Meta Platforms CEO Mark Zuckerberg is preparing for major budget cuts in the company’s metaverse division, a move that could result in layoffs early next year. The decision comes as Meta shifts its focus toward artificial intelligence and trims spending on long-term virtual reality projects.
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Meta Considering Deep Cuts in Metaverse Budget
According to sources familiar with internal discussions, Meta executives are exploring budget cuts of up to 30% for its metaverse division in 2026.
This unit includes:
- Meta Horizon Worlds
- Quest VR headsets
- Other Reality Labs projects
Such significant cuts would likely lead to layoffs as early as January, though final decisions are still pending.
Budget Review Held at Zuckerberg’s Hawaii Compound
The proposed reductions come as part of Meta’s annual financial planning.
Last month, executives held budget meetings at Zuckerberg’s Hawaii residence, where he asked leaders across the company to find 10% budget cuts, a recurring request in recent years.
However, the metaverse division was asked to cut even deeper because Meta has not seen the competitive momentum it once expected in the virtual reality space.
VR Division to Be Hit Hardest
Most of the planned cuts will target Meta’s virtual reality hardware unit, which represents the largest share of metaverse-related expenses.
Horizon Worlds is also expected to face resource reductions as Meta reassesses the future of its virtual worlds.
Investor Pressure and Safety Concerns
Meta’s metaverse investments have drawn criticism from:
- Investors, who view the project as financially draining
- Watchdogs, who have raised concerns about children’s safety and privacy in virtual environments
After news of the potential cuts surfaced, Meta’s stock surged up to 5.7%, marking its biggest intraday gain in months.
Metaverse Struggles Despite Massive Investment
Zuckerberg rebranded Facebook to Meta in 2021, betting heavily on the metaverse as the future of social interaction and work.
But the company’s Reality Labs division — which oversees VR and AR technologies — has lost over $70 billion since 2021.
In recent years, Zuckerberg has shifted his public messaging away from the metaverse, focusing instead on:
- AI development
- AI chatbots and generative models
- Ray-Ban smart glasses and other AI-powered hardware
Analysts Say Metaverse Projects May Be Shut Down
Some industry experts believe Meta may eventually end its metaverse ambitions entirely.
Earlier this year, analyst Mike Proulx predicted that Meta might “shutter its metaverse projects, including Horizon Worlds,” due to persistent financial losses.
Proulx argued that stepping away from Reality Labs would allow Meta to focus more resources on:
- Llama AI models
- Meta AI
- AI-powered wearable devices
Meta Still Committed to Hardware Development
Despite major cuts, Meta continues to invest in consumer hardware.
Recently, the company hired Apple’s former top design executive to strengthen its hardware lineup, signaling that Meta is not exiting the device market anytime soon.
Conclusion
Meta’s decision to consider 30% budget cuts marks a major shift in the company’s strategy. With mounting losses and growing pressure to prioritize artificial intelligence, the future of the metaverse — once Meta’s biggest ambition — remains uncertain. Layoffs appear likely, and the company’s long-term focus is clearly moving toward AI-driven products and innovations.