Zuckerberg Weighs Deep Cuts to Meta’s Metaverse Division, Including Up to 30% Budget Reductions and Early-2026 Layoffs.

Mark Zuckerberg is preparing deep cuts to Meta’s metaverse unit, Reality Labs, including potential budget reductions of up to 30% for 2026 and associated layoffs that could begin as early as January 2026, according to reports based on internal planning discussions. The restructuring targets the broader “metaverse group,” which encompasses the Horizon Worlds virtual worlds product and Quest virtual reality hardware, both of which have been central to Meta’s metaverse strategy since the company rebranded from Facebook in 2021. The proposed cuts emerged during Meta’s 2026 budget planning meetings at Zuckerberg’s Hawaii compound, where executives were asked to identify 10% cuts across the company, with metaverse-related operations instructed to reduce spending more aggressively. Reality Labs has accumulated more than $70 billion in losses since 2021, drawing sustained investor criticism that the metaverse push has been a significant drag on profitability. The majority of the planned reductions are expected to hit the virtual reality group—Meta’s most capital-intensive metaverse segment—with further cuts anticipated for Horizon Worlds, which has struggled to achieve mainstream adoption and has also attracted scrutiny from regulators and watchdogs over safety and privacy, including for minors. These moves reflect a broader strategic shift at Meta from large-scale metaverse investment toward artificial intelligence and AI-powered consumer hardware. Company representatives have indicated that some metaverse funding is being reallocated to AI glasses and wearables, such as the Ray-Ban smart glasses, which Meta cites as gaining commercial traction. For investors, the retrenchment signals that the metaverse is being downgraded from Meta’s core near-term growth narrative, while for employees in Reality Labs it foreshadows a new wave of restructuring and job cuts aligned with the company’s pivot toward AI infrastructure, models, and devices.

✨ AI-generated background, compiled from web sources — not editorial content.

More coverage

• Mark Zuckerberg renamed Facebook for the metaverse - Fortune (fortune.com)
• Meta's Zuckerberg plans deep cuts for company's metaverse efforts (latimes.com)
• Meta's Zuckerberg Plans Deep Cuts for Metaverse Efforts - Bloomberg (bloomberg.com)

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