More tech layoffs are around the corner. According to a Bloomberg report, Meta has recently decided to implement large budget cuts to its metaverse division. The company famously changed its name from Facebook to Meta because of this project. However, the development is not proceeding the way the company had imagined.
Bloomberg reports that the metaverse department could face budget cuts as high as 30 per cent, with potential layoffs occurring as early as next year. These budget cuts are expected to impact virtual worlds products like Meta Horizon Worlds and the Quest virtual reality headset.
Budget cuts
Engadget reports that company insiders say these budget cuts are part of Meta's annual budget planning for 2026 and were discussed at a series of meetings at CEO Mark Zuckerberg's compound in Hawaii.
Reports suggest that the metaverse team was asked for deeper-than-average cuts because the technology has not become popular the way the company wanted. The idea of the metaverse also did not resonate with investors, who have seen it as a drain on resources.
Even consumers are not widely interested in the concept, as the metaverse is currently largely limited to gaming, and users are reluctant to spend real money on virtual items or avatars.
Financial impact and future focus
Reality Labs, the division under which the metaverse project falls, has lost more than $70 billion since 2021. Zuckerberg has also largely refrained from mentioning the metaverse in public and in earnings calls.
However, reports suggest he still believes people will one day spend the majority of their time in virtual worlds. These cuts signal that he understands that this idea is still years, or even decades, away from fruition.
It is now reported that Meta will focus its spending on further developing large AI models and chatbots, in addition to hardware products linked to AI experiences, such as the Ray-Ban smart display glasses.
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