Meta is reducing its ambitions for the Metaverse and shifting its focus towards AI-powered glasses and wearable tech, as announced to FOX Business on Thursday.
This pivot comes after reports suggesting that Meta might impose a significant 30% cut from its Metaverse Group, which had previously been highlighted by CEO Mark Zuckerberg as a cornerstone of the company’s future.
While specific details weren’t confirmed, adjustments are set to occur within Reality Labs, the segment dedicated to augmented and virtual reality initiatives.
A spokesperson from Meta stated, “Given the momentum within our Reality Labs portfolio, we are reallocating some investments from the Metaverse towards AI glasses and wearables. We’re not planning any broader changes beyond that.”
As part of this shift, Meta is looking at potentially laying off staff, aligning with a 2026 budget proposal that suggests substantial layoffs might commence as soon as January.
Market observers reacted positively, with Meta’s shares rising by 4%. This suggests a transition to more prudent spending and may indicate investor relief as the company winds down costly Metaverse projects, which have reportedly consumed over $60 billion.
Despite challenges in promoting its immersive Metaverse vision outside the gaming sphere, Meta has seen some initial success with smart glasses. This success likely influenced their decision to transition resources into the wearable tech domain.
In contrast, competitors like Google, Apple, and Snap continue to struggle to transform their early products into commercially viable offerings.
The announcement also comes as Meta intensifies its role in the AI sector, particularly following an underwhelming reception of its Rama 4 model. Zuckerberg had earlier projected up to $65 billion in capital expenses for the year, while the broader tech industry anticipates spending around $400 billion on AI by 2025.
