Meta is weighing sharp budget cuts for its Metaverse division, with internal discussions focused on reducing spending by as much as 30%, according to Bloomberg. The cuts could include layoffs and a narrower scope for Horizon Worlds and VR hardware under the company’s Reality Labs unit.
The shift signals Meta’s recalibration toward generative AI, where products such as its Ray-Ban Meta smart glasses and large language model research have seen better traction. Investors have long expressed concern about the billions of dollars in quarterly losses tied to the Metaverse strategy since the company’s 2021 rebrand.
Market reaction has been positive, with shares rising after the budget deliberations surfaced, suggesting investor support for redirecting resources toward AI initiatives with clearer near-term returns.
Meta is simultaneously facing heightened regulatory pressure in Europe. The European Commission recently opened an antitrust investigation into Meta over WhatsApp’s integration of AI features, marking another challenge as the company reshapes its product focus.
Meta has not commented on the reported budget discussions.
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