Meta is reportedly going to slash spending on the metaverse

Meta is reportedly planning steep cuts to its metaverse division, according to Bloomberg. This is happening just a few years after the company changed its name from Facebook to reflect its renewed interest in that same metaverse.

Bloomberg notes that the metaverse department could get hit with significant budget cuts in the near future, with layoffs potentially occurring early next year. The budget cuts could go as high as 30 percent and will likely impact the virtual worlds product Meta Horizon Worlds and the Quest virtual reality headset. The publication did note that this isn’t a done deal just yet.

Company insiders say this is all part of Meta’s annual budget planning for 2026 and that the cuts were discussed at a series of meetings at CEO Mark Zuckerberg’s compound in Hawaii. The metaverse team was reportedly asked for deeper-than-average cuts because the technology hasn’t exactly taken the world by storm.

As a matter of fact, the whole metaverse idea has been a dud with investors, who see it as a drain on resources. Consumers aren’t exactly keen on the idea either, even if they still buy VR headsets and traditional games. It’s one thing to throw on a headset to shoot bad guys for 20 minutes but it’s a whole other thing to, well, wander around a fake Abercrombie & Fitch for hours looking to spend real money on fake clothing for an avatar.

The report does suggest that Zuckerberg still believes that people will one day spend the majority of their time in virtual worlds, but these cuts signal that he understands that this idea is still years or decades away from fruition. The metaverse sits within a company division called Reality Labs that has lost more than $70 billion since 2021. Zuckerberg has also largely refrained from mentioning the metaverse in public and in earnings calls.

So what will Meta be spending money on instead? It’s reportedly focused on further developing large AI models and chatbots, in addition to hardware products linked to AI experiences like those Ray-Ban smart display glasses.