Meta To Cut Reality Labs Budget By Up To 30% As Zuckerberg Pivots From Metaverse To AI
Meta plans to reduce its Reality Labs division budget by as much as 30%, according to Bloomberg, marking a retreat from Mark Zuckerberg’s metaverse vision four years after the company’s high-profile rebrand.
Reality Labs has accumulated more than $70 billion in losses since 2021. The division develops virtual reality headsets, the Horizon Worlds platform, and Quest hardware. The upcoming cuts could reduce spending by $4 billion to $6 billion, with potential layoffs coming as early as January, although Meta has not finalized decisions.
Zuckerberg conducted a strategy meeting last month at his Hawaii compound to review Meta’s 2026 budget, Bloomberg reports. The CEO asked executives to identify 10% cuts across the company, but directed Reality Labs to cut deeper. “Competition in the broader VR market simply never took off the way Meta expected,” one person told Bloomberg.
Meta’s stock jumped more than 4% on the news, adding approximately $69 billion in market value. “Smart move, just late,” Craig Huber of Huber Research told Reuters. Investors have criticized the metaverse investment as an expensive distraction that drains resources without generating meaningful revenue.
Meta expects to spend around $72 billion on AI this year, nearly matching total metaverse losses since 2021. The spending covers data centers, model development, and hardware.
Tech companies are evaluating initiatives not directly tied to AI. Apple is revamping its leadership structure around AI concerns, while Microsoft reassesses “the economics of AI.” Amazon, Google, and Microsoft are investing billions in cloud infrastructure.
Source: Fortune
