Meta is reportedly slashing its Metaverse budget by up to 30% for 2026, signaling a potential shift away from its
ambitious virtual reality vision after incurring over $70 billion in losses. This move comes as the company doubles down
on artificial intelligence, investing heavily in AI infrastructure and talent acquisition.
Meta CEO Mark Zuckerberg seems to have finally realised that one of the company's biggest bets -- Metaverse -- is not
working (or not working as expected). It is also the technology that the company changed its very name after. In 2021,
after 17 years of being called Facebook, the social networking parent company behind Facebook, Instagram, WhatsApp and
Oculus changed its name to Meta. Now according to a report from Bloomberg, Meta is likely to slash its Reality Labs
budget, shaving off as much as 30%. The proposed metaverse cuts are reportedly part of the company's annual budget
planning for 2026, which included a series of meetings at Zuckerberg's compound in Hawaii last month. For those unaware,
Metaverse unit works on virtual reality headsets and a VR-based social network, which produces the company's Quest
mixed-reality headsets, smart glasses made with EssilorLuxottica's Ray-Ban and upcoming augmented-reality glasses. Meta
has struggled to sell its vision of an immersive metaverse of interconnected virtual worlds and expand the market for
its devices beyond the niche of the gaming community. Analysts see the move reflecting the overall lack of interest in
products like Meta’s social virtual reality platform Horizon Worlds, as well as its virtual reality hardware — both in
the industry at large, as well as among consumers.
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$70 billion in losses and counting
Zuckerberg’s Metaverse vision has posted more than $70 billion in losses over the past four years. Little doubt then
that Facebook parent's shares rose 4% as the move eased some investor jitters over a bet that CEO Mark Zuckerberg has
backed with billions of dollars. "Smart move, just late," told Huber Research Partners analyst Craig Huber to Bloomberg.
He added, "This seems a major shift to align costs with a revenue outlook that surely is not as prosperous as management
Layoffs may be coming to Meta
Reality Labs is made up of a Metaverse unit and a wearables unit. Within the Metaverse unit, executives are reportedly
considering making cuts to VR jobs. As the report says, cuts in resources that high are most likely to include layoffs
The report comes as Meta scrambles to stay relevant in Silicon Valley's artificial-intelligence race after its Llama 4
model met with a poor reception. To fuel its ambitious goals, Meta has committed as much as $72 billion in capital
spending this year. The company reorganized its AI efforts under Superintelligence Labs earlier this year, with
Zuckerberg said to be personally leading an aggressive talent acquisition, floating offers for startups and directly
courting prospects on WhatsApp with million-dollar pay packages. In fact, Meta's big hiring is said to have triggered a
talent war in the Silicon Valley. Last month, Meta Platforms said that it will invest $600 billion in the US
infrastructure and jobs over the next three years, including artificial intelligence data centers. Meta has doubled down
on AI, with a target of achieving superintelligence. Zuckerberg said Meta is building compute because "it's the right
strategy to aggressively front-load capacity so we're prepared for the most optimistic cases," on the company's recent
earnings call. Meta has forecast "notably larger" capital expenses next year thanks to investments in artificial
intelligence, including aggressively building data centers to power its AI push. Incidentally, earlier this week,
Zuckerberg announced that Alan Dye, a longtime designer at Apple, is joining Meta to lead a new creative studio inside
the Reality Labs division that would focus on design, fashion and technology. Dye will report to Andrew Bosworth, Meta’s
chief technology officer, who leads Reality Labs. “We’re entering a new era where A.I. glasses and other devices will
change how we connect with technology and each other,” Mr. Zuckerberg said in a post to Threads. “With this new studio,
we’re focused on making every interaction thoughtful, intuitive, and built to serve people.”