Meta Platforms will cut between 20% and 30% of its metaverse-related budget for 2026, signaling a significant shift in strategy as CEO Mark Zuckerberg responds to growing investor pressure and pivots the company’s focus toward artificial intelligence and core revenue-generating platforms.
The reductions, first reported by Bloomberg News citing internal sources, target Reality Labs — Meta’s division responsible for virtual and augmented reality projects, including the Quest headset line and Horizon Worlds platform. Reality Labs has been a financial drag on the company, reporting cumulative losses exceeding $40 billion since 2020.
Strategic Retrenchment
Zuckerberg’s decision comes after Meta shares surged over 180% in 2023 and 2024, driven by cost discipline and strong growth in advertising and AI-driven engagement tools on Facebook and Instagram. In contrast, the metaverse effort has yet to yield significant user or commercial traction.
With investors increasingly prioritizing profitability and return on investment, the steep budget cuts reflect Meta’s recalibration toward technologies with clearer monetization paths — such as generative AI, messaging commerce, and ad targeting innovations.
Staff and Product Impact
While exact headcount implications remain unclear, Bloomberg reports that some metaverse-related teams are being downsized or reassigned, and certain experimental hardware projects could be delayed or canceled altogether. Reality Labs will still receive substantial funding, but with a tighter focus on market-ready products.
Broader Tech Trend
Meta’s shift mirrors a broader trend across big tech, with companies like Microsoft and Apple tempering XR ambitions amid uncertain consumer adoption. Analysts suggest Meta’s move may mark a turning point for how and when the metaverse concept scales commercially — if at all.
