The $70B Wake-Up Call: Zuckerberg Finally Concedes the Metaverse Isn't What He Promised

Mark Zuckerberg has reportedly delivered the clearest internal admission yet that Meta's metaverse dream is not what he promised.

After years of insisting virtual worlds would define the future of human interaction, the Chief Executive of Meta Platforms has, according to people familiar with Meta's 2026 budget meetings, acknowledged that the metaverse is ''not working' as envisioned.

His concession comes with a staggering price tag: more than $70 billion in losses at Reality Labs since 2021.

The vast hole left behind has forced a sweeping strategic reset, confirming what investors and critics have long argued — the metaverse bet has become a costly distraction from the tech industry's real arms race: artificial intelligence.

The latest details emerged from reports outlining the company's annual budget planning sessions for 2026, which included executive meetings at Zuckerberg's compound in Hawaii.

Meta Rewrites Its Future And Doubles Down On AI Superintelligence

The most striking feature of Zuckerberg's recalibration is where the money is now heading. Rather than bank the savings, Meta is pouring capital into what Zuckerberg has privately called the company's new 'North Star': artificial intelligence superintelligence.

Meta's projected capital expenditure for 2025 is expected to reach up to $72bn, much of it directed towards enormous data-centre build-outs and model-training capacity. According to insiders, Zuckerberg is personally leading hiring offensives and offering major pay packages to lure elite AI researchers.

The message is unmistakable. Meta is exiting its metaverse-first era and repositioning itself at the centre of Silicon Valley's AI race, where executives believe a faster, more straightforward path to commercial returns exists.

The company, which changed its name from Facebook to Meta in 2021 to reflect its commitment to the metaverse, is now aggressively pivoting capital expenditures and talent acquisition efforts toward Artificial Intelligence (AI) to remain competitive in the tech sector's new primary arms race.

The $70 Billion Reality Check and Investor Relief

The Reality Labs division has been a financial drain on Meta, reporting cumulative operating losses exceeding $70 billion since the company went all-in on the metaverse.

The market reaction to reports of the proposed budget cuts was immediate and highly positive. Meta Platforms shares surged by approximately 4%, signalling clear support from investors who believe the heavy spending on non-performing VR technology should cease.

The concession was a 'smart move, just late,' reflecting the belief that the company's costs must be reined in to match the disappointing sales figures of its Quest headsets and the lacklustre social platform, Horizon Worlds. The financial relief stems from the fact that capital will no longer be funnelled into a division that has struggled to articulate a clear value proposition to the masses.

The Aggressive Pivot to AI Superintelligence

The capital being pulled from the struggling metaverse division is not simply being saved; it is being aggressively redeployed into the firm's burgeoning AI sector. Zuckerberg has now made the pursuit of 'superintelligence' in artificial intelligence the company's strategic priority. This fundamental shift is evident in the staggering $72 billion in capital expenditure forecast for this year (2025), much of which is dedicated to building the necessary infrastructure, including vast data centres, to power its advanced AI models.

The CEO is reportedly personally leading an aggressive talent war, floating massive pay packages and courting top prospects. This transition confirms that Meta is exiting its period of primary focus on VR and positioning itself as a central player in the competitive Silicon Valley AI race, where it sees a more immediate path to market relevance and, crucially, a quicker return on investment than the distant promise of the metaverse.

Market Rejection and Hardware Hurdles

A core issue underlying the financial losses is the public's lack of genuine engagement with the metaverse as it currently exists. The promise of interconnected virtual worlds has largely failed to materialise for the average consumer, whose day-to-day reliance remains firmly with established smartphones and laptops. Meta's social VR platform has struggled to expand beyond a niche gaming community, failing to become the daily digital destination Zuckerberg envisioned when he renamed the firm.

Compounding these struggles, the company has been forced to delay the launch of its crucial Mixed Reality (MR) Glasses. Initially planned for the second half of 2026, the launch has been pushed back to the first half of 2027. The executives cited the need for a 'lot more breathing room' to ensure the product 'Phoenix' is fully polished and reliable a stark acknowledgment that rushing to market with a flawed product is no longer a viable option after the costly, $70 billion metaverse experiment.