$70 Billion in Operating Losses Over Five Years
Development of Smart Glasses and Other Devices Expected to Continue
Meta, which had heavily invested in metaverse-related businesses to the extent of changing its company name, has begun restructuring its operations after four years.
According to reports from Bloomberg and other sources on December 4 (local time), Facebook’s parent company Meta is considering a plan to cut its metaverse-related budget for 2026 by 30%.
The proposed cuts were discussed during the 2026 budget planning meeting held last month at CEO Mark Zuckerberg’s residence in Hawaii. The main reason is that the company has not seen the level of overall metaverse technology competition in the industry that it had anticipated. Most of the reductions are expected to focus on Reality Labs, which manufactures virtual reality (VR) devices, and the metaverse platform Horizon Worlds. In particular, if the budget plan is finalized, Reality Labs is expected to begin workforce reductions as early as next month. However, sources explained that a final decision regarding the budget cuts has not yet been made. Meta declined to comment on the matter.
In October 2021, Meta changed its name from Facebook to Meta, declaring its ambition to build a three-dimensional virtual world at the forefront of next-generation digital technology. At the time, CEO Zuckerberg stated, "I have been thinking a lot about our identity," and added, "Over time, I hope we will be seen as a metaverse company."
However, contrary to expectations, the metaverse business has recorded significant losses. Since early 2021, Reality Labs has accumulated more than $70 billion in operating losses. Financial analysts and investors have referred to the metaverse business as a "leaky bucket," arguing that Meta should discontinue it. Horizon Worlds has also faced criticism from civic groups, who claim that children are subjected to sexual and racial harassment on the platform, as well as privacy violations. Craig Huber, an analyst at Huber Research Partners, commented, "It is a wise decision, albeit a late one."
Recently, CEO Zuckerberg has refrained from mentioning the metaverse in public appearances and is instead focusing the company’s capabilities and resources on artificial intelligence (AI) fields such as "artificial superintelligence." However, Meta is expected to continue developing consumer hardware that has received positive market reviews, such as Ray-Ban smart glasses. To this end, Meta recently hired Alan Dye from Apple and appointed him as Chief Design Officer (CDO).
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