Just a few years after Facebook changed its name to Meta and announced its full-fledged entry into the "metaverse," the social media platform appears to be facing a major strategic shift. According to...Bloomberg NewsIt is alleged that Meta is planning to drastically cut spending at its metaverse division, Reality Labs, with budget reductions potentially reaching 30%, and even layoffs in early 2026 are not ruled out.
This news reportedly came during a series of budget meetings at Meta CEO Mark Zuckerberg's private estate in Hawaii. Sources familiar with the matter revealed that Reality Labs' team was asked to undergo "deeper than average" cuts to its funding, indicating that the company's patience in this area is wearing thin.
Burning through $700 billion in four years, investors are losing patience.
Reality Labs, the core division of Meta that develops VR (virtual reality) and AR (augmented reality), has accumulated losses exceeding $700 billion since 2021. Although Mark Zuckerberg has repeatedly emphasized that this is a long-term investment in the future, for investors, it seems more like a bottomless pit of resource consumption.
The report points out that the concept of the metaverse has not taken off as expected among consumers. While players are still willing to buy VR headsets to play games (such as shooting games), their willingness to wander around virtual worlds (such as Horizon Worlds) or spend real money to buy virtual clothing remains low.
This budget cut is expected to directly impact the Meta Horizon Worlds virtual world platform and the hardware development process of the Quest series headsets.
Strategic Shift: From the Virtual World to AI and Smart Glasses
Although Mark Zuckerberg says he still believes people will eventually spend the vast majority of their time in the virtual world, this budget cut is seen as a signal that he understands that this vision is still years, or even decades, away from being realized.
So, where will the money saved go? The answer is obviously AI, which is currently the hottest topic.
The report indicates that Meta's future spending focus will shift to developing large-scale AI models, chatbots, and hardware products closely integrated with AI experiences. For example, the recently well-received Ray-Ban Meta smart glasses. This also explains why Mark Zuckerberg has been mentioning "metaverse" less frequently in public appearances and earnings calls, instead focusing on the development of AI agents and open-source models.
