Tech giant Meta may have made an impressive number of promises in setting up its Metaverse as the future of the internet, but the company is now scaling back its ambitious investments. Meta announced 30% budget cuts to its Metaverse projects, providing no clear indications of why this was a necessary choice for the company at this stage. The decision is expected to affect the company’s Reality Labs unit, emerging as a part of the company’s strategy to revise its annual budget for the coming year. Meta is no stranger to layoffs, having hired fervently before similarly cutting jobs with a similar intensity. With the proposed budget changes, many expect a corresponding adjustment to the workforce as well, with Bloomberg estimating layoffs as early as January.
Meta has announced budget cuts to its metaverse plans for 2026, expecting to eliminate 30% of its operating costs with regard to the Reality Labs unit. (Image: Pexels)
Meta’s Metaverse is Facing Budget Cuts, with the Possibility of Layoffs Looming Over Workers
As part of Meta’s Metaverse budget cuts, the company is expected to bring down its expenses on the unit by 30%. With this impact on the Reality Labs division, employees working on the virtual platform Horizon Worlds are expected to see changes, as well as the organization’s Quest virtual reality (VR) unit. While Meta makes a concentrated effort to revise its annual budget for the coming year, little is known about why the company is choosing to step back from the project.
The company reported that it was hoping to shift some of this investment into its other growing programs, but this does not sufficiently tell us whether Meta is choosing to scale down its metaverse ambitions due to declining faith in the project or a mere excess of current investment in one area. Considering the heavy losses the company has faced since the introduction of the division, racking up $60 billion in losses since 2020, it does appear likely that the company is backtracking in order to shift attention to more lucrative endeavors.
“Within our overall Reality Labs portfolio, we are shifting some of our investment from Metaverse toward AI glasses and Wearables, given the momentum there,” a Meta spokesperson told Business Insider. “We aren’t planning any broader changes than that.” Most of the cuts to the metaverse budget are expected to come from a reduction of operating expenses. This could mean anything from the salary of workers to the expenses on third-party platforms that support its operations.
Meta Work Policy Is Also Changing, Slowly but Surely
Meta’s Instagram division has committed to a full-time RTO policy, requiring employees to come to the office all five days of the workweek. While the work policy remains unchanged for other branches like Facebook and WhatsApp, there is a distinct possibility of greater shifts across Meta’s overall work policy. Meta has also tightened the reins on its overall work culture, targeting low performers with greater focus than before. The decision triggered layoff fears across the workforce, and unsurprisingly, the company invested in its own share of job cuts.
Meta also spent the year building up its AI team, poaching employees from other organizations to build up its headcount. The company has committed to a $72 billion investment in capital spending for next year, and it is evident that the Superintelligence Labs still hold a key place in the overall business strategy. Despite the extensive job cuts and restructuring in 2025, there is a distinct possibility that Meta will continue with layoffs in 2026, evaluating performances closely to determine its next step.
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