Mark Zuckerberg, CEO of Meta, finally seems to understand that Metaverse, one of the company’s biggest bets, is not working (or not working the way Meta wanted it to). The company even changed its name to reflect this technology.
After 17 years as Facebook, the company that runs Facebook, Instagram, WhatsApp and Oculus changed its name to Meta in 2021. Now, a story from Bloomberg says that Meta may cut its Reality Labs budget by much more than 30%. The planned cuts to the metaverse were part of the company’s annual budget planning that took place at Zuckerberg’s home in Hawaii last month.
A lot of people might not know that the Metaverse unit makes VR gear and a social network that works in VR. It also makes the company’s Quest mixed-reality headsets, smart glasses with Ray-Ban from EssilorLuxottica, and the brand-new augmented reality glasses. It’s been hard for Meta to sell its goods and get people outside of the game community to buy its ideas about a true metaverse of linked virtual worlds. Some experts say that this action shows that buyers and the industry as a whole don’t care much about Meta’s social VR app Horizon Worlds or its VR gear.
$70 billion in losses and still going
Over the past four years, Zuckerberg’s Metaverse plan has lost more than $70 billion. So, there’s no question that the parent company of Facebook saw its shares rise 4%. This was because the move calmed investors’ fears about a bet that CEO Mark Zuckerberg has backed with billions of dollars. “Smart move, just late,” Craig Huber, an expert at Huber Research Partners, told Bloomberg. He said, “This seems a major shift to align costs with a revenue outlook that surely is not as prosperous as management thought years ago.”
Meta might have to lay off some people.
There is a Metaverse unit and a gadgets unit in Reality Labs. Reports say that leaders in the Metaverse unit are thinking about reducing the number of VR jobs. The story says that huge cuts in resources are expected to lead to layoffs as early as January.
Where cuts to the budget might land
According to the story, Meta is trying hard to stay in the AI race in Silicon Valley after its Llama 4 model didn’t go over well. To help it reach its lofty goals, Meta has
This year, they have planned to spend up to $72 billion on major projects.
The company reorganised its AI work under the name Superintelligence Labs earlier this year. Zuckerberg is said to be personally leading an active effort to hire new employees, making offers to startups and directly courting potential employees on WhatsApp with million-dollar pay deals. According to rumours, Meta’s big hiring has caused a talent war in Silicon Valley.
Meta Platforms said last month that it would put $600 billion into US infrastructure and jobs over the next three years. This money will go towards building AI data centres, among other things. Meta has put even more effort into AI with the goal of making it superintelligent. On the most recent earnings call for the company, Zuckerberg said that Meta is building compute because “it’s the right strategy to aggressively front-load capacity so we’re ready for the most optimistic cases.” Meta expects its capital costs to be “notably larger” next year because it is investing in AI and building a lot of data centres to power its AI push.
Also, earlier this week, Zuckerberg revealed that Alan Dye, a designer who has worked at Apple for a long time, will be joining Meta to lead a new creative company in Reality Labs that will focus on fashion, technology, and design. Andy Bosworth, who is Meta’s chief technology officer and runs Reality Labs, will be Dye’s boss. In a thread, Mr Zuckerberg wrote, “We’re entering a new era where AI glasses and other devices will change how we connect with technology and each other.” “Our goal with this new studio is to make every interaction thoughtful, natural, and made to help people.”
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