Did Mark Zuckerberg Throw $77 Billion in Our Money Into the Toilet?

Meta recently announced that it was sharply cutting back its Metaverse division so that it could put more money into its AI projects. This is after its CEO, Mark Zuckerberg, spent around $77 billion to build up his Metaverse, which apparently never really caught on with users.

On the one hand, this can be seen as just a mistaken investment decision of the sort companies make all the time, just an especially large one. And it was Facebook’s money in the sense that investors chose to buy up Facebook stock (now Meta) and/or lend it money through bonds or loans.

That story is all true, but there is a public good aspect to investment that it is important to recognize. Ostensibly, we become wealthier as a country in large part because U.S. corporations invest in areas that increase productivity and thereby lead to economic growth. (We also get economic growth when governments build infrastructure, support research, and people gain education.)

It is easy to point to investments that fit this wealth-creating bill. The investments by Apple in developing home computers and smartphones are two obvious examples. Or, going back a century, the investment by Ford in developing low-cost mass-produced cars. Both led to huge benefits to society.

This is the argument for the benefits of capitalism. The quest for profit provides incentive for companies to innovate and develop ways to produce better and/or cheaper products.

But 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. When Zuckerberg invested $77 billion in Meta he was pulling software engineers away from other tasks that might have been more productive. The same is true of all the other people who worked on the planning and implementation of his Meta vision. These were all people who could have otherwise been productively employed.

There were also physical resources used to advance Zuckerberg’s Meta plans. Computers, office space, electricity, and other physical resources were tied up in the $77 billion that Zuckerberg spent trying to make Meta into a profitable project. All these resources could have been better used elsewhere. (Maybe the resources to build office space could have instead been used to build affordable housing in the expensive Bay Area.)

Anyhow, Mark Zuckerberg’s wasted $77 billion becomes more interesting in the context of the hundreds of billions that Meta, Google, Open AI, and other major tech companies are throwing into AI. The impact of this spending is being very clearly felt throughout the economy.

AI has been a major source of growth in the economy, as these companies have snatched up many of the country’s and world’s top software engineers. They are also putting huge demands on the nation’s electricity grid as the data centers they are constructing are massive energy hogs. This is also pushing back efforts to reduce greenhouse gas emissions.

In addition, the multitrillion-dollar stock valuations of the major tech companies are driving demand in the economy through the wealth effect. The spending of wealthy stockholders explains most of the growth in consumption in 2025.

The obvious question that needs to be asked in this context is whether Mark Zuckerberg has gotten a lot smarter in the five years since he decided to throw $77 billion in the garbage with Meta? There are some reasons for thinking that he may not be any sharper today than he was back in 2020. We are likely to learn the answer in 2026.

This first appeared on Dean Baker’s Beat the Press blog.

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