Shares in tech titan Meta Platforms (META) raced higher today on reports that it is set to slash spending on its Metaverse virtual reality venture.
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Deep Cuts are the Reality
According to a report on Bloomberg, chief executive Mark Zuckerberg is set to make “deep cuts” at its Metaverse division. It is reported that executives have discussed potential budget cuts as high as 30% for the Metaverse group next year, which includes the virtual worlds product Horizon Worlds and its Quest virtual reality unit. The Metaverse budget cuts are expected to include job losses in January.
The Metaverse is a shared virtual environment, which the company hopes could be the successor to the mobile internet and the future of the business. So much so in fact that Zuckerberg changed the name from Facebook to Meta back in 2021.
However, it has burned through more than $60 billion since 2020, according to reports, with the idea receiving a lukewarm reception from customers and techies. Its Reality Labs division posted an operating loss of $4.4 billion on sales of $470 million in its Q3 results – see above.
Lack of Real Competition
According to the report, Meta has “not seen the level of industrywide competition over the technology that it once expected.”
Zuckerberg has instead shifted focus to developing its AI capabilities with a pledge to spend hundreds of billions of dollars on infrastructure. It has also poached talent from its rivals to boost its AI output.
The proposed reductions are part of Meta’s annual budget planning process, which involved a series of meetings at Zuckerberg’s Hawaii compound last month. While the CEO has reportedly asked executives to look for 10% cuts across the board—a standard request during similar budget cycles in recent years—the metaverse group faces deeper cuts.
Meta did not comment on the report.
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