Meta is planning a significant scale-back of its metaverse projects next year as CEO Mark Zuckerberg shifts the company’s focus toward artificial intelligence.
According to sources familiar with the discussions, executives at the $1.7 trillion social media giant have considered slashing as much as 30 percent of the budget for its metaverse division. This unit includes teams developing Horizon Worlds, the company’s avatar-centric social virtual reality platform, as well as its Quest VR headsets. The potential cost-cutting measures, which could include layoffs, are not yet finalized. Bloomberg was the first to report on the internal deliberations.
Investors responded positively to the news, reflecting longstanding skepticism about Meta’s heavy spending on the metaverse, a long-term initiative that has struggled to gain traction with users and offers no immediate financial returns. Shares of the company rose as much as 7 percent in early trading in New York before settling with gains of roughly 4 percent, adding nearly $60 billion to Meta’s market value. Meta did not provide a comment on the reports.
The announcement comes just a day after Zuckerberg unveiled plans for a new design studio within Reality Labs, the company’s AR and VR division, which will focus on AI-powered wearable devices like smart glasses. Alan Dye, a former top designer at Apple, has been recruited to lead the new studio.
Zuckerberg first outlined his vision for the metaverse in 2021, promising a digital world where users could socialize, shop, and play games through avatars, and even rebranded Facebook as Meta to signal the company’s commitment. However, the effort has been hindered by technological challenges, safety concerns, and limited consumer demand. Investors have repeatedly pressured the CEO to rein in spending as Reality Labs has accumulated losses exceeding $70 billion since 2021.
Despite these setbacks, there have been some bright spots. Wearable products like Meta’s Ray-Ban smart glasses have shown early success, prompting Zuckerberg to further invest in AI-enabled devices. He has emphasized their importance to his vision of “superintelligence,” aiming to develop AI systems that surpass human capabilities.
Meta is now investing heavily in recruiting leading AI researchers and building infrastructure to support ambitious projects, including open-source AI models, AI-powered chatbots within its apps, and AI glasses envisioned as the next-generation computing platform.
This strategic pivot has already triggered a wave of executive changes and layoffs over the past year. Still, investors remain wary of the AI push. In October, shares fell more than 10 percent—erasing over $208 billion in value, Meta’s second-largest single-day loss—after Zuckerberg announced plans for even more aggressive AI investments in the coming year.
