January 6 committee subpoenas Google, Facebook, Twitter and Reddit in probe of Capitol attack

The logos of Facebook and Google apps displayed on a tablet.

Denis Charlet | AFP via Getty Images

The House select committee investigating the deadly Capitol riot has subpoenaed social media giants Twitter, Reddit and the parent companies of Facebook and Google, the panel’s chairman said Thursday.

The bipartisan committee had asked for a trove of records last summer from those and other social companies, but said it received “inadequate responses” from some of the largest platforms.

The committee again demanded that Google parent company Alphabet, Twitter, Reddit and Meta — formerly known as Facebook — hand over a slew of records related to domestic terrorism, the spread of misinformation and efforts to influence or overturn the 2020 election.

“Two key questions for the Select Committee are how the spread of misinformation and violent extremism contributed to the violent attack on our democracy, and what steps — if any — social media companies took to prevent their platforms from being breeding grounds for radicalizing people to violence,” Chairman Bennie Thompson, D-Miss., said in a statement Thursday.

“It’s disappointing that after months of engagement, we still do not have the documents and information necessary to answer those basic questions,” Thompson said. “The Select Committee is working to get answers for the American people and help ensure nothing like January 6th ever happens again. We cannot allow our important work to be delayed any further.”

Representatives for Meta, Alphabet, Twitter and Reddit did not immediately respond to CNBC’s requests for comment.

The committee is tasked with investigating the facts and causes surrounding the Jan. 6 Capitol riot, when hundreds of former President Donald Trump’s supporters violently stormed the building and delayed the transfer of power to current President Joe Biden.

The committee believes the social media giants have held back information that is central to the House investigation, Thompson said in letters to each of the four firms.

Thompson told Alphabet CEO Sundar Pichai that the company failed to produce documents clarifying its discussions about content moderation and the policies that led to Trump’s suspension from Google-owned YouTube in the wake of the Capitol riot.

Thompson also said Meta has not handed over documents related to the reported disbandment of Facebook’s team focused on election risks ahead of the invasion.

The chairman accused Reddit of failing to conduct a “thorough review of its records” responsive to the committee’s requests. He also said Twitter hasn’t produced documents that fully explain why it suspended Trump’s account.

Analysts on metaverse benefiting chipmakers, big tech, crypto

Baidu’s metaverse concept on XiRang starts with a “Creator City” with a tall skyscraper at its center, according to this visualization shared with reporters on Dec. 21, 2021.

Baidu

The metaverse, which requires a massive amount of computing power, is set to benefit global chipmakers— but other tech-related industries could also gain from it, analysts say.

Widely seen as the next generation of the internet, the metaverse refers broadly to a virtual world where humans interact through three-dimensional avatars that can be controlled via virtual reality headsets like Oculus.

Through the metaverse, users can engage in virtual activities such as gaming, virtual concerts or live sports.

The metaverse drew much attention last year, when social networking giant Facebook announced it was changing its name to Meta in October.

Big tech firms will benefit as the technologies related to that virtual world emerge, analysts said.

“The metaverse winners are really the technology companies,” DBS Bank’s Chief Investment Officer Hou Wey Fook told CNBC’s “Squawk Box Asia” on Monday. Semiconductor firms would be a clear beneficiary as the metaverse will need a lot of computing power, he said.

However, the benefits to chipmakers will be “uneven,” Morningstar said in a report last week.

“Since many of the tasks that take place in a ‘metaverse’ involve real-time processing of immense amount of data, this will require the chips involved to use advanced process nodes that are only available at TSMC, Samsung and Intel,” it said.

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Other main areas set to support the metaverse infrastructure that investors could consider would be firms that are supplying the “key building blocks,” such as cloud computing, artificial intelligence and video games graphics, said private banking firm Lombard Odier in a December report.

In such cashless, virtual environments, blockchain technology and cryptocurrencies may also play a key role. Blockchain supporting non-fungible tokens, or NFTs — digital tokens that represent proof of ownership of assets such as art, collectibles or memes — could create an “interesting” ecosystem for digital content creation and monetization, the bank said.

