After $70 billion in losses, Zuckerberg finally admits his metaverse megaproject isn’t working

Meta Platforms CEO Mark Zuckerberg has apparently accepted that one of his boldest strategic wagers – the Metaverse – is not meeting his most optimistic expectations. Meta has reined in spending on the project as part of a wider recalibration that shifts the company’s emphasis toward artificial intelligence and wearables, according to multiple news reports. The decision comes after years of pouring resources into the effort and more than $70 billion in cumulative losses.

Announced with great fanfare in 2021 when the company rebranded itself as Meta Platforms, the Metaverse was billed as a major pivot toward a new computing paradigm built around immersive virtual environments. Zuckerberg and other leaders at Meta have described it as the next phase of social interaction, work, entertainment and commerce – a place where people can more seamlessly blend their physical and online lives. However, as tech executives from across the industry will tell you, even when the vision is solid, execution is difficult. And for Meta, it has been even more so.

News reports suggest Meta will reduce the Metaverse budget by up to 30 % in 2026, a larger percentage than for most other divisions. The cuts, part of an annual budget planning process, include reductions to Reality Labs, which houses Meta’s VR and AR efforts, including the company’s core Horizon Worlds platform and Quest VR headset. Headcount reductions in Reality Labs could occur as early as January if the budget adjustments are implemented as planned. A Meta spokesperson declined to comment on the matter.

In many ways, this makes sense: The Metaverse products and services Meta has so far put in place have yet to meaningfully gain traction with either consumers or businesses. The company has been struggling to find product-market fit in the Metaverse space, and analysts cite user engagement statistics for Horizon Worlds as well as tepid sales of its Quest VR headsets as evidence of this.

Investors were pleased to hear of Meta’s retrenchment. The company’s stock price was up as much as 5 % on the news, as investors clearly liked the idea of the company dialing back its spending on its most expensive experimental projects and instead reallocating capital to areas with a higher chance of generating meaningful growth. Meta’s most notable investment target for now is in artificial intelligence. The company has been expanding that effort aggressively, reorganizing parts of the business under new AI-focused groups and redoubling on AI talent as it seeks to compete with upstarts such as OpenAI as well as industry giants such as Google.

Meta’s pivot comes amid industrywide shifts that have seen tech giants in particular prioritize AI innovation as well as smart devices, such as AR glasses, that many view as more attainable short-term opportunities than Zuckerberg’s vision of a fully immersive Metaverse. Meta continues to invest in long-term “next-generation” smart glasses in partnership with EssilorLuxottica, but that project has been delayed multiple times.

Zuckerberg’s apparent retreat is as much a sign of the times in Silicon Valley as it is anything else. In the modern tech industry, particularly in Silicon Valley, there is a widespread acknowledgment of the limits of visionary but highly speculative projects that don’t have obvious paths to profitability. Zuckerberg’s struggle with the Metaverse project offers a cautionary tale about trying to pioneer an entirely new computing platform from scratch and especially about the pressure from today’s investors to show results more quickly.

This isn’t to say that Meta is necessarily giving up on the Metaverse entirely. Instead, after years of lofty pronouncements and big spending, Zuckerberg’s bet has been pared back, but not abandoned as Meta adjusts to what may be a more sober future than the one it imagined just a few years ago, one defined more by AI and wearables than fully immersive virtual worlds.