Meta Considers 30% Budget Cuts for Metaverse Group Amid Shift to AI

Core Insights - Meta is reportedly considering cutting up to 30% of its metaverse group's budget as resources shift towards artificial intelligence [1][2] - The proposed budget cuts are part of Meta's annual planning for 2026 and may lead to layoffs as early as January [2] - CEO Mark Zuckerberg has requested a 10% budget cut across the company [2] Metaverse Group Overview - The metaverse group includes products like Meta Horizon Worlds and the Quest virtual reality unit [3] - Since its rebranding in 2021, Meta has heavily invested in the metaverse, which has faced skepticism from investors and criticism regarding children's privacy and safety [3] - The metaverse initiative has not attracted the expected competition from other industry players [3] Financial Performance - Meta's Reality Labs division, encompassing the metaverse group, has incurred losses exceeding $70 billion since early 2021 [4] - Operating losses for Reality Labs have surpassed $4 billion per quarter [4] Shift to Artificial Intelligence - Meta is investing billions into artificial intelligence, with Zuckerberg emphasizing the goal of establishing Meta as a leading AI lab [5] - CFO Susan Li indicated that capital expenditures will be significantly higher in 2026 compared to 2025, focusing on data centers, cloud contracts, and AI talent [5] New Initiatives - Zuckerberg announced the establishment of a new creative studio within Reality Labs focused on AI glasses and related devices, integrating the metaverse design and art teams [6]