“These could confer the right to use artworks or own creatures created in the metaverse, opening the door to a new virtual economy. In this realm, human creativity has virtually no limits,” the firm said.

Facebook parent Meta, as well as Apple, Microsoft and Google are gearing up to release new hardware products and software services for the metaverse.

In Asia, China is set to go big on the metaverse as well. Its biggest city, Shanghai, included the metaverse in its five-year development plan. The plan called for “encouraging the application of the metaverse in areas such as public services, business offices, social entertainment, industrial manufacturing, production safety and electronic games.”

— CNBC’s Evelyn Cheng contributed to this report.

Investors are paying millions for virtual land in the metaverse

It’s no secret the real estate market is skyrocketing, but the Covid pandemic is creating another little-known land rush. Indeed, some investors are paying millions for plots of land — not in New York or Beverly Hills. In fact, the plots do not physically exist here on Earth.

Rather, the land is located online, in a set of virtual worlds that tech insiders have dubbed the metaverse. Prices for plots have soared as much as 500% in the last few months ever since Facebook announced it was going all-in on virtual reality, even changing its corporate name to Meta Platforms.

“The metaverse is the next iteration of social media,” said Andrew Kiguel, CEO of Toronto-based Tokens.com, which invests in metaverse real estate and non fungible token-related digital assets. 

[Digital real estate] prices have gone up 400% to 500% in the last few months.

Andrew Kiguel

Tokens.com CEO

“You can go to a carnival, you can go to a music concert, you can go to a museum,” Kiguel said. 

In these virtual worlds, real people interact as cartoon-like characters called avatars, similar to a real-time multiplayer video game. Today, people can access these worlds through a normal computer screen, but Meta and other companies have a long-term vision of building 360-degree immersive worlds, which people will access through virtual reality goggles like Meta’s Oculus.

A recent report by crypto asset manager Grayscale estimates the digital world may grow into a $1 trillion business in the near future. 

Here, major artists, including Justin Bieber, Ariana Grande and DJ Marshmello, are performing as their own avatars. Even Paris Hilton DJ’ed a New Year’s Eve party on her own virtual island.

Kiguel’s company recently dropped nearly $2.5 million on a patch of land in Decentraland — one of several popular metaverse worlds. “Prices have gone up 400% to 500% in the last few months,” Kiguel said.

Another hot metaverse world is the Sandbox, where Janine Yorio’s virtual real estate development company, Republic Realm, spent a record $4.3 million on a parcel of virtual land. 

The digital world, to some, is as important as the real world.

Oren Alexander

Real estate broker

Yorio tells CNBC her company sold 100 virtual private islands last year for $15,000 each. “Today, they’re selling for about $300,000 each, which is coincidentally the same as the average home price in America,” she said.

A risky investment

“The digital world, to some, is as important as the real world,” Miami-based real estate broker Oren Alexander tells CNBC. “It’s not about what you and I believe in, but it’s about what the future does.”

Just like property in the real world, Kiguel says the metaverse is about three things: location, location, location.

“There are areas when you first go into the metaverse where people congregate — those areas would certainly be a lot more valuable than the areas that don’t have any events going on,” Kiguel said.

To be sure, those heavily trafficked areas are reeling in big spenders.

“Think about the board game Monopoly. We just bought Boardwalk and the surrounding area,” Kiguel said. “Areas where people congregate are far more valuable for advertisers and retailers to find ways to get in there to access that demographic.”

For example, Snoop Dogg is building a virtual mansion on a plot of land in Sandbox, and someone recently paid $450,000 to be his neighbor.

[It’s] highly, highly risky. You should only invest capital that you’re prepared to lose.

Janine Yorio

Republic Realm CEO

“I think it absolutely matters who your neighbor is,” said Yorio. “That’s kind of true of almost anything, right? It’s like a club and you want to be around people that share similar interests.”

Buying virtual land is pretty simple — either directly from the platform or through a developer. Investors build on their land and make it interactive. “You can decorate it, you can change it, you can renovate,” Yorio says. “It’s code.”

But Yorio cautions that investing in digital real estate is risky business.

