Meta Plans Deep Cuts to Metaverse Division Amid AI Shift Meta is preparing to make significant budget cuts to its metaverse division, according to a new report. This strategic pullback comes just a few years after the company famously changed its name from Facebook to Meta to signal its commitment to building the virtual future. The metaverse department, which includes the Horizon Worlds virtual platform and the Quest VR headset line, could face budget reductions of up to thirty percent. Layoffs are reportedly possible early next year, though the plans are not yet finalized. Company insiders indicate the cuts were discussed during annual budget planning meetings for 2026, held at CEO Mark Zuckerberg’s compound in Hawaii. The metaverse team was asked to propose deeper cuts than other divisions, a reflection of the technology’s failure to capture mainstream adoption. The metaverse concept has proven unpopular with investors, who view it as a major financial drain. Consumer interest has also remained tepid. While people buy VR headsets for gaming, there is little appetite for spending significant time or real money in corporate virtual spaces, like digital stores for avatar clothing. The division housing the metaverse, called Reality Labs, has accumulated staggering losses exceeding seventy billion dollars since 2021. Zuckerberg has notably scaled back his public mentions of the metaverse in recent earnings calls. The report suggests Zuckerberg still holds a long-term belief that virtual worlds will become central to daily life. However, these cuts signal a pragmatic acknowledgment that such a future is likely years or even decades away. Instead, Meta is shifting its financial and strategic focus toward artificial intelligence. The company plans to channel resources into developing large AI models and chatbots. It is also prioritizing hardware products linked to AI, such as its line of Ray-Ban smart glasses with built-in displays and assistants. This move represents a significant recalibration for Meta, scaling back its most ambitious and costly bet to chase the current wave of generative AI innovation.
