- Mark Zuckerberg is reducing Meta’s investment in the metaverse.
- Meta shifts to reduce spending and focus on profitability while maintaining strong investments in AI and the metaverse.
OUR TAKE
Meta’s shift towards reducing spending and focusing on profitability signals a strategic realignment, even as it continues to invest heavily in AI and the metaverse.
— Yasmine Luo, BTW reporter
What happened?
Mark Zuckerberg is cutting Meta’s spending on the metaverse. The company is reducing the budget for Reality Labs, the division responsible for VR, AR, and metaverse development. The hardware team has been asked to cut expenses by nearly 20% from this year through 2026, according to a former Reality Labs manager.
Over the past year, the division has undergone multiple layoffs, especially among mid- and senior-level management. Meta has already spent over $40 billion on the metaverse and is targeting a $1 trillion market opportunity in AR and VR. Although Zuckerberg stated that the metaverse is a “very long-term bet” and “the direction that the world is going in”, he also emphasized the importance of efficiency and cost control.
“We’re constantly shifting how we execute. Other things like flattening the org structure, those are going to affect the whole company, both in Reality Labs and Family of Apps. We want the work to be more efficient,” he stated.
In 2021, Facebook rebranded to Meta and announced that the metaverse would be its top priority.
Also read: Meta plans to bring generative AI to metaverse games
Also read: Meta to discontinue Workplace app, shift focus to AI and metaverse technologies
Why it’s important
Meta has consistently supported its AR/VR metaverse business by burning through significant amounts of money. If we only consider the financial data of Reality Labs, which has been separately disclosed since Q4 2020, and exclude the investments made since the acquisition of Oculus in 2014 until the separate financial disclosures began, the company’s publicly traceable investments have already exceeded $50 billion.
According to an earlier report by Reuters, more than 50% of Reality Labs’ expenditure is dedicated to the development of AR glasses, 40% to VR-related projects, and 10% to the social platform Horizon. This reduction in investment in the metaverse does not indicate that Meta is retreating from the AR/VR field. Instead, it marks the beginning of Reality Labs’ long-term transition from heavy spending to achieving eventual profitability.
Mark Zuckerberg has stated that Meta has always focused on AI and the metaverse and will continue to deeply invest in these two areas in the future.