“[It’s] highly, highly risky. You should only invest capital that you’re prepared to lose,” Yorio tells CNBC. “It’s highly speculative. It’s also blockchain-based. And as we all know, crypto is highly volatile. But it can also be massively rewarding.”

Mark Stapp, professor and director for real estate theory and practice at Arizona State University, agrees. “I would not put money into this that I didn’t care about losing. I certainly wouldn’t,” Stapp says. “If it continues the way it’s going, it is most likely going to be a bubble. You’re buying something that isn’t tied to reality.”

Take-Two Interactive to buy FarmVille creator Zynga for $12.7 billion

Signage on Zynga headquarters in San Francisco, California, U.S., on Wednesday, Aug. 4, 2021. Zynga Inc. is expected to release earnings figures on August 5.

David Paul Morris | Bloomberg | Getty Images

Take-Two Interactive says it is buying mobile gaming company Zynga for $12.7 billion with a mix of cash and stock, marking the latest blockbuster acquisition in a string of major deals in the video game industry.

The company announced Monday that it would acquire all outstanding shares of Zynga at $9.86 apiece, a 64% premium to Zynga’s closing price Friday. Zynga’s stock skyrocketed 45% in morning trading Monday, while Take-Two slumped more than 13%.

Take-Two said Zynga shareholders will receive $3.50 in cash and $6.36 in Take-Two stock for each share of Zynga outstanding at the closing of the transaction. The deal, which is subject to regulatory and shareholder approvals, is expected to close by June 30, 2022.

“We are trying to build a business over a very long period of time,” Take-Two CEO Strauss Zelnick told CNBC’s “Squawk on the Street” on Monday. “We’ve paid attention to creating value for our players, for our colleagues and for our shareholders, and that’s worked out over a very long period of time.”

Take-Two said the deal gives Zynga an implied enterprise value of $12.7 billion. On an equity basis, Zynga’s market value would be closer to $11 billion, according to CNBC calculations. The value could be subject to change depending on fluctuations in Take-Two’s stock price.

Take-Two said part of the deal would be funded by $2.7 billion in financing from JPMorgan. The remainder will come from cash on its balance sheet and the proceeds of new debt issuance.

Best known for its FarmVille series, Zynga initially flourished on Facebook, at one point becoming the most successful app developer on the platform. In the years since, Zynga turned its focus to mobile, hoping to capitalize on explosive growth in the smartphone era.

While the company was viewed as a key beneficiary of stay-at-home trends brought about by Covid-19, its share price has fallen nearly 38% in the past year, with some investors questioning whether the pandemic gaming boom has legs in the long term.

Michael Pachter, managing director of equity research at Wedbush Securities, said the acquisition was a “solid move.” He has a $15 price target on Zynga stock, much higher than Take-Two’s offer.

“Take-Two should see an acceleration of its mobile business, including taking existing brands and turning them into mobile franchises,” Pachter told CNBC by email Monday. He expects Take-Two to take a “hands-off” approach to managing the combined company, which will be helmed by Zelnick.

While FarmVille is Zynga’s most well-known game, it has published several other notable titles including CSR Racing, Empires & Puzzles, and Harry Potter: Puzzles & Spells, which is based on Warner Bros.’ Harry Potter franchise.

Take Two, which is known for Grand Theft Auto and other blockbuster console and PC franchises, is hoping to tap into the continued growth of mobile gaming, which accounts for more than half of the entire video game industry.

Take-Two, which reported $6.1 billion in net bookings in the 12 months ended Sept. 30, 2021, said it expects mobile to comprise more than 50% of its net bookings in the next fiscal year, up from 12% in fiscal 2022. The company defines net booking as the “net amount of products and services sold digitally or sold-in physically” over a certain period.

Zelnick said he expects the deal to create $100 million in annual cost synergies within the first two years after closing and potential net bookings of at least $500 million over time.

The deal follows a series of consolidation efforts in the $180 billion video game industry.

Microsoft bought Bethesda, the company behind the Fallout and The Elder Scrolls franchises, for $7.5 billion in 2020, while Electronic Arts acquired U.K. racing game developer Codemasters for $1.2 billion later that year. In 2021, Tencent announced deals to buy British gaming studio Sumo Group, as well as Turtle Rock Studios, the U.S.-based creator of zombie game Back4Blood.

