Meta Platforms’ revenue dropped 1 percent in the second quarter, totaling $28.8 billion, just missing Wall Street’s expectation. It was the first year-over-year revenue drop since the company went public 10 years ago. Meta logged $6.69 billion in Q2 profit, down 36 percent over the same period in 2021. Costs increased by 22 percent, largely due to ongoing heavy investment in the metaverse, where the company’s ambitions took a hit Wednesday when the Federal Trade Commission filed a lawsuit to prevent Meta from buying Los Angeles-based virtual reality firm Within.

“’Meta could have chosen to try to compete with Within on the merits,” but is instead trying to buy a leading company in “a vitally important category,” the FTC wrote in what The New York Times calls the first antitrust action under new chair Lina Khan. The FTC’s injunction request puts Khan “on a collision course with Mark Zuckerberg, Meta’s chief executive, who is also named as a defendant in the request.”

In a separate article, NYT says Khan’s Meta suit “upends antitrust standards” by “filing cases in tech areas before they mature.” Meta says in a statement the FTC’s case has “no merit,” and is “based on ideology and speculation, not evidence.” Meta is already producing commercials for Within’s “Supernatural” fitness app, popular with users of the Meta Quest 2 VR headset.

To help offset losses in its pioneering Reality Labs unit, Meta this week announced a $100 price increase for Quest 2 hardware, which beginning August 1 will sell for $399 for a 128GB version and for $499 for the 256GB model, TechCrunch reports. Reality Labs generated $2.8 billion in Q2, a 15.4 percent increase over Q2 2021. The losses lightened by 5.5 percent from Q1 2022. The fledgling division includes augmented and virtual reality consumer hardware, software and content.

On the Wednesday earnings call, Zuckerberg said the company is slowing some of its ambitious multi-year projects and plans to “reduce headcount growth” throughout the year. That said, the company founder and CEO called the metaverse “a massive opportunity” that “enables deeper social experiences where you feel a realistic sense of presence with other people.”

“Developing these platforms will unlock hundreds of billions of dollars, if not trillions, over time,” he added. Setting off on that journey, Reality Labs revenue increased 48.2 percent year-over-year, to $452 million in Q2, per Meta’s earnings release.

There was other good news. Facebook added 60 million daily active users, a 3 percent increase, and the DAUs across Meta’s social family, including WhatsApp and Instagram, increased 4 percent, to 2.88 billion. This was the second consecutive quarter Meta added users, reversing the Facebook flatline that triggered panic following the Q4 report.

On Wednesday’s earnings news, Meta shares “had risen more than 6.5 percent during the regular trading day to close at $169.58,” reports Deadline. On Thursday, shares slid 5.5 percent to close at $160.72. Zuckerberg attributed the lackluster financial results to “an economic downturn that will have a broad impact on the digital advertising business,” adding that “the situation seems worse than it did a quarter ago.”

Related:
Mark Zuckerberg’s Bid to Reinvent Facebook Parent Meta Hits Early Snags, The Wall Street Journal, 7/28/22
‘Operating With Increased Intensity’: Zuckerberg Leads Meta into Next Phase, The New York Times, 7/26/22