Meta Plans Major Budget Cuts to Its Metaverse Division as Zuckerberg Shifts Focus to AI
Meta CEO Mark Zuckerberg is reportedly preparing significant budget reductions for the company’s metaverse division — once promoted as the future direction of the firm and the reason behind Facebook’s rebranding to Meta.
According to a Bloomberg report, internal discussions suggest that the budget for Meta’s metaverse group could be cut by up to 30% next year. The division includes Horizon Worlds and the Quest VR hardware unit.
Part of Meta’s 2026 Planning
The reported move is linked to Meta’s 2026 annual budget strategy. While Zuckerberg typically requests a 10% cost reduction across departments, the metaverse team is facing a much larger cut amid concerns over market response and slower-than-expected adoption.
The steepest reductions are expected in the virtual reality division, which accounts for the bulk of metaverse-related spending. The report also suggests potential layoffs beginning in January, although no final decision has been made.
The metaverse programme is overseen by Meta’s Reality Labs division, responsible for VR headsets and augmented-reality smart glasses. Since early 2021, the division has accumulated losses exceeding $70 billion.
Shift Toward Artificial Intelligence
The budget shift reflects Zuckerberg’s broader change in strategic priorities. In recent earnings calls, references to the metaverse have largely disappeared, replaced by a renewed emphasis on artificial intelligence.
Meta is now directing resources toward large AI models, chatbot development and new AI-enabled products such as the Ray-Ban Meta smart glasses.
Industry analysts had already predicted such a shift. Forrester Vice President Mike Proulx previously suggested that Meta may eventually scale down or discontinue its metaverse project, including Horizon Worlds, in order to prioritise AI initiatives such as Llama, Meta AI, and AI-powered wearables.