Meta Platforms (META) is reportedly planning substantial budget cuts, including potential layoffs, within its Reality Labs division, signaling a further pull-back from the metaverse vision the company once championed.
According to a report from Bloomberg citing sources familiar with the discussions, executives are deliberating budget reductions of up to 30% for the company’s metaverse division in 2026. This unit includes its social virtual reality (VR) platform, Horizon Worlds, and the Quest headset product line.
The reported cuts go deeper than the standard 10% cost-saving targets reportedly requested by CEO Mark Zuckerberg across all departments. The deeper reduction is attributed, in part, to the broader tech industry’s slow adoption of the fully immersive metaverse concept Meta had anticipated.
The largest reductions are expected to hit the virtual reality group, which accounts for the majority of the company’s metaverse-related spending, with Horizon Worlds also facing likely decreases.
Meta rebranded from Facebook to Meta in 2021, betting its future and billions of dollars on the metaverse, which Zuckerberg termed the “next frontier” of computing. However, user adoption has fallen significantly short of expectations.
The Reality Labs division, which houses the metaverse group, has accumulated over $70 billion in losses since the start of 2021, according to the Bloomberg report.
This strategic reappraisal comes as the tech industry’s focus shifts: Apple has pivoted toward “spatial computing” with its Vision Pro headset, Microsoft has scaled back its mixed-reality ambitions, and the competition for artificial intelligence (AI) dominance has become the new industry battleground.