 — CNBC’s Jessica Bursztynsky contributed to this report.

How A.I. is set to evolve in 2022

An Ubtech Walker X Robot plays Chinese chess during 2021 World Artificial Intelligence Conference (WAIC) at Shanghai World Expo Center on July 8, 2021 in Shanghai, China.

VCG | VCG via Getty Images

Machines are getting smarter and smarter every year, but artificial intelligence is yet to live up to the hype that’s been generated by some of the world’s largest technology companies.

AI can excel at specific narrow tasks such as playing chess but it struggles to do more than one thing well. A seven-year-old has far broader intelligence than any of today’s AI systems, for example.

“AI algorithms are good at approaching individual tasks, or tasks that include a small degree of variability,” Edward Grefenstette, a research scientist at Meta AI, formerly Facebook AI Research, told CNBC.

“However, the real world encompasses significant potential for change, a dynamic which we are bad at capturing within our training algorithms, yielding brittle intelligence,” he added.

AI researchers have started to show that there are ways to efficiently adapt AI training methods to changing environments or tasks, resulting in more robust agents, Grefenstette said. He believes there will be more industrial and scientific applications of such methods this year that will produce “noticeable leaps.”

While AI still has a long way to go before anything like human-level intelligence is achieved, it hasn’t stopped the likes of Google, Facebook (Meta) and Amazon investing billions of dollars into hiring talented AI researchers who can potentially improve everything from search engines and voice assistants to aspects of the so-called “metaverse.”

Anthropologist Beth Singler, who studies AI and robots at the University of Cambridge, told CNBC that claims about the effectiveness and reality of AI in spaces that are now being labeled as the metaverse will become more commonplace in 2022 as more money is invested in the area and the public start to recognize the “metaverse” as a term and a concept.

Singler also warned that there could be “too little discussion” in 2022 of the effect of the metaverse on people’s “identities, communities, and rights.”

Gary Marcus, a scientist who sold an AI start-up to Uber and is currently executive chairman of another firm called Robust AI, told CNBC that the most important AI breakthrough in 2022 will likely be one that the world doesn’t immediately see.

“The cycle from lab discovery to practicality can take years,” he said, adding that the field of deep learning still has a long way to go. Deep learning is an area of AI that attempts to mimic the activity in layers of neurons in the brain to learn how to recognize complex patterns in data.

Marcus believes the most important challenge for AI right now is to “find a good way of combining all the world’s immense knowledge of science and technology” with deep learning. At the moment “deep learning can’t leverage all that knowledge and instead is stuck again and again trying to learn everything from scratch,” he said.

“I predict there will be progress on this problem this year that will ultimately be transformational, towards what I called hybrid systems, but that it’ll be another few years before we see major dividends,” Marcus added. “The thing that we probably will see this year or next is the first medicine in which AI played a substantial role in the discovery process.”

DeepMind’s next steps

Language models — AI systems that can generate convincing text, converse with humans, respond to questions, and more — are also set to improve in 2022.

The best-known language model is OpenAI’s GPT-3 but DeepMind said in December that its new “RETRO” language model can beat others 25 times its size.

Catherine Breslin, a machine learning scientist who used to work on Amazon Alexa, thinks Big Tech will race toward larger and larger language models next year.

Breslin, who now runs AI consultancy firm Kingfisher Labs, told CNBC that there will also be a move toward models that combine vision, speech and language capability, rather than treat them as separate tasks.

Nathan Benaich, a venture capitalist with Air Street Capital and the co-author of the annual State of AI report, told CNBC that a new breed of companies will likely use language models to predict the most effective RNA (ribonucleic acid) sequences.

“Last year we witnessed the impact of RNA technologies as novel covid vaccines, many of them built on this technology, brought an end to nation-wide lockdowns,” he said. “This year, I believe we will see a new crop of AI-first RNA therapeutic companies. Using language models to predict the most effective RNA sequences to target a disease of interest, these new companies could dramatically speed up the time it takes to discover new drugs and vaccines.”

