Zuckerberg is expected to cut resources for building the metaverse, a project he once positioned as the company's future. Meta executives have discussed the possibility of reducing the metaverse division’s budget by up to 30% next year. This could include layoffs as early as January 2026.
Meta Platforms CEO Zuckerberg is expected to significantly reduce resource allocation for the so-called 'metaverse' project, which he once considered the future direction of the company and prompted its rebranding from Facebook to Meta.
According to media reports citing insiders, Meta executives have discussed cutting the metaverse division’s budget by as much as 30% next year. This division includes the virtual world product Meta Horizon Worlds and the Quest virtual reality business. Such a large-scale reduction is likely to take place as early as January next year alongside layoffs, although no final decision has been made.
The proposed metaverse cutbacks are part of Meta's 2026 annual budget planning. The related planning includes a series of meetings held last month at Zuckerberg’s residence in Hawaii. Additionally, Zuckerberg has asked senior executives to identify a 10% cost reduction across the entire company, a routine request in similar budget cycles over the past few years.
Due to Meta not observing the anticipated industry-wide competition in metaverse technology this year, the metaverse division has been instructed to implement deeper cuts. Most of the proposed reductions are expected to impact Meta’s virtual reality business, which constitutes the majority of metaverse-related expenditures; Horizon Worlds will also be subject to reductions.
The entire metaverse project has been under scrutiny by investors, who view it as a 'bottomless pit' of resource consumption, and by regulators, who accuse virtual worlds of potentially jeopardizing children's privacy and safety.
Although Zuckerberg remains convinced that people will eventually work and entertain themselves in virtual worlds, Meta’s vision of the metaverse has yet to truly take off. In 2021, amid public backlash against Facebook over user safety and privacy issues, Zuckerberg repositioned the entire company around the 'metaverse' and began heavily investing in this vision.
The metaverse business falls under Reality Labs, Meta’s division responsible for long-term bets such as virtual reality headsets and augmented reality glasses. Since early 2021, this division has accumulated losses exceeding $70 billion.
In recent years, Zuckerberg has rarely mentioned the 'metaverse' in public appearances or during earnings calls, shifting his focus to large artificial intelligence models supporting AI chatbots and other generative AI products. He is also paying more attention to hardware closely tied to these experiences, such as the smart display glasses developed in collaboration with Ray-Ban.
Some analysts and investors have long argued that Zuckerberg should divest Reality Labs' resource-draining products that struggle to generate significant revenue.
In April this year, Mike Proulx, Vice President of research and consulting firm Forrester, predicted that Meta might shut down its metaverse projects, such as Horizon Worlds, by the end of the year. In an email at the time, he stated that Meta's Reality Labs division remains a leaky bucket, incurring massive losses. Closing the metaverse business would allow the company to focus more on AI initiatives, including Llama, Meta AI, and AI glasses.
Meta remains firmly committed to the development of consumer hardware products and has recently hired a top design executive from Apple to join its team.
Editor/Lambor
