Mark Zuckerberg rebranded Facebook as Meta and declared the metaverse a new frontier in 2021. The concept was seen as a trillion-dollar opportunity, but five years later, Meta’s Reality Labs division is facing significant losses. According to Bloomberg, the division has lost over $70 billion since 2021.
The main problem with the metaverse is that its value proposition remains unclear. Despite years of investment, virtual reality (VR) still struggles with structural limitations and lacks compelling content for most users.
In a recent budget review, Zuckerberg asked executives to find 10% cuts across the board, which led to Reality Labs being told to cut deeper. The division’s budget is expected to be slashed by as much as 30%, potentially translating to $4 billion to $6 billion in reduced spend.
The move follows reports of competition not taking off as expected, making the division a money sink. However, Meta’s stock jumped over 4% on the news, adding $69 billion in market value.
Meta claims it is shifting investment from metaverse toward AI glasses and wearables, citing momentum behind its Ray-Ban smart glasses. But investors are more excited about AI burn than metaverse burn, with some questioning how much Meta will spend on AI and for how long.
The company’s emphasis on AI is evident in its planned $72 billion expenditure this year, which matches the amount lost on the metaverse since 2021. Other tech companies, such as Apple and Microsoft, are also rethinking their priorities to focus on AI-driven initiatives.
Source: https://fortune.com/2025/12/05/mark-zuckerberg-metaverse-layoffs-cuts-facebook-rebrand