Meta reportedly plans 30% budget cut to Reality Labs as metaverse ambitions shrink
Meta CEO Mark Zuckerberg is preparing to significantly reduce funding for the company’s metaverse division, according to reports indicating that Reality Labs may face budget cuts of up to 30%. The move marks a dramatic shift away from the metaverse-focused strategy that once drove Meta’s rebranding from Facebook.The restructuring could result in layoffs within teams responsible for virtual reality hardware, Horizon Worlds and long-term immersive computing research.
A sharp pivot from the metaverse vision
Reality Labs, Meta’s division dedicated to VR, AR and metaverse development, has absorbed tens of billions of dollars in losses over recent years as the company attempted to position immersive worlds at the center of its future. Despite heavy investment, adoption of platforms like Horizon Worlds has lagged behind expectations, and VR hardware sales remain modest compared to Meta’s AI and social media revenue streams.After years of branding the metaverse as the next major technological shift, Zuckerberg’s willingness to consider dramatic cuts underscores a strategic pivot toward artificial intelligence projects, which the company now views as essential for long-term competitiveness.
Reality Labs may lose nearly one-third of its funding
According to individuals familiar with internal discussions, leadership is evaluating a 30% reduction in the Reality Labs budget. Such a cut would affect development timelines, staffing levels and future hardware releases across Meta’s immersive technologies portfolio.Teams working on Quest headsets and the Horizon Worlds ecosystem may face the deepest restructuring, as the company shifts focus toward more profitable and strategically urgent initiatives.
The scale of the potential cuts suggests that Meta will deprioritize speculative metaverse projects in favor of near-term AI capabilities and infrastructure.
Layoffs expected, though final decisions are pending
While no official announcement has been made, sources indicate that team reductions are likely if the budget cut proceeds as proposed. The final structure of the reorganization is still under discussion, and Meta has not publicly confirmed any specific staffing decisions.Reality Labs previously experienced downsizing during earlier waves of company-wide layoffs, but a targeted budget reduction of this magnitude would represent the most direct rollback of Meta’s metaverse ambitions to date.
Investors welcome the shift toward financial discipline
Investor sentiment appears positive, with many shareholders viewing the cuts as overdue. Meta’s metaverse spending has long been a point of criticism, especially during periods of tightening economic conditions and pressure to increase profitability.The company’s recent financial performance has been strongly supported by advertising revenue and by its accelerating investment in AI infrastructure, including training compute, LLM deployment and recommendation system upgrades. Redirecting funds from long-horizon metaverse research to more immediately impactful technologies is expected to strengthen Meta’s near-term financial outlook.
If implemented, the restructuring would signal that Meta is prioritizing AI innovation and core business stability over speculative extended-reality ecosystems.
What the decision means for the future of the metaverse
A reduction in funding does not necessarily mean Meta is abandoning the metaverse, but the era of aggressive, high-risk bets on virtual worlds appears to be ending. Instead, Meta may fold metaverse development into a larger ecosystem strategy that emphasizes AI-driven experiences, lightweight AR interfaces and productivity tools rather than fully immersive virtual universes.The coming months will clarify how Reality Labs adapts and which long-term projects survive the restructuring. What is clear is that the metaverse is no longer positioned as the singular future of the company—a profound change from the narrative that defined years of Meta’s public messaging.
Editorial Team - CoinBotLab
Source: Bloomberg
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