Asger Risom
Meta is evaluating budget reductions of up to 30% within the Meta-sphere.
Meta is preparing another major shake-up inside Reality Labs, the unit behind its metaverse hardware and software efforts, as leadership reassesses where the company should place its biggest bets for the coming years.
Budget cuts of up to 30% under consideration
Meta is evaluating budget reductions of up to 30% within Reality Labs, according to a person familiar with the plans. The cuts could affect teams working on Horizon Worlds and other virtual-environment projects. Some employees worry the overhaul may lead to layoffs, though directors have told staff that most reductions will come from operating expenses and third-party studio payments rather than headcount.
A Meta spokesperson said the company is shifting more of its Reality Labs investment toward AI glasses and wearables as those categories gain momentum.
Strategic rethink follows executive meeting in Hawaii
The plans come after a leadership strategy meeting at CEO Mark Zuckerberg’s Hawaii compound last month, where executives reviewed priorities for next year. The reassessment arrives after Reality Labs tallied more than $60 billion in losses since 2020 and as Meta increases its AI spending in a fiercely competitive race.
Analysts estimate that a 30% cut to metaverse spending could translate to $4 billion to $6 billion in cost savings in 2026. Some see the potential shift as a sign Meta is willing to scale back long-term metaverse ambitions to pursue nearer-term AI opportunities.
Meta’s stock rose as much as 4% on Thursday following reports of the planned cuts, adding roughly $69 billion to its market value.
Ongoing reshuffles inside Reality Labs
Reality Labs has undergone repeated reorganizations over the past year. In October, Meta appointed Gabriel Aul and Ryan Cairns to co-lead its metaverse efforts, while longtime executive Vishal Shah moved to Meta Superintelligence Labs. This week, the company hired former Apple design leader Alan Dye to lead a new creative studio within Reality Labs.
Earlier this year, Meta cut an undisclosed number of employees in Oculus Studios and the team behind the VR fitness app Supernatural as part of a broader restructuring.
In a 2024 memo, CTO Andrew Bosworth described the current period as “the most critical” for proving whether the metaverse will be a breakthrough or a misstep. He highlighted the importance of mixed reality adoption and the success of Horizon Worlds on mobile.
Investor scrutiny intensifies as Meta leans on wearables
The steep losses at Reality Labs continue to attract questions from analysts. During Meta’s first-quarter earnings call, Zuckerberg pointed to the strong performance of the company’s Ray-Ban smart glasses, which he said had tripled in sales year over year, as evidence that its hardware strategy is gaining traction.
Sources: Meta, Bloomberg, Business Insider