Ethical concerns

While a number of advancements could be around the corner, there are major concerns around the ethics of AI, which can be highly discriminative and biased when trained on certain datasets. AI systems are also being used to power autonomous weapons and to generate fake porn.

Verena Rieser, a professor of conversational AI at Heriot-Watt University in Edinburgh, told CNBC that there will be a stronger focus on ethical questions around AI in 2022.

“I don’t know whether AI will be able to do much ‘new’ stuff by the end of 2022 but hopefully it will do it better,” she said, adding that this means it would be fairer, less biased and more inclusive.

Samim Winiger, an independent AI researcher who used to work for a Big Tech firm, added that he believes there will be revelations around the use of machine learning models in financial markets, spying, and health care.

“It will raise major questions about privacy, legality, ethics and economics,” he told CNBC.

Trump SPAC DWAC stock rises after social media app sets launch date

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 29, 2021.

Brendan McDermid | Reuters

Shares of the company connected to a planned social media app backed by former President Donald Trump rose sharply Thursday after news that the app has set a target launch date of Feb. 21.

Blank-check company Digital World Acquisition Corp.’s stock jumped by nearly 20% by the close of the trading day Thursday, on significantly higher-than-average volume. The gains came after the Trump app Truth Social indicated on the Apple app store that it expects to go live next month.

Reuters first reported the target date posting on the app store, where Truth Social is available for pre-order. Feb. 21 is Presidents’ Day, a federal holiday.

Trump’s company is being marketed as an alternative to social media giants Twitter and Facebook, both of which banned him on the grounds of inciting the Jan. 6, 2021, riot at the U.S. Capitol. Thursday was the anniversary of that attack on Congress, which disrupted proceedings confirming the election of President Joe Biden over Trump.

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DWAC is a so-called special purpose acquisition company, and like other SPACs was created with no underlying business other than to raise capital from the public stock markets with a goal of identifying another company to merge with or buy with that money within a period or two years or less.

In December, DWAC disclosed in a public filing that two financial regulators, the Securities and Exchange Commission, and the Financial Industry Regulatory Authority, had opened investigations into stock trading and communications with Trump’s firm before the merger deal was announced.

Sony teases new PlayStation VR2 virtual reality headset

A woman plays ASTRO BOT Rescue Mission at a Playstation VR display at the Sony Exhibit at the Las Vegas Convention Center during CES 2019 in Las Vegas on January 9, 2019.

David McNew | AFP | Getty Images

Sony has announced new details about its next-generation virtual reality headset and teased what the experience will look like in a demo for an upcoming PlayStation game.

At the CES technology event in Las Vegas, Sony Interactive Entertainment CEO Jim Ryan confirmed its new hardware will be called PlayStation VR2, replacing its predecessor PS VR. The headset will work with Sony’s PlayStation 5 console, which it released in late 2020.

PS VR2 will come with an OLED display supporting 4K resolution, as well as a new controller called PS VR2 Sense, according to a blogpost published by Sony on Tuesday. It will link up to the PS5 via a single cord.

The system will also feature eye-tracking technology that affects how the player interacts with a game, and a built-in motor with vibrations to create headset feedback.

While Sony didn’t reveal what its new headset will look like, the company gave an early look at the in-game experience, showing off the trailer for a new game called Horizon Call of the Mountain.

The game is set in the same world as Sony’s blockbuster action role-playing game franchise Horizon, which sees players fight dinosaur-like machines in a post-apocalyptic world.

The series began with Horizon Zero Dawn in 2017, and Sony is set to release a sequel called Horizon Forbidden West next month.

The reveal of Sony’s PS VR2 hardware is especially timely as Facebook parent company Meta and others attempt to capitalize on a buzzy new trend in tech — the “metaverse.” It’s a kind of shared virtual experience in which users can work, play and interact with each other. Many iterations of the metaverse incorporate VR technology.

Meta rebranded from Facebook last year in a pivot to the metaverse. Its Oculus Quest 2 VR headset was a popular gift during the holidays, with the main Oculus app topping the rankings on Apple’s App Store on Christmas Day.

