Tech giant Meta is reportedly planning to downsize its metaverse division Reality Labs, home to the Quest VR headend and Horizon Worlds platform.
This is according to Bloombergwhich reports that company executives are planning budget cuts of as much as 30% through 2026. Layoffs could happen as early as January.
The company is planning cuts across the board, but more broadly in its metaverse division because it hasn't seen significant competition in that area, Bloomberg sources said. Investors and analysts are pressing the company to cut its heavily loss-making investments in the sector, which amount to billions of dollars per quarter.
The firm is reportedly not going to abandon its metaverse plans, but is transferring the money it saves from these cuts into its augmented reality glasses, which are currently produced in partnership with Ray-Ban, according to the report. additional New York Times reporting.
“As part of our overall Reality Labs portfolio, we are shifting some of our investments from Metaverse towards artificial intelligence glasses and wearables, given the dynamics of developments. We do not plan any more sweeping changes than these,” A Meta spokesperson told the FT.
Following the Bloomberg report, the company's shares rose 5.5% at market open Thursday morning, signaling investor approval of the changes. Meta's share price ended the day up 3.4%.
In February 2025 Meta reported that while its Meta Quest hardware generated $1.08 billion in revenue.the Reality Labs division recorded a loss of $4.97 billion. This part of the company has been in the red for most of its existence and has lost over $70 billion since the company began focusing on the metaverse.
For the three months ended September 30, 2025, Meta reported an operating loss of $4.4 billion. – largely in line with the previous year – while for the nine months ended September 30, that loss was $13.2 billion, up 3% from last year.
Meta Chief Financial Officer Susan Lee told investors that the company expects Reality Labs' earnings to decline in the fourth quarter, which ends Dec. 30, 2025.
Facebook was renamed Meta Platforms back in 2021Such was the belief of Zuckerburg and company that the metaverse was the future of digital communications.
Despite Meta's recent focus on artificial intelligence, the company last month announced it was cutting 600 jobs in its Superintelligence Labs division.
The cuts would be the latest in a series of significant job cuts at the company. In January of this year Meta has cut 5% of its workforce, which is estimated to be around 3,600 people. while in 2023 he laid off 10,000 workers and eliminated 5,000 open positions.
