Mark Zuckerberg's dream of the metaverse has become bleak. With increased investment in AI, Meta continues to reduce staff in its Reality Labs division and requires its hardware team to cut spending by nearly 20% by 2026. Meta believes it has made significant investments in Reality Lab, but the division has accumulated losses of over $55 billion since 2019.
Meta is re-evaluating its burning department, Reality Labs, and plans to cut departmental expenses. The once hot metaverse is losing favor at Meta and is being replaced by artificial intelligence.
The Reality Labs department was asked to cut costs by 20%.
According to US technology media outlet The Information on July 18, as Meta increases its spending on artificial intelligence, company executives are increasingly restricting Reality Labs. This department mainly develops AR/VR products and once carried Zuckerberg's 'metaverse dream'.
A former department manager said that Reality Labs' hardware team was asked to cut costs by nearly 20% over the next two years, with most of the cuts taking place this year. Meta's CFO told employees that, given the company's huge investments, AR/VR should be positioned as a trillion-dollar opportunity.
Meta's huge investment in the department has yet to translate into expected results. Since 2019, Meta's cumulative losses on Reality Labs have exceeded $55 billion, with annual losses soaring from $4.5 billion in 2019 to $16.1 billion in 2023. In addition, the department has undergone several rounds of layoffs and reorganization in the past year, mainly targeting mid-to-high-level management.
Meta has not withdrawn from AR/VR.
According to multiple sources involved in the project, Meta is developing a series of new Quest headsets and AR glasses, planned for release in the next three years.
These include the first augmented reality glasses planned for release next year. Meta plans to release the Quest 4 VR headset in 2026, codenamed Pismo Low and Pismo High. Meta also plans to release a high-end Quest headset, codenamed La Jolla, in 2027, with the aim of competing with Apple's Vision Pro.
However, Meta's cumulative losses on Reality Labs continue to rise, and the company is increasingly questioning the department. With AI becoming increasingly popular, Meta is beginning to limit spending on Reality Labs and streamline team members.
Meta began massive layoffs at the end of 2022, ultimately cutting about 20% of its staff. Layoffs in Reality Labs were particularly prominent.
In the past year, the department has undergone several rounds of layoffs, mostly aimed at cutting mid-to-high-level management. At the end of June this year, Meta cut more than a dozen senior managers in Reality Labs, including Caitlin Kalinowski, former head of AR glasses hardware, and Steve McClure, former head of intelligent glasses hardware.
Despite not giving up on AR or VR, Meta is increasingly restricting the department and gradually shifting its focus to AI.
Meta is focusing on AI.
According to the report, Meta has transferred some of Reality Labs' AI-related employees to other departments. This month, the company transferred most of Reality Labs' AI voice team of about 140 to the generative AI team, marking a shift in Meta's strategic focus on AI.
Reality Labs cost reductions are happening at the same time as a weak VR market. According to data firm IDC, shipments of AR/VR headsets fell by 23.5% last year and 67.4% in the first quarter of this year. In addition, Meta's AR glasses planned for release next year (Hypernova) currently weigh more than 70 grams and have thicker frames, which current and former Meta employees say could discourage consumers.
Although the VR device market is weak, interest in AI devices is growing. meta is also shifting more focus to AI technology. This spring, the company added Meta AI assistant to the latest version of Ray-Ban smart glasses. The assistant can recognize objects and assist users in completing tasks such as translation.
In April, Meta also announced the release of its third-generation large language model (LLM), Llama 3, calling it 'the most powerful open-source LLM to date' and upgrading its AI assistant, Meta AI, based on Llama 3, calling it 'the smartest AI assistant you can now use for free'. Meta announced that Llama 3 will be enabled on cloud platforms such as Amazon, Microsoft and Google Cloud, and will be supported by chip giants such as Nvidia and hardware company Dell.
Editor/ping