How Virtual Reality DiedMeta, Microsoft, and Apple lost billions trying to convince us to live in the Matrix. Can you guess what they're doing next?
A big birthday happens tomorrow. But don’t expect a celebration. There will be no party, no disco. There will be no cake, no clown, no bouncy house for the kids. No Marilyn Monroe cooing the birthday song. Just dead silence. But make no mistake—this is a very expensive birthday. Exactly three years ago, Mark Zuckerberg placed a huge bet on virtual reality. On October 28, 2021, he even changed the name of his company—from Facebook to Meta. A new company was born. But that’s now a huge embarrassment. The name Meta is a lasting reminder of the most foolish decision Zuck ever made—even worse than Facemash or those ugly T-shirts. If you want to support my work, please take out a premium subscription (just $6 per month).Of course, that’s not how he saw things three years ago. “Meta’s focus will be to bring the metaverse to life,” the company announced. “In the metaverse,” Zuckerberg bragged, “you'll be able to do almost anything you can imagine." There was a catch—the tech billionaire needed to convince millions of people to wear virtual reality headsets. But they looked ridiculous—you literally had to wear blinders if you wanted to enter Mr. Zucker’s neighborhood. The very next day, I declared that “Meta is for losers.” “This will never be cool.”
Zuckerberg was “making the wrong bet,” I warned—and gave my reasons:
Mark Zuckerberg eventually figured this out. But the company lost more than $20 billion over the next two years in a desperate attempt to convince normal people to abandon reality and enter his fake world. Even as consumers resisted, Meta refused to admit it had made such a colossal mistake. Just last year, Zuckerberg still denied that he was abandoning virtual reality. “A narrative has developed that we're somehow moving away from focusing on the metaverse," he told shareholders.” So I just want to say upfront that that's not accurate." Then he did exactly that—retreating from the metaverse he had spent so much money building. Fortune warned three months ago that Mr. Z’s metaverse “may finally be running out of cash.” Then in August, Meta cancelled the development of a next generation VR headset. But other huge tech companies had imitated Meta. They also got burned. Microsoft spent $150 million just to buy some virtual reality patents—from a start-up that (as far as I can tell) no longer exists. That was just for IP. Creating an actual product was far more expensive. According to one estimate, Microsoft ran up losses of $5 billion in a failed attempt to commercialize its Hololens technology. Meanwhile demand for virtual reality headsets collapsed 40% in 2023. That’s hardly the sign of the hottest new thing in tech, and more like the second week of the Cats movie at your local Cineplex. Four months ago, Microsoft started laying off employees of its virtual reality business. And just three weeks ago, the company stopped making virtual reality headsets—with no mention of any replacement product. And the exact same thing is happening at Apple. By my measure, Tim Cook should be the most embarrassed of any of these stumbling CEOs. Under his predecessor Steve Jobs, Apple didn’t imitate other tech businesses—and it certainly didn’t mimic the bad decisions of clueless billionaires. Those days are gone. “We’re perfectly fine with not being first,” Cook admitted to the Wall Street Journal a few days ago. Can you imagine Steve Jobs ever saying that? But the painful truth is that Apple now imitates more than it innovates. So Cook—driven by Zuck envy—went all in on ridiculous headsets. “Today marks the beginning of a new era for computing,” he declared at the launch of Vision Pro headset. “Just as the Mac introduced us to personal computing, and iPhone introduced us to mobile computing, Apple Vision Pro introduces us to spatial computing.” And how’s that working out for them? Just five weeks after the launch, I warned that Apple had lost its ability to innovate—and predicted that the company (correctly, as it turned out) would struggle to achieve a growth rate even in the low single digits. Sales were lousy. But Apple kept sinking more money into its failed headset—earlier this year it announced the launch of 600 specially designed apps for Vision Pro. But Apple was finally forced to cut back production of the headsets—consumers just don’t want them. And just last week, a rumor circulated that Apple would discontinue Vision Pro before the end of the year. The technology will soon end up on the scrap heap of history, but this photo will last forever.
It’s a painful mistake—and not just in terms of lost time and money. Apple looks aimless and out-of-touch. More than ten years have elapsed since Steve Jobs’s death, and the company still relies on his innovations—especially the iPhone and the Mac—for most of its sales. And what about other tech behemoths? Google might still push ahead with virtual reality, according to a news report from last month. You might think that they had learned from their previous failure with Google Glass—which they finally discontinued last year. But some folks never learn from their mistakes. Gift subscriptions to The Honest Broker are available.Guess what? These same four companies—Meta, Apple, Microsoft, Google—have a new dream technology built on fakery. It’s called artificial intelligence. What an amazing coincidence! Do these four CEOs coordinate their moves in secret? Or are they just obsessed with imitating each other in some kind of warped Girardian way? But their AI plans aren’t much different than the virtual reality debacle.
That’s not much of an improvement. By my measure, it’s actually a step backward. Reality is not something to trifle with. It always gets the last laugh. We are already seeing the cost of AI replicants entering into society. Here’s a headline from three days ago—get ready for more of the same in the future, but magnified a thousandfold. You’re thinking that it’s obviously a bad idea to fall in love with a chatbot. But… But this is the single largest investment in the economy right now. The goal is to force people into dependency relationships with bots. Should this be our highest priority as a society? Obviously not. But guess who is pushing it? It’s the usual suspects—those four CEOs who wanted us to wear ridiculous headsets. And now they are just making another bad wager. The numbers don’t add up. Those four CEOS are throwing good money after bad. The only company getting rich on AI is Nvidia—who sells chips to these four out-of-touch technocrats. It’s like a Gold Rush, where miners go broke, but people selling shovels get rich. Take the advice of MIT professor Daron Acemoglu—who won the Nobel Prize in Economics three weeks ago. He says that ten years from now, AI will have replaced only 5% of tasks. This Nobel laureate warns that an AI crash is inevitable.
I’m not surprised. I see it myself in my own fields, writing and music. AI is everywhere, but
The AI companies are fully aware of this. That’s why they pretend that their fake stuff is made by human beings. They know how much people hate all the AI slop polluting the culture. So they are forced to lie. Their business model requires it. And that’s why their business model will fail. If you do the analysis and run the numbers, you can already see what’s coming. There’s no way that this huge investment—a trillion dollars!—will ever generate meaningful returns for investors. Sure, there will be disruption. (Silicon Valley loves that word.) But reality will win. It always does, sooner or later. That will be true in AI, just as it was true for VR. So at least one person will celebrate the Meta birthday tomorrow. It will be me. Perhaps you’ll join me. Fakery didn’t survive to age three. Even a coalition of obsessed billionaires couldn’t keep the metaverse on life support. That’s worth at least a cake. And we already have some appropriate clowns for the occasion—sitting in their executive offices. What else is missing? Marilyn Monroe isn’t available to sing the birthday song. Okay, maybe I’ll hire a bouncy house. You're currently a free subscriber to The Honest Broker. For the full experience, upgrade your subscription.
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How Virtual Reality Died
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