitable “any time in the near future.”

The company is hiring engineers and buying up multiple virtual reality gaming studios to build toward the metaverse, which is a broad futuristic idea of shared virtual realms that can be accessed via different devices and which Zuckerberg is betting will be the successor to the mobile internet.

Analysts said they would be keen to see indicators about the Reality Labs division’s profitability, how long it might be a drag on the advertising side, and evidence around the strength of VR headset sales.

“It’s going to be huge for me as an analyst, not having to surgically dig through Facebook earnings … and just see a lens into the Reality Labs,” said VR market analyst Stephanie Llamas of VoxPop.

Meta has said it expects non-advertising revenue to be down year-over-year in the fourth quarter as it compares unfavorably with the “strong launch” of its VR Quest 2 headsets during the previous year’s holiday shopping season.

The company has not released sales numbers for Quest headsets, but a July recall notice for the Quest 2’s facial foam liners said it affected about 4 million units in the United States. In a sign of strong sales for the headsets during the recent holiday period, its Oculus app hit the top spot on the U.S. App Store for free iPhone apps on Christmas Day.

‘SIGNIFICANT UNCERTAINTY’

Front-of-mind for investors, though, will be how Meta’s core digital advertising business is faring, after the tech giant said in October it faced “significant uncertainty” in the fourth quarter.

The company, which has the second-largest digital ad platform in the world after Alphabet Inc’s Google, warned it could face continued hits from Apple Inc’s privacy changes which have made it harder for brands to target and measure their ads on Meta’s social media services Facebook and Instagram. Analysts said Meta had set the bar low for its coming earnings, but questions remained about these effects and about issues related to the COVID-19 pandemic.

“The Apple tracking change clearly had a negative impact on Facebook in the September quarter,” said Evercore ISI analyst Mark Mahaney. “The question is, were they able to further mitigate that risk … or did it become bigger?”

Pedro Palandrani, a research analyst at Global X, said the metaverse was the “long-term story” but in the near term investors would look for how Meta navigates Apple’s policy as well as e-commerce updates and ways to monetize messaging or features like its short video offering, Reels.

Meta, which reported 2020 revenue of about $86 billion, has yet to explain in detail how it will make money in the metaverse. In November, it pointed to potential opportunities for brands, from immersive shops to running paid mixed-reality events. The company has invited a group of ad execs to discuss its brand change and its plans for the metaverse at a virtual roundtable next month.

Meta is expected to report revenue of $33.38 billion, according to Wall Street estimates, up 18.9% year over year, and is expected to post quarterly earnings per share of $3.84, a slight decline. The company has said it expects total 2021 expenses to come in at $70 billion-$71 billion and full-year 2022 expenses to reach $91 billion-$97 billion.

Science & Technology

UN adopts first global artificial intelligence resolution

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(Last Updated On: March 22, 2024)

The United Nations General Assembly on Thursday unanimously adopted the first global resolution on artificial intelligence that encourages countries to safeguard human rights, protect personal data, and monitor AI for risks, Reuters reported.

The nonbinding resolution, proposed by the United States and co-sponsored by China and over 120 other nations, also advocates the strengthening of privacy policies.

“Today, all 193 members of the United Nations General Assembly have spoken in one voice, and together, chosen to govern artificial intelligence rather than let it govern us,” U.S. Ambassador to the United Nations Linda Thomas-Greenfield said.

The resolution is the latest in a series of initiatives – few of which carry teeth – by governments around the world to shape AI’s development, amid fears it could be used to disrupt democratic processes, turbocharge fraud or lead to dramatic job losses, among other harms.

“The improper or malicious design, development, deployment and use of artificial intelligence systems … pose risks that could … undercut the protection, promotion and enjoyment of human rights and fundamental freedoms,” the measure says. In November, the U.S., Britain and more than a dozen other countries unveiled the first detailed international agreement on how to keep artificial intelligence safe from rogue actors, pushing for companies to create AI systems that are “secure by design.”

Europe is ahead of the United States, with EU lawmakers adopting a provisional agreement this month to oversee the technology. The Biden administration has been pressing lawmakers for AI regulation, but a polarized U.S. Congress has made little headway, read the report.

In the meantime, the White House sought to reduce AI risks to consumers, workers, and minorities while bolstering national security with a new executive order in October.

U.S. National Security Advisor Jake Sullivan said it took nearly four months to negotiate the resolution, but that it gave the world “a baseline set of principles to guide next steps in AI’s development and use.”

Asked on Wednesday whether negotiators faced resistance from Russia or China, senior administration officials said there were “lots of heated conversations,” but the administration actively engaged with countries with which it has different views.

Like governments around the world, Chinese and Russian officials are eagerly exploring the use of AI tools for a variety of purposes. Last month, Microsoft said it had caught hackers from both countries using Microsoft-backed OpenAI software to hone their espionage skills.

In response to the Microsoft report, China has said it opposes what it called groundless accusations while Russia did not respond to a request for comment, Reuters reported.

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Turkey moves against Meta over Threads-Instagram data sharing

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(Last Updated On: March 18, 2024)

Turkey’s competition authority on Monday imposed an interim measure on Meta Platforms Inc meant to hinder data sharing between the Instagram and Threads platforms as it investigates possible abuse of the company’s dominant market position.

In December the authority launched an investigation into Facebook parent Meta (META.O), opens new tab over a possible violation of competition law by linking its social media platforms Instagram and the newer Threads.

The authority said the interim measure would remain in place until a final decision is made, since the data obtained and merged through these two apps could “violate competition law and cause irreparable damage” in the market.

Separately, the Turkish authority fined Meta 4.8 million lira ($148,000) daily as part of a separate investigation over a notification message that the company sends users about the sharing of data.

The notification about data sharing between the company’s Facebook, Instagram and WhatsApp services did not provide sufficient information and was not sufficiently transparent, it said.

The notification was also designed to guide users to approve data sharing, which was not deemed sufficient to address anti-competition concerns, it added.

A Meta spokesperson said that the company is considering the decision and will have more to say in due course. – Reuters

 

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Musk’s SpaceX building spy satellite network for US intelligence agency

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(Last Updated On: March 17, 2024)

SpaceX is building a network of hundreds of spy satellites under a classified contract with a U.S. intelligence agency, five sources familiar with the program said, demonstrating deepening ties between billionaire entrepreneur Elon Musk’s space company and national security agencies.

The network is being built by SpaceX’s Starshield business unit under a $1.8 billion contract signed in 2021 with the National Reconnaissance Office (NRO), an intelligence agency that manages spy satellites, sources told Reuters.

The plans show the extent of SpaceX’s involvement in U.S. intelligence and military projects and illustrate a deeper Pentagon investment into vast, low-Earth orbiting satellite systems aimed at supporting ground forces.

If successful, the sources said the program would significantly advance the ability of the U.S. government and military to quickly spot potential targets almost anywhere on the globe.

The contract signals growing trust by the intelligence establishment of a company whose owner has clashed with the Biden administration and sparked controversy.

The satellites can track targets on the ground and share that data with U.S. intelligence and military officials, the sources said.

In principle, that would enable the U.S. government to quickly capture continuous imagery of activities on the ground nearly anywhere on the globe, aiding intelligence and military operations, they added.

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