Meta Metaverse Changes

Metaverse Reality Check
Zuck finally listened. After reportedly burning nearly $70 billion in Reality Labs since 2021, Meta is preparing to slash its metaverse budget by up to 30%.
Meta's stock jumped on the news. Wall Street sees this as a signal of discipline and focus. Call it Part Two of the "Year of Efficiency." For years, Reality Labs' losses have been a shadow, while its core "Family of Apps" business has remained strong.
🔪 Horizon is on the chopping block
The company isn't exiting hardware entirely. Instead, this is a "surgical" strike on the software supporting the metaverse vision.

• Target: Cuts will reportedly focus heavily on Meta's virtual social platform Horizon Worlds and VR division (Quest).
  Timeline: Layoffs could happen as early as January next year as part of the 2026 budget planning cycle.
  Meta spent billions fighting a platform war no one responded to. With metaverse adoption still limited to gaming and rivals like Apple and Google fully pivoting to AI and spatial computing, that "existential threat" is gone. Zuckerberg is realizing he's essentially racing himself—which gives him room to slow down.
  To be sure, Zuckerberg remains focused on hardware. He just poached Apple's longtime VP of human interface design, Alan Dye, to lead a new creative studio at Reality Labs. Dye spearheaded the interfaces for Apple Watch and Vision Pro. His hiring signals Meta is now serious about building hardware people actually want to wear.
  🔄 From "Metaverse First" to "AI First"
  Analysts have described Reality Labs as a "leaky bucket." By capping metaverse spending, Zuckerberg can reallocate capital to the real battleground: generative AI and smart glasses (hardware that's actually gaining traction).
  For context, since its October 2023 launch, Meta and EssilorLuxottica's Ray-Ban Meta AI smart glasses have sold over 2 million units. The company is on track to ramp annual production to 10 million by late 2026 to meet demand.
  Zuckerberg has hinted that the "Family of Apps vs. Reality Labs" reporting structure is becoming outdated.
  "Over time, we may need to find better ways to articulate the value being created in these two segments, so it doesn't just look like as our glasses ecosystem scales, our hardware costs go up, but all the value accrues to the other segment."

A potential reorg in fiscal 2026 could blur those lines—and neatly bury standalone "metaverse" losses under a broader "AI infrastructure" cost center.
The bottom line: Facebook's late-2021 rebrand to Meta was about declaring the future. In 2025, these cuts declare reality. By scaling back metaverse ambitions, Zuckerberg admits the vision remains—but the timeline was wrong. Meta is now effectively an AI company that also sells headsets. Investors are cheering.