Meta Platforms CEO Mark Zuckerberg is preparing to significantly reduce investment in the company’s metaverse initiatives, marking a dramatic retreat from what was once positioned as the tech giant’s defining vision for the future.
Company executives are discussing budget reductions of up to 30% for the metaverse division in 2026 , according to sources familiar with internal discussions.
The cuts would affect Meta Horizon Worlds and the Quest virtual reality unit , two cornerstone products of the company’s metaverse strategy.
Such deep reductions would likely trigger layoffs as early as January, though company leadership has not finalized specific plans.
The potential workforce reductions would add to Meta’s ongoing restructuring efforts that have already eliminated tens of thousands of positions since 2022.
The proposed cuts represent a stark reversal for Zuckerberg, who in 2021 renamed Facebook to Meta and declared the company would become “metaverse-first.”
At that time, the billionaire entrepreneur expressed his hope that Meta would be recognized primarily as a metaverse company, anchoring the organization’s identity around building immersive virtual worlds.
That ambitious pivot has proven costly. Reality Labs, Meta’s division focused on augmented and virtual reality development, has accumulated losses exceeding $46.5 billion since 2019.
The division continues to hemorrhage money each quarter despite years of investment in VR headsets, AR glasses, and virtual world platforms.
The budget discussions occurred during meetings at Zuckerberg’s Hawaii compound last month, part of the company’s annual planning process.
While Zuckerberg reportedly requested 10% cuts across all departments—a standard practice during Meta’s budget cycles—the metaverse group faces substantially deeper reductions.
The shift reflects broader changes in Silicon Valley’s priorities. Following the emergence of generative AI and ChatGPT in late 2022, major tech companies have redirected resources toward artificial intelligence development.
Meta has followed suit, with company executives reportedly dedicating most of their time to AI initiatives rather than metaverse projects.
Meta’s stock surged more than 6% following reports of the planned metaverse cuts , suggesting investors welcome the pullback from what many viewed as an expensive distraction.
The company’s shares have more than doubled in 2024 as Meta has demonstrated stronger financial discipline and capitalized on AI integration across its social media platforms.
The metaverse reduction also comes amid mounting competition in the VR and AR space.
Apple’s Vision Pro headset has established new benchmarks for spatial computing devices, while other tech giants continue developing their own mixed reality products.
For Zuckerberg, the budget cuts represent a calculated retreat from a vision that consumed billions in investment but struggled to attract mainstream users.
Meta Horizon Worlds, the company’s social VR platform, has faced criticism for poor graphics quality and low user engagement despite aggressive promotion.
The company has not officially commented on the reported budget plans.
As Meta navigates this strategic shift, the question remains whether the metaverse will become a footnote in tech history or simply a long-term bet that required recalibration.
For now, artificial intelligence appears to have displaced virtual worlds as Silicon Valley’s dominant obsession—and Meta is adjusting its spending accordingly.
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