（Singapore, 05.12.2025）Meta Platforms is preparing to make some of its most significant strategic adjustments in years, as CEO Mark Zuckerberg weighs deep budget cuts to the company’s once-ambitious metaverse vision. Just a few years after rebranding from Facebook to Meta to signal its commitment to virtual worlds, the company is now planning to scale back spending on those projects and redirect resources toward artificial intelligence and next-generation consumer hardware.
According to people familiar with the internal discussions, Meta executives have been reviewing proposals to cut the metaverse unit’s budget by as much as 30% in 2026. This division includes Meta Horizon Worlds — its virtual social platform — as well as the Quest virtual reality headset business. Cuts of that size could lead to layoffs as early as January, although no final decision has been made.
These discussions took place over the past month during a series of strategy meetings at Zuckerberg’s compound in Hawaii. As part of Meta’s annual budgeting cycle, the CEO has once again asked teams across the company to trim around 10% from their spending — something he has done for several years now to keep Meta lean. However, the metaverse group was told to explore deeper cuts this time, largely because the technology has not attracted the widespread competition or market adoption Meta once anticipated.
Meta confirmed that it plans to reduce investment in some metaverse initiatives, but stressed that the savings will be channelled into areas showing stronger momentum, especially AI-related hardware. A company spokesperson said Meta is “shifting some of our investment from Metaverse toward AI glasses and wearables given the momentum there” but added that there are “no broader changes” planned for Reality Labs beyond this adjustment.
The move marks a notable change in direction for a company that just four years ago described the metaverse as the future of digital life — a place where people would work, play, socialise and even shop using virtual and augmented reality devices. Zuckerberg championed the idea so strongly that he changed the company’s name to Meta in 2021, at a time when Facebook was facing public criticism over privacy, user safety and misinformation issues. Investing in long-term innovation, he argued then, would reshape not only Meta but the internet itself.
But the metaverse has not grown into the cultural or commercial force Zuckerberg envisioned. Reality Labs, the division that oversees Meta’s metaverse ambitions, has lost more than US$70 billion since 2021. Despite years of heavy spending, Horizon Worlds struggled to retain users, and VR headsets remain a niche product. Meanwhile, regulators and child-safety advocates have criticised the platform for allowing young users into virtual environments they describe as poorly monitored.
Investors have long expressed frustration over the enormous cost of developing metaverse products that generate limited revenue. Those concerns resurfaced quickly after reports of the potential budget cuts, even as Meta’s shares rose 3.4% to US$661.53 in early trading — a sign that markets welcome a more disciplined approach to spending.
Some analysts say the latest developments simply reflect reality: generative AI has become the centre of competition in Silicon Valley, and Meta cannot afford to fall behind. The company is already investing heavily in AI models such as Llama, Meta AI and various AI-powered features across its apps. The popularity of Meta’s Ray-Ban smart glasses — which integrate AI capabilities — has reinforced the idea that consumer hardware linked to AI may have a clearer and faster path to mass adoption than VR headsets.
Industry watchers like Forrester’s vice-president Mike Proulx have been predicting for months that Meta would eventually scale back or even shut down parts of its metaverse operations. In April, Proulx referred to Reality Labs as “a leaky bucket” and suggested that cutting unprofitable projects could free up resources for more promising efforts in AI and wearables. He even anticipated that Horizon Worlds could be shuttered before the end of this year.
For now, there’s no indication Meta is closing Horizon Worlds entirely, but the platform is widely expected to face tightened budgets and reduced staffing. The heavier cuts are likely to fall on the virtual reality hardware team, which represents most of Meta’s metaverse spending.
Still, Meta insists that it remains committed to building hardware for the future. The company recently hired Apple’s top design executive — a significant move that suggests Meta still sees devices such as glasses, headsets and wearables as central to its long-term strategy. What is changing, however, is the company’s belief in which category will take off first. Instead of virtual reality, AI-powered devices now appear to be Meta’s next big bet.
Zuckerberg, who once spoke passionately about the metaverse during earnings calls and public events, rarely mentions it now. Instead, he highlights breakthroughs in generative AI, chatbot capabilities and innovative hardware that blends digital information seamlessly into daily life. While he still believes virtual worlds may one day play a meaningful role in how people connect, Meta’s priorities have clearly shifted.
As the company prepares its 2026 budget, employees and investors alike are watching closely to see how deep the cuts will be — and what they mean for the future of a vision that once defined the tech industry’s imagination. For now, Meta’s message is that it is not abandoning the metaverse entirely, but trimming ambitions to focus on technologies showing more immediate potential.
