TL;DR

Meta is planning to cut its metaverse division budget by up to 30%, redirecting investment towards AI-powered wearables such as smart glasses. The move signals a strategic pivot as CEO Mark Zuckerberg focuses on winning the artificial intelligence race.

Strategic Pivot from Virtual Reality

The $1.7 trillion social media company has discussed potential budget cuts that will likely include job losses starting early next year. Teams working on Horizon Worlds, the avatar-filled virtual reality experience, and Quest VR headsets are expected to be affected.

Investors welcomed the news, with Meta’s shares rising as much as 7% before closing 3.4% higher, adding approximately $60 billion to the company’s market value. The Reality Labs division has accumulated losses exceeding $70 billion since 2021, when Zuckerberg announced the company’s metaverse ambitions and rebranded from Facebook.

AI Wearables Take Priority

The shift comes as Meta doubles down on its Ray-Ban smart glasses collaboration, which has emerged as a bright spot within Reality Labs. Zuckerberg recently poached top Apple design executive Alan Dye to head a new design studio focused on AI-powered wearables.

“Within our overall Reality Labs portfolio we are shifting some of our investment from Metaverse towards AI glasses and wearables, given the momentum there,” a Meta spokesperson confirmed.

Looking Forward

Zuckerberg is now pouring billions into developing what he calls “personal superintelligence”, including open-source AI models and chatbots. He believes AI-powered glasses will eventually replace smartphones as the ubiquitous computing platform. However, investors remain cautious—Meta shares dropped over 10% in October after the company announced aggressive AI spending plans.

Source: Financial Times