Zuckerberg Axes Metaverse: Meta Slashes Budget By £52 Billion As VR Dream Implodes

Shockingly, Meta head Mark Zuckerberg is preparing to pull the plug on a considerable project. After pouring tens of billions into the virtual reality fantasy known as the Metaverse, the parent company Meta (formerly Facebook) is reportedly planning deep cuts to its metaverse efforts, which could lead to massive layoffs as well.

The Rise and Fall of Metaverse

The game-changing decision shows a massive retreat from VR ambitions in favour of a more pragmatic focus on artificial intelligence and a painful reckoning for a venture that once seemed like the future of the internet. Back in 2021, Mark Zuckerberg made a shocking bet as he rebranded Facebook to Meta and committed the company to building the metaverse, which was an immersive, persistent virtual world where people could socialise, work and play.

Moreover, at its core was the VR and AR-heavy division called Reality Labs, tasked with developing VR headsets, AR glasses, and the virtual world platform Horizon Worlds. The vision was indeed revolutionary as it aimed to create a re-imagined internet, where physical and digital realities merged.

But the dream stumbled, it seems, as the uptake of VR hardware remained niche. Horizon Worlds failed to achieve meaningful traction beyond early adopters. However, more problematic were the staggering financial losses: since 2021, Reality Labs has reportedly lost more than $70 billion (£52.5 billion approx), burning through capital even as revenue remained minimal.

Now, with internal discussions underway, Meta is considering slashing up to 30 percent of the metaverse budget in 2026, a cut that financial commentators estimate could amount to around £45.0 billion (or more than $60 billion) when accounting for years of losses and redirected spending, especially the cash burn as reported by Reuters. Furthermore, the cuts are expected to affect the entire metaverse division, from VR headset development to Horizon Worlds and other related initiatives.

The likely impact is worrying, of course, as a Bloomberg report says layoffs may begin as early as January 2026, with the division asked to deliver deeper reductions than the usual across-the-board 10 per cent cut. This, especially for Meta, shows a big retreat from its most ambitious gamble, one that once defined the company's identity.

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Pivot to AI: Why Meta Is Betting on a Different Future

The decision to sharply cut back on metaverse spending clearly signals a changing business strategy at Meta. Rather than continue to fund a costly, slow-growing VR dream, the company is doubling down on what many see as the real engine of future growth: artificial intelligence. Zuckerberg and his leadership appear convinced that AI, not virtual reality, holds the key to sustainable success.

Meta is now investing heavily in large AI models, generative AI tools, and intelligent hardware such as smart glasses and wearables that integrate AI features. A spokesperson for Meta confirmed to Fox Business that, within Reality Labs, the company would shift resources from metaverse projects toward AI-led wearable technology.

Moreover, this giant change is motivated by both financial pragmatism and market demand, it seems, as by reallocating capital into AI and hardware that could yield faster returns, Meta might be aiming to reinforce its main businesses, which are social media, ads, and messaging. All of this is to build a more scalable long-term growth strategy.

Despite this, Zuckerberg's original idea for the metaverse is not officially dead. It seems to be relegated to a lower priority for now, awaiting conditions such as better hardware adoption, real use cases, or bigger industry interest that have not yet materialised. Meta continues to maintain the metaverse roadmap, but for now, Reality Labs' VR ambitions are on ice.