Meta significantly cuts metaverse investment, slashes next year's budget by 30%, Zuckerberg shifts focus to AI sector

Source: BlockMedia Original Title: Meta plans to drastically scale back metaverse business… Zuckerberg hints at shift in investment direction - Bloomberg Original Link: https://www.blockmedia.co.kr/archives/1015298 Meta CEO Mark Zuckerberg once positioned building the metaverse as the company’s future and the reason for its rebranding. According to a Bloomberg report, Meta plans to significantly cut resources allocated to metaverse development.

Metaverse division budget may be cut by up to 30% next year

Bloomberg, citing sources familiar with the matter, reported that company leadership is considering cutting next year’s metaverse division budget—covering products like Meta Horizon Worlds and Quest VR devices—by as much as 30%. While a final decision hasn’t been made yet, the sources said this level of cuts will likely include major layoffs in January.

This proposal to scale back the metaverse business is part of the company’s budget planning for fiscal year 2026 and was discussed last month during a series of meetings at Zuckerberg’s private estate in Hawaii. While Zuckerberg asked all departments to cut their budgets by 10%, the metaverse division was asked to make deeper cuts due to its underperformance in industry competition.

Most of the cuts will focus on the virtual reality (VR) division, which accounts for the majority of the company’s metaverse-related spending.

Investor criticism and $70 billion in losses

Meta’s entire metaverse initiative has faced concentrated criticism from investors, being seen as a waste of resources. Additionally, the project is under regulatory investigation for alleged violations of children’s privacy and safety in virtual worlds. Following reports of these cutbacks, Meta’s stock price rose 5.7% at the opening of the New York Stock Exchange, indicating investor support for Meta pulling back from the metaverse.

A Meta spokesperson declined to comment.

Although Zuckerberg remains convinced that people will eventually work and play in virtual worlds, Meta’s metaverse vision has yet to materialize. In 2021, amid user safety and privacy controversies, Facebook rebranded the entire company as “Meta” to align with the metaverse vision and began investing heavily in it.

The metaverse division is part of Reality Labs, Meta’s business unit focused on long-term projects like VR headsets and AR glasses. Since early 2021, Reality Labs has accumulated losses exceeding $70 billion, consuming massive capital. In recent months, Zuckerberg has significantly reduced references to the metaverse in public and on earnings calls, shifting focus to the development of large-scale AI models (the foundation for AI chatbots and other generative AI products) and hardware related to AI experiences, such as Ray-Ban smart display glasses.