Meta has set out plans to meaningfully cut back its metaverse efforts next year, as chief executive Mark Zuckerberg narrows his focus on winning the artificial intelligence (AI) race.
Executives at the $1.7 trillion (€1.4 trillion) social media company have discussed potential budget cuts as high as 30 per cent for its metaverse group, which will probably include job losses starting early next year.
The news was welcomed by investors, who have questioned Mr Zuckerberg’s spending on a long-term initiative that failed to gain traction with consumers and promised no immediate returns.
Meta’s shares rose as much as 7 per cent at the start of trade in New York. They were 4 per cent higher in mid-afternoon, adding about $60 billion to its market value.
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The cuts would include teams working on Horizon Worlds, its avatar-filled social virtual reality experience, and its Quest virtual reality headsets, according to a person familiar with the discussions.
Meta declined to comment. The plans were first reported by Bloomberg, and could yet change.
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It comes a day after Mr Zuckerberg announced that the company was building a new design studio within its virtual and augmented reality department Reality Labs, focused on wearable AI-powered devices, such as smart glasses. The company poached top Apple design executive Alan Dye to head the new studio.
Mr Zuckerberg in 2021 announced a push to build an avatar-filled “metaverse” where users globally could socialise, game and shop in virtual spaces, going as far as to rebrand the company from Facebook to Meta.
However, that effort has been hampered by technical difficulties, safety concerns and a lack of consumer appetite, prompting some investors to pressure Mr Zuckerberg to curb spending. The Reality Labs division has lost more than $70 billion since 2021.
Mr Zuckerberg began to link the metaverse to his wider AI objectives. In April 2023, he told investors: “The two areas are . . . related . . . Metaverse technologies will also help to deliver AI as well. For example, embodying AI agents will take advantage of the deep investment we’ve made in avatars over the last several years.”
A bright spot at Reality Labs has been the emerging success of wearables such as Meta’s Ray-Ban smart glasses. Mr Zuckerberg has recently doubled down on his commitment to developing AI-powered wearables, arguing that they will supplant smartphones and are vital to his bet on “superintelligence”.
The social media titan is now pouring billions of dollars into hiring top AI researcher talent and building costly infrastructure to support plans to develop “personal superintelligence”, which Mr Zuckerberg hopes will be smarter than humans. This includes developing open-source AI models, chatbots within Meta’s suite of apps and the AI glasses that he believes will replace smartphones as the ubiquitous computing platform.
The shake-up in strategy has led to a series of executive reshuffles and rounds of lay-offs at the company over the past year.
Investors remain cautious about the AI push, however. In October, Meta’s shares dropped more than 10 per cent — wiping more than $208 billion from its valuation, its second-biggest one-day loss in value — after Zuckerberg announced plans for even more aggressive spending on AI next year. - Copyright The Financial Times Limited 2025
