Mark Zuckerberg, from Meta, must significantly reduce the resources allocated to building the so-called metaverse, a project that he has already defined as the future of the company and the reason for changing Facebook’s name.
Executives are considering cuts of up to 30% in the budget of the group responsible for the metaverse next year, which includes virtual worlds product Meta Horizon Worlds and virtual reality unit Quest, according to people close to the discussions, who declined to be identified because they are internal company plans. These cuts will likely involve layoffs as early as January, according to the sources, although a final decision has not yet been made.
The reductions are part of the company’s annual budget planning for 2026, which included a series of meetings at Zuckerberg’s Hawaii estate last month, according to the sources. Zuckerberg has asked Meta executives to seek 10% cuts across the board, a standard request in recent budget cycles.
The Metaverse group was told to cut back further this year as Meta did not see the level of competition in the industry regarding technology that it expected, the sources said. The bulk of the cuts are expected to hit Meta’s virtual reality group, which concentrates the majority of spending related to the metaverse, including Horizon Worlds.
The metaverse project has been the target of criticism from investors, who see it as a drain on resources, as well as regulatory bodies, who point out concerns about the privacy and safety of children in virtual worlds. Following the announcement, Meta shares rose as much as 5.7% as markets opened in New York, their biggest intraday gain since July 31.
A Meta spokesperson declined to comment.
Continues after advertising
Despite Zuckerberg’s conviction that people will one day work and play in virtual worlds, Meta’s vision for the metaverse hasn’t taken off. In 2021, when Facebook was facing issues related to user security and privacy, Zuckerberg rebranded the company around the idea of the metaverse and began investing heavily in this vision.
The metaverse group is within Reality Labs, a division of Meta focused on long-term bets, such as virtual reality headsets and augmented reality glasses. That division has racked up losses in excess of $70 billion since the start of 2021. Zuckerberg has largely stopped mentioning the Metaverse in public and on earnings calls, focusing instead on developing large AI models that underpin chatbots and other generative AI products, as well as hardware tied to those experiences, like Meta’s Ray-Ban smart glasses.
Some analysts and investors advocate that Zuckerberg abandon Reality Labs products that continue to consume resources without generating significant revenue. In April, Mike Proulx, vice president at research and consulting firm Forrester, predicted that Meta would “shut down its metaverse projects like Horizon Worlds” before the end of the year.
Continues after advertising
The Reality Labs division “remains a leaky bucket,” he said in an email at the time, highlighting the unit’s losses. Ending efforts with the metaverse, according to Proulx, “would allow the company to focus more on its AI projects, including Llama, Meta AI and AI glasses.”
Meta remains committed to building hardware for consumers and recently hired Apple’s top design executive to help.
© 2025 Bloomberg L.P.
Continues after advertising
