Post by : Rameen Ariff

Meta Platforms Inc. CEO Mark Zuckerberg is reportedly preparing significant budget reductions for the company’s metaverse division, including Meta Horizon Worlds and its Quest virtual reality unit, as part of 2026 planning. Executives are considering cuts as high as 30 percent for the metaverse group next year, with potential layoffs as early as January, according to sources familiar with the discussions. No final decision has yet been announced.

The proposed cuts come amid Meta’s broader effort to streamline spending across the company. Zuckerberg has instructed executives to seek 10 percent reductions across all divisions, a standard practice during past budget cycles, but the metaverse group is being asked to make deeper cuts due to slower-than-expected industry adoption and the high cost of maintaining virtual reality projects. The majority of the reductions are expected to impact Meta’s virtual reality unit, which accounts for the largest portion of metaverse-related spending, along with Horizon Worlds.

The metaverse initiative, once hailed by Zuckerberg as the future of the company and a key reason for Facebook’s rebranding, has faced scrutiny from investors and regulators. Critics argue that the projects have drained resources while providing limited revenue, and watchdogs have raised concerns about children’s privacy and safety within virtual worlds. Despite these challenges, Meta’s shares jumped as much as 5.7 percent in early trading, marking the company’s largest intraday gain since July.

Since the launch of the metaverse push in 2021, Reality Labs—the Meta division overseeing long-term projects such as VR headsets and AR glasses—has incurred losses exceeding $70 billion. Zuckerberg has gradually shifted his focus away from the metaverse in public statements and earnings calls, prioritizing AI projects and hardware that support AI experiences, including Ray-Ban smart display glasses. Analysts have long suggested that the company should reduce investment in metaverse projects like Horizon Worlds, redirecting resources toward AI initiatives including Llama and Meta AI.

Despite the budget cuts, Meta remains committed to developing consumer hardware and recently hired a top design executive from Apple to strengthen its product design capabilities. The company continues to invest in virtual reality and augmented reality hardware while adjusting its approach to the broader metaverse strategy in response to market realities and investor expectations.

The budget reductions and potential layoffs signal a major shift in Meta’s approach to the metaverse, emphasizing cost efficiency and a pivot toward technologies that promise greater immediate returns. While the vision of people working and playing in virtual worlds remains a long-term goal for Zuckerberg, the company appears to be recalibrating its strategy to balance innovation with financial sustainability.

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