Meta executives are reportedly considering cutting as much as 30% of the budget of the company’s metaverse group amid a shift of resources toward artificial intelligence.
The proposed cuts are part of Meta’s annual budget planning for 2026, and they could lead to layoffs as soon as January, Bloomberg reported Thursday (Dec. 4), citing unnamed sources.
Mark Zuckerberg, CEO of Meta, has also asked executives to look for 10% budget cuts across the company, according to the report.
Meta did not immediately reply to PYMNTS’ request for comment.
The company’s metaverse group includes the Meta Horizon Worlds virtual worlds product and the Quest virtual reality unit, according to the report.
Zuckerberg rebranded the company formerly known as Facebook and began spending heavily on the metaverse efforts in 2021, the report said.
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The metaverse effort has been questioned by investors who see it as a waste of resources and criticized by watchdogs who allege that its virtual worlds compromise children’s privacy and safety, per the report. In addition, it has not drawn the sort of competition that Meta expected to see from others in the industry.
Since the beginning of 2021, Meta’s Reality Labs division, which includes the metaverse group, has lost over $70 billion, according to the report.
PYMNTS reported in October that Meta’s building of infrastructure without a clear definition of what success looks like potentially derailed its metaverse. At that point, Reality Labs’ operating losses exceeded $4 billion per quarter.
That report added that Meta is pouring billions of dollars into its biggest artificial intelligence bet. It added that Zuckerberg told analysts during an Oct. 29 earnings call that he is “very focused on establishing Meta as the leading frontier AI lab.”
Meta Chief Financial Officer Susan Li said during the call that the company expects capital expenditures to be “notably larger in 2026 than in 2025,” with the main costs being data centers, cloud contracts and AI talent.
On Wednesday (Dec. 3), Zuckerberg said in a series of posts on Threads that Meta is establishing a new creative studio in Reality Labs focused on AI glasses and other devices and that the company’s metaverse design and art teams will join it.
Source: https://www.pymnts.com/