However, some experts are concerned about how safe the metaverse will be. Most VR systems lack parental controls, and apps like VRChat are rife with abuse.

Stock futures are flat after Dow and S&P 500 close at records

U.S. stock futures were steady in overnight trading on Monday after the Dow Jones Industrial Average and S&P 500 notched new record closes on the first trading day of 2022.

Dow futures fell just 20 points. S&P 500 futures slid 0.05% and Nasdaq 100 futures rose 0.05%.

On Monday, the major averages rose, lifted by the technology sector. The Dow Jones Industrial Average added 246 points to close at a record. The S&P 500 also registered a gain, climbing 0.6% to close at an all-time high.

The Nasdaq Composite was the relative outperformer, gaining 1.2% as Meta Platforms, Amazon and Google-parent Alphabet all closed in the green.

Tesla and Apple were bright spots of the trading day Monday. Tesla added 13.5% after the firm beat fourth-quarter and full-year delivery expectations. Apple became the first ever $3 trillion market capitalization company after rising 2.5% to a new record.

Reopening plays like airlines and cruise lines also rose on Monday. A jump in bond yields lifted bank stocks.

“Optimism on global economic growth and earnings momentum reviving since mid-December continued to grow in the first day of the New Year,” said Jim Paulsen, Leuthold Group chief investment strategist. “Those stocks most closely tied to better economic growth did the best [Monday] but were joined by new-era sectors including technology and communications.”     

On Tuesday, November’s Job Openings and Labor Turnover Survey will be released at 10:00 a.m. The JOLTS report is closely watched at the Federal Reserve and elsewhere for signs of labor market tightness.

December’s ISM manufacturing PMI is also set to release Tuesday morning.

Monday’s records moves come after markets closed out a strong 2021 last week. The S&P 500 rose nearly 27% for the year, with the Nasdaq Composite and Dow also posting strong gains.

“The well-known Santa Claus Rally ends on Tuesday. The good news is stocks look like they’ll be higher during these bullish 7 days,” said Ryan Detrick of LPL Financial. “It is when these days have been down when we need to worry, so that’s one less worry at least.”

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Apple’s $3 trillion market cap shows value of share buybacks, dividend

Apple CEO Tim Cook attends Apple’s “Ted Lasso” season two premiere at Pacific Design Center on July 15, 2021 in West Hollywood, California.

Emma McIntyre | WireImage | Getty Images

Apple capped off a stunning rise on Monday when it briefly became the first company to touch a $3 trillion market value before closing the day just short of the mark.

The relentless rise of Apple’s stock speaks to the power of Apple’s capital return program. In the past years, Apple has been the biggest repurchaser of its own shares in the S&P 500 by far.

Apple spent $85.5 billion to repurchase shares and $14.5 billion on dividends in Apple’s fiscal 2021 (which ended in September). Apple spends more on buybacks than other companies who repurchase a lot of their shares, including Meta Platforms (formerly Facebook), Alphabet, Bank of America, and Oracle.

Share buybacks boost stock a company’s stock price by reducing the supply of shares in the market, effectively returning the money to investors through higher share prices. In addition, reduced share counts increase earnings per share, a metric used by many value-based investors to judge a stock.

Apple started to pay quarterly dividends and repurchase its shares in March 2012. Since then and through last summer, Apple has spent over $467 billion on buybacks, according to S&P Global Market Intelligence, which calls the iPhone maker the “poster child” for share buybacks.

In fact, since August 2018, when Apple first hit a $1 trillion value, its stock is up 252%, compared to a market cap increase of about 200%. The disparity is a direct result of its buyback program, which has reduced the company’s share count from about 19.4 billion at the end of June 2018 to about 16.4 billion now.

Investors are beginning to see Apple as a “flight to safety” or quality trade thanks to the combination of its large cash flow and willingness to return that money to investors.

“The recent rally in shares in part may reflect investor expectations of relatively stable demand and continued strong cash flows and capital return for a stock that has performed largely in-line with the market,” Bank of America Securities analyst Wamsi Mohan wrote in a December note.

Can it continue?

