Report: Meta set to implement significant reductions in Reality Labs metaverse division

Meta, the technology leader, is planning cost reductions within its Reality Labs division, known for products like the Quest VR headset and Horizon Worlds platform.

Bloomberg reports that executive management is considering slicing budgets by as much as 30% in 2026, with potential job cuts beginning as early as January.

While the company intends to cut costs across numerous segments, the metaverse-focused division is expected to experience the most significant reductions. Insiders informed Bloomberg that the rationale stems from a lack of formidable competition in this domain. Investors and market analysts are urging Meta to curb substantial financial losses from this sector, which have been in the billions each quarter.

Despite these cutbacks, Meta remains committed to its metaverse vision. Instead, the firm is reallocating saved funds towards technological projects like augmented reality glasses, developed in cooperation with Ray-Ban. This information was corroborated by The New York Times.

A Meta representative confirmed to the FT that the company is shifting some investment in Reality Labs from the metaverse towards AI glasses and other wearable tech due to growing interest in these sectors. No extensive changes beyond this are on the horizon.

After Bloomberg released its findings, Meta's stock rose by 5.5% at market opening on Thursday, signaling investor approval, finishing the day with a 3.4% increase.

In February 2025, it was revealed that while Meta's Quest devices generated $1.08 billion in sales, Reality Labs had incurred a $4.97 billion deficit. The division has consistently operated at a loss, amassing over $70 billion in losses since the pivot towards metaverse initiatives.

For the quarter ending September 30, 2025, Meta reported an operational deficit of $4.4 billion, mirroring the prior year's results. Over nine months concluding September 30, losses reached $13.2 billion, marking a 3% rise from the previous year.

Meta's CFO, Susan Li, informed investors of anticipated reduced revenue for Reality Labs in the fourth quarter, which closes on December 30, 2025.

In 2021, Facebook rebranded as Meta Platforms to reflect the company's strong belief that the metaverse would become the cornerstone of digital interaction.

Even as focus shifts to AI, Meta last month announced 600 position eliminations within its Superintelligence Labs sector.

The forthcoming cuts add to a history of significant workforce reductions. Earlier this year, Meta decreased its staff by 5%, translating to roughly 3,600 roles. In 2023, the company eliminated 10,000 jobs and withdrew 5,000 open positions.