In recent times, Mark Zuckerberg has championed the metaverse as the next digital platform, predicting it would create numerous jobs in Europe. However, emerging indicators suggest a starkly different scenario as Reality Labs, the core of the project, braces for an unprecedented austerity measure.
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Possible Budget Cuts of Up to 30% at Reality Labs?
According to Bloomberg, Meta is poised to slash nearly a third of its metaverse investment, a cut significantly deeper than the 10% savings mandated for other departments.
Virtual reality operations, including Quest headsets, Horizon Worlds, and some teams, are likely to be the first affected, with job cuts expected by early 2026. Since 2021, Reality Labs has brought in about $9.7 billion in revenue against a staggering $70 billion in losses. While products like Meta Ray-Ban glasses and VR headsets have gained a following, Horizon Worlds has struggled to deliver on its revolutionary promise.
Simultaneously, the market has reacted positively to this shift, with Meta’s stock climbing nearly 4%, indicating that investors view this pivot as a more rational strategy.
New Priority: AI as a Growth Engine
This budget realignment coincides with AI becoming a focal point at Meta. Indeed, Mark Zuckerberg has ramped up investments in this area, with a potential budget of $70 billion by 2026. Although Meta’s in-house language model, Llama, is still trailing behind competitors like ChatGPT or Gemini, the company plans to push forward with an aggressive strategy.
This year, Meta has bolstered its teams by attracting talent from OpenAI, as well as from Google and Apple. The acquisition of 49% of Scale AI for $14.3 billion also underscores this escalation, bringing Alexandr Wang to oversee all AI activities.
At the same time, Yann LeCun is preparing to leave the company, signaling a significant internal reshuffling.
A Deliberate Pivot, Not a Withdrawal
While Meta is scaling back its metaverse initiatives, the leadership asserts that they are not abandoning this long-term project. Instead, rumors suggest a reallocation of resources towards more tangible drivers to achieve a balance between futuristic vision and economic stability.
This shift marks a pivotal moment, as the metaverse, which once defined the company’s identity, now makes way for strategic generative AI as Meta’s future focus.
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Samantha Klein is a seasoned tech journalist with a sharp focus on Apple and mobile ecosystems. With over a decade of experience, she brings insightful commentary and deep technical understanding to the fast-evolving world of consumer technology.