Apple’s prodigious cash flow is one reason why investors believe that Apple can continue to spend significant amounts on share buybacks while still growing its headcount and investing in research and development. Apple reported an industry-leading $104 billion in cash flow in its fiscal 2021. By way of comparison, fellow tech giants Microsoft and Alphabet had about $77 billion and $65 billion in cash flows during their most recent fiscal years respectively.

Apple’s ability to generate free cash flow could also allow the company to continue its capital return program even when it becomes “net cash neutral,” which Apple CEO Tim Cook has said that it means that Apple’s total cash will equal its total debt.

In Dec. 2017, alongside a new tax law that allowed it to move most of its cash pile from overseas, Apple said that it planned to no longer maintain its huge cash pile and it planned to return it to investors over time.

Apple’s buyback pace immediately quickened, from $33 billion in fiscal 2017 to $73 billion in fiscal 2018. As of October, Apple has $66 billion in net cash, CFO Luca Maestri said at the time. That’s down from about $163 billion in net cash from when the decision was announced.

In November, Bernstein analyst Toni Sacconaghi predicted that Apple would be able to continue repurchasing between 3% and 4% of outstanding shares through 2026 without taking on net debt — Apple has borrowed in recent years to fuel its capital return program but its spending has been offset by its cash pile.

Apple generally updates investors on its shareholder return plans in April alongside its second-quarter financial results. Citi analysts expect Apple to announce another $90 billion in buybacks and to raise its dividend by 10%.

Meta, Apple, Google, Microsoft gear up for big augmented reality year

2022 is poised to be the biggest year yet for “the metaverse,” as Facebook parent Meta, Apple, Microsoft and Google gear up to release new hardware products and software services in what so far has been a niche market for early adopters.

The “metaverse” describes software and hardware that allow users to play or work in virtual 3-D spaces, or pull in information from the internet and integrate it with the real world in real time. For now, the metaverse might be accessed through a smartphone, but eventually, it will be experienced through advanced virtual reality or augmented reality headsets, backers say.

Big Tech companies are betting that gadgets that transport their users into enhanced or imaginary worlds will open up the biggest new market in software since Apple introduced the touchscreen smartphone in 2007. If the metaverse takes off, then perhaps everyone who has a smartphone today will also have a pair of computer glasses or a VR headset in a few years.

“Large tech platforms (which benefited from the rise of mobile computing apps) now look toward augmented reality as the next computing platform shift,” Goldman Sachs analyst Eric Sheridan wrote in a December note. He said it appears to be the “next logical shift in consumption patterns” and will create new industry leaders.

Companies are pouring research and development dollars into prototypes and foundational technologies and gearing up for a virtual battle when their products hit the market.

Venture capitalists invested $10 billion in virtual world start-ups in 2021, according to Crunchbase, and that doesn’t count the budgets from Big Tech players. For example, Meta CEO Mark Zuckerberg said the company spent so much money on VR and AR in 2021 that it cut the company’s profit by $10 billion.

Goldman Sachs analysts estimate that as much as $1.35 trillion will be invested in developing these technologies in the coming years.

Here’s where the big names in technology stand and what they’re expected to release next year:

Meta

Facebook’s test of its new Horizon Workrooms remote-working app for its virtual reality Oculus Quest 2 headsets is shown in this handout image obtained by Reuters on August 18, 2021.

Facebook | Reuters

Facebook is all in on metaverse technologies. In fact, in 2021, it changed its name to Meta Platforms to reflect the company’s new focus.

Meta has a lead over its Big Tech rivals: It’s currently manufacturing and selling VR hardware, and accounted for 75% of the market in 2021, according to IDC.

On Christmas, the most popular app in Apple’s U.S. App Store was the Oculus virtual reality app needed to use a Quest 2 headset, an imperfect but meaningful sign that a lot of people found virtual reality gear under the tree.

Meta hasn’t released sales numbers for its Quest. But Qualcomm, which makes the chip at the heart of the Quest, estimated that the company had shipped 10 million units by November. Those aren’t smartphone numbers, but they are significant — and boosted by major TV ad campaigns flogging the hardware.

