Meta Platforms is preparing to scale back one of its boldest bets. Reports say CEO Mark Zuckerberg plans to reduce the company’s metaverse budget by around 30 percent in 2026.

The move signals a clear change in strategy. Meta once promoted the metaverse as the future of the internet. However, the project has delivered heavy losses, weak user growth, and rising concern from investors.

Reality Labs Faces Sharp Funding Reduction

According to reports, Meta will significantly cut funding for Reality Labs, the division that runs its metaverse efforts. The unit failed to achieve the growth and engagement Zuckerberg had expected.

Since Meta shifted its focus to the metaverse in 2021, the company has recorded an estimated $70 billion in cumulative losses and value erosion linked to the project.

Reality Labs has posted losses of more than $10 billion every year for several years. Platforms like Horizon Worlds also failed to attract users at the scale Meta had promised.

From Aggressive Push to Strategic Pullback

Zuckerberg once described the metaverse as a fully immersive digital world. He imagined people working, socialising, and living through virtual reality.

Meta invested billions each year in VR headsets, augmented reality tools, and digital infrastructure. The goal was to build a complete virtual ecosystem.

Now, the company appears to be stepping back. Reports suggest Meta’s board and senior leaders agree on cutting Reality Labs spending from next year. They plan to redirect money toward technologies with clearer commercial returns.

A 30 percent cut would mark Meta’s largest retreat from the metaverse since the pivot began. It shows the company is reassessing both the timing and value of virtual-world investments.

AI Takes Priority as Metaverse Loses Momentum

The expected cuts reflect a broader shift inside Meta. Generative artificial intelligence has surged across the tech industry. Rivals like OpenAI, Google, and Microsoft are moving fast.

Meta is now racing to position its own AI tools as its next growth engine. These include its Llama models and AI-powered features across Facebook, WhatsApp, and Instagram.

Analysts say the shift makes sense. AI already delivers real commercial benefits. These range from digital assistants to smarter advertising.

“Meta simply cannot justify burning tens of billions on an unproven concept when AI is delivering real returns today,” one analyst told Reuters. The analyst added that shareholder pressure has grown as the metaverse keeps pushing profitability further into the future.

Signs of Internal Doubt

Zuckerberg defended the metaverse for years. He often said long-term bets need patience. However, recent media reports suggest a change in tone.

According to internal assessments cited by IDN Financials, Meta executives now see parts of the metaverse roadmap as “overly ambitious.” They point to unrealistic expectations around user growth and ecosystem readiness.

Investor criticism has also intensified. Some shareholders have urged Meta to abandon or sharply limit Reality Labs spending. With Meta aiming to control costs across the company, the metaverse has become a prime target for restructuring.

What This Means for Meta Going Forward

A 30 percent budget cut does not mean Meta is quitting the metaverse. