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Economist Slams Zuckerberg's $77 Billion Metaverse Gamble: Did He Just Flush Our Resources Down The Drain?

MarketDash Editorial Team
2 hours ago
Economist Dean Baker argues that Mark Zuckerberg's roughly $77 billion Metaverse investment wasn't just a corporate misstep but a massive social cost that diverted scarce talent and resources from productive uses. Now, as Meta pours billions into AI, the question looms: has Zuckerberg learned anything?

When Corporate Failures Become Everyone's Problem

Economist Dean Baker isn't pulling punches about Meta Platforms Inc. (META) CEO Mark Zuckerberg's Metaverse adventure. In a newsletter published Monday with the wonderfully blunt title "Did Mark Zuckerberg Throw $77 Billion of Our Money into the Toilet?" Baker makes the case that this wasn't just another corporate miscalculation. It was a massive waste of resources that society could have used better.

Sure, companies make bad bets all the time. That's capitalism. But Baker argues the scale here matters enormously. When Zuckerberg directed roughly $77 billion toward building virtual reality worlds that nobody particularly wanted to inhabit, he wasn't just burning Meta's money. He was tying up thousands of software engineers, planners, and support staff for years. He was consuming office space, computing equipment, and massive amounts of electricity that could have powered something actually useful.

"The flip side to this story is that when companies make stupid investment decisions, as it seems Zuckerberg did with the $77 billion he threw into Meta, it is not just a loss on their books, but also a cost to society," Baker wrote.

Opportunity Costs Are Real Costs

Baker, who co-founded the Center for Economic and Policy Research, points out that all these resources "could have otherwise been productively employed." He even suggests that the construction materials used for Meta's expansion could have instead supported "affordable housing in the expensive Bay Area." Now there's an alternative reality worth exploring.

This isn't just theoretical hand-wringing. The Metaverse bet becomes especially relevant right now because major technology firms are pouring hundreds of billions of dollars into artificial intelligence. Baker warns that this AI investment boom is already reshaping the economy, absorbing top engineering talent while simultaneously straining power grids and complicating climate goals.

Has Zuckerberg Learned His Lesson?

The big question, according to Baker, is whether Zuckerberg has become a more disciplined steward of capital since the Metaverse era. "We are likely to learn the answer in 2026," he concluded.

There are some signs of discipline emerging. Earlier this month, Meta announced it was cutting its 2026 Metaverse budget by up to 30%. According to analyst estimates, the Metaverse accounts for 50% to 60% of Reality Labs division spending, which has racked up a stunning $70 billion in cumulative losses since 2021.

But Meta is simultaneously facing growing criticism for its expanding AI investments, which are set to reach $100 billion in 2026 and require significant external financing, according to CFO Susan Li. So the jury's still out on whether this represents newfound fiscal restraint or just redirecting the firehose of spending toward a different target.

The Market's Take

Meta shares were down 0.69% on Monday, closing at $658.69, and declined another 0.24% in after-hours trading. Despite the controversy around its massive capital expenditures, the stock continues to perform reasonably well, though concerns about value and spending discipline persist among some investors.

The ultimate irony? We're probably about to run the same experiment again, just with AI instead of virtual reality headsets. The resources are scarce, the talent pool is limited, and the opportunity costs are real. Whether the outcome will be different this time depends on whether the technology actually delivers value that people want to pay for. Stay tuned for 2026.

Back to Stock Market News

Economist Slams Zuckerberg's $77 Billion Metaverse Gamble: Did He Just Flush Our Resources Down The Drain?

MarketDash Editorial Team
2 hours ago
Economist Dean Baker argues that Mark Zuckerberg's roughly $77 billion Metaverse investment wasn't just a corporate misstep but a massive social cost that diverted scarce talent and resources from productive uses. Now, as Meta pours billions into AI, the question looms: has Zuckerberg learned anything?

When Corporate Failures Become Everyone's Problem

Economist Dean Baker isn't pulling punches about Meta Platforms Inc. (META) CEO Mark Zuckerberg's Metaverse adventure. In a newsletter published Monday with the wonderfully blunt title "Did Mark Zuckerberg Throw $77 Billion of Our Money into the Toilet?" Baker makes the case that this wasn't just another corporate miscalculation. It was a massive waste of resources that society could have used better.

Sure, companies make bad bets all the time. That's capitalism. But Baker argues the scale here matters enormously. When Zuckerberg directed roughly $77 billion toward building virtual reality worlds that nobody particularly wanted to inhabit, he wasn't just burning Meta's money. He was tying up thousands of software engineers, planners, and support staff for years. He was consuming office space, computing equipment, and massive amounts of electricity that could have powered something actually useful.

"The flip side to this story is that when companies make stupid investment decisions, as it seems Zuckerberg did with the $77 billion he threw into Meta, it is not just a loss on their books, but also a cost to society," Baker wrote.

Opportunity Costs Are Real Costs

Baker, who co-founded the Center for Economic and Policy Research, points out that all these resources "could have otherwise been productively employed." He even suggests that the construction materials used for Meta's expansion could have instead supported "affordable housing in the expensive Bay Area." Now there's an alternative reality worth exploring.

This isn't just theoretical hand-wringing. The Metaverse bet becomes especially relevant right now because major technology firms are pouring hundreds of billions of dollars into artificial intelligence. Baker warns that this AI investment boom is already reshaping the economy, absorbing top engineering talent while simultaneously straining power grids and complicating climate goals.

Has Zuckerberg Learned His Lesson?

The big question, according to Baker, is whether Zuckerberg has become a more disciplined steward of capital since the Metaverse era. "We are likely to learn the answer in 2026," he concluded.

There are some signs of discipline emerging. Earlier this month, Meta announced it was cutting its 2026 Metaverse budget by up to 30%. According to analyst estimates, the Metaverse accounts for 50% to 60% of Reality Labs division spending, which has racked up a stunning $70 billion in cumulative losses since 2021.

But Meta is simultaneously facing growing criticism for its expanding AI investments, which are set to reach $100 billion in 2026 and require significant external financing, according to CFO Susan Li. So the jury's still out on whether this represents newfound fiscal restraint or just redirecting the firehose of spending toward a different target.

The Market's Take

Meta shares were down 0.69% on Monday, closing at $658.69, and declined another 0.24% in after-hours trading. Despite the controversy around its massive capital expenditures, the stock continues to perform reasonably well, though concerns about value and spending discipline persist among some investors.

The ultimate irony? We're probably about to run the same experiment again, just with AI instead of virtual reality headsets. The resources are scarce, the talent pool is limited, and the opportunity costs are real. Whether the outcome will be different this time depends on whether the technology actually delivers value that people want to pay for. Stay tuned for 2026.

    Economist Slams Zuckerberg's $77 Billion Metaverse Gamble: Did He Just Flush Our Resources Down The Drain? - MarketDash News