On Thursday local time, according to various media reports, US tech giant Meta Platforms is exploring multi-billion euro investments in European eyewear manufacturer EssilorLuxottica (EssilorLuxottica), hoping to step up the development of smart glasses.

In reverse, news that Meta is cutting spending on VR, AR, and Reality Labs in the metaverse division has gone unabated.

Meta AI powers Ray-Ban smart glasses

EssilorLuxottica is a well-known eyewear manufacturer that owns brands such as Ray-Ban (Ray-Ban). Meta is considering holding a small share in EssilorLuxottica, a move that comes at a time when the two sides are in talks to deepen existing cooperation.

Specifically, META is negotiating with EssilorLuxottica to acquire 5% of its shares, which are worth around 4.5 billion euros. This investment will help META to work more closely with EssilorLuxottica in the field of smart glasses.

According to the analysis, sales of Ray-Ban Meta smart glasses were higher than expected and became an important part of Meta's hardware business. By buying shares, Meta can build more devices with EssilorLuxottica and maintain ties with the Ray-Ban brand, which is popular among smart glasses buyers.

Previously, the “Ray-Ban Meta” smart glasses they collaborated to launch had some success in the market. Meta CEO Mark Zuckerberg has invested billions of dollars in recent years into the wearable technology market, including products such as virtual reality headsets.

EssilorLuxottica is also actively promoting deals that will attract a new generation of shoppers. Although the negotiations have yet to be finalized, the news has drawn the attention of the market, and EssilorLuxottica's stock price has fluctuated significantly after related reports.

AR/VR department cuts costs and reorganizes

Meta's AR/VR hardware team is also under pressure to cut expenses.

Meta invests tens of billions of dollars each year in its Reality Labs AR/VR division, but those investments have yet to deliver the expected returns. Reality Labs' spending is increasing every year, but Meta executives now want to start controlling spending and begin a long path to profit as the XR industry matures.

According to reports, Meta is asking the Reality Labs hardware team to cut spending by 20% by 2026, most of which will happen this year. Reality Labs has been restructured in the past year to this end, eliminating middle and senior management positions, including “a dozen directors and vice presidents,” and transferring some teams working on AI.

Despite pressure to cut spending, Meta hasn't completely abandoned AR and VR. Meta is still developing a new line of Quest headsets and AR glasses, and plans to launch them within the next three years.

These include an AR glasses to be released next year, as well as the Quest 4 VR headset, which is scheduled to be released in 2026 and 2027, respectively, and a high-end Quest headset that competes with Apple's Vision Pro. Meta added Meta AI assistant to its latest version of Ray-Ban smart glasses this spring, which can recognize objects and assist users with tasks such as translation.

Meta's Reality Labs division has accumulated losses of more than 55 billion dollars since 2019, and annual losses soared from 4.5 billion dollars in 2019 to 16.1 billion dollars in 2023. As investment in the new “darling” artificial intelligence continues to increase, Reality Labs' huge losses have raised questions from investors and within the company.

Susan Lee, the chief financial officer of Meta, said at a Reality Labs employee gathering in February this year that Reality Labs should target $1 trillion-dollar business opportunities in the AR and VR fields.

Zuckerberg said during the April earnings call that the company “has significantly improved” the future of smart glasses, which is one of the “larger areas” in which the company invests in its AR and virtual reality division, Reality Labs. Meta's collaboration with EssilorLuxottica, and continued investment in smart glasses and AR/VR hardware, shows Meta's strong determination in this field.