Meta Platforms Inc. is preparing to significantly scale back its once-flagship metaverse ambitions, with Chief Executive Mark Zuckerberg weighing budget cuts as steep as 30 percent for the division responsible for virtual reality and Horizon Worlds, according to information first reported by Bloomberg. Such reductions would almost certainly trigger layoffs as early as January, though final decisions have not yet been made. The deliberations come as part of Meta’s annual 2026 budget planning cycle, which included a series of leadership meetings held at Zuckerberg’s Hawaii compound last month.
People familiar with the discussions said Zuckerberg has again asked executives across the company to identify 10 percent spending cuts, a recurring request in recent years. But the metaverse group was instructed to explore deeper reductions this cycle due to the absence of meaningful industrywide competition and growing skepticism from investors. Meta’s costly bet on virtual and augmented reality — housed under its Reality Labs division — has accumulated more than $70 billion in losses since early 2021, a fact that has intensified scrutiny from both shareholders and regulatory watchdogs concerned about spending, child safety, and user privacy in virtual spaces.
Much of the proposed trimming would fall on the company’s virtual reality hardware unit, which represents the bulk of metaverse-related expenditures. Horizon Worlds, the virtual social environment Zuckerberg once championed as the company’s future, is also a target for cuts. Investor frustration has long contrasted with Zuckerberg’s public optimism. In 2021, amid growing criticism around Facebook’s handling of privacy and safety issues, he rebranded the company as Meta and presented the metaverse as the next chapter of human interaction. But adoption has lagged, and the CEO has largely stopped emphasizing the concept in earnings calls or interviews.
Shares of Meta rose as much as 5.7 percent after markets opened in New York following reports of the planned cuts, marking the stock’s biggest intraday jump since late July. Analysts have repeatedly argued that Meta should abandon its metaverse ambitions to focus resources on artificial intelligence. Some, including Forrester vice president Mike Proulx, predicted earlier this year that projects like Horizon Worlds could be shuttered entirely, describing Reality Labs as a “leaky bucket” draining capital without delivering proportional revenue.
Bloomberg reported that Meta is now centering its long-term strategy around large-scale AI models, AI chatbots, and hardware tied to these technologies, such as Ray-Ban smart display glasses. The company also recently hired Apple’s top design executive, signaling ongoing commitment to consumer hardware even as metaverse efforts face major reductions.