Meta is planning to release another virtual reality headset this year that it’s been calling Project Cambria. The device, according to Facebook, will have hardware that makes it better for “mixed reality,” or using cameras on the outside of a VR headset to pipe the real world in to the viewer. Meta says it will also include face and eye tracking, which will make the device more responsive to the user’s commands.

Meta’s early foray into the market has given the company an early look at what software users want to boot up on their headsets. This month, it launched a social platform called Horizon Worlds, where people can attend comedy shows and movie nights inside Facebook’s virtual world.

Meta has acquired several companies that make popular apps for Oculus headsets, most notably Supernatural, a workout game in which users hit floating blocks in time with a beat.

This strategy may come under antitrust scrutiny. The Federal Trade Commission has opened an in-depth probe over the $400 million acquisition, The Information reported.

Apple

Augmented Reality

Source: Apple

Apple has never confirmed it is working on a headset, but it has been prototyping approaches inside its Technology Development Group for years.

Apple has been laying the groundwork for a major new product category. Its newer iPhones come equipped with Lidar sensors, which can measure how far away an object is — critical for location-based applications. Recent iPhones and iPads have software installed called ARkit, which allows developers to create apps that use the iPhone’s sensors for precise room mapping and localization.

These technological building blocks are creating the foundation for an entirely new product, expected to be an Apple-made high-end headset that mixes virtual reality and augmented reality, which reportedly could be launched in 2022.

Unlike Meta, Apple doesn’t discuss new hardware products until they are ready to be revealed. When Apple does release a headset, it is likely to shake up the entire market and provide a new approach for many challengers, like the iPhone did for smartphones and the Apple Watch did for smartwatches.

Apple’s competitors will watch closely to see what Apple CEO Tim Cook touts as the biggest advantages and selling points for its headset.

Content and how Apple integrates its services will be crucial to the device’s appeal. Will Apple introduce a new app store for virtual reality apps? Will the Apple headset have exclusive content or VR-based sports or music stemming from its purchase of NextVR?

Investors and market analysts are starting to wonder if future sales from headsets or other reality-based gadgets should push Apple’s stock even higher if it does release its first major new product category in seven years.

“Apple’s current market value does not reflect new product category launches,” Citi analysts wrote in December. “This will change with the launch of the new AR/VR headset in 2022.”

Apple won’t call it “metaverse,” though. “I’ll stay away from the buzzwords. We just call it augmented reality,” Cook said in September.

Google

Alphabet’s Glass being used in manufacturing

Alphabet

Microsoft

Soldiers wearing the IVAS system, a modified version of the HoloLens 2.

US Army

Microsoft was the first Big Tech company to introduce a fully featured AR headset, HoloLens, in 2016. But its current product is still a long way from a device that consumers will wear on a regular basis.

Instead, Microsoft has focused on “enterprise,” or selling headsets to businesses that can stomach the $3,500 list price and want to see if the technology makes its workers more productive.

The highest-profile client for HoloLens is the U.S. military. Microsoft won a $22 billion deal earlier this year to sell 120,000 custom HoloLenses to the government so soldiers can use them to “increase lethality.” However, earlier this year, the Army said it would delay the start of a HoloLens field test to 2022.

Whether the deal continues to get delayed or whether it turns out to be a winner for both sides will be an important signal for the ultimate health of the augmented reality market.

HoloLens has also piqued the interest of medical companies, who want to see if augmented reality can help improve operating rooms or even help do surgery remotely.

Microsoft is heavily investing in cloud services to be the glue for virtual worlds expected to be released to the public in 2022.

In March, the company announced Mesh, which allows software makers to create apps that allow different devices to share the same digital reality. Mesh works a little like a video call, only with three-dimensional holograms. Microsoft laid the groundwork for this push in 2017 when it acquired AltspaceVR.

These metaverse software features will be launched in 2022. Microsoft is integrating Mesh into its videoconferencing app, Teams, later this year. Features for Xbox games, another natural fit, are also in the works, with no release date yet. But it remains to be seen if AR headsets improve the kind of productivity applications that Microsoft is best known for.

Still, CEO Satya Nadella is enthusiastic.

“I can’t overstate how much of a breakthrough this is,” Nadella said in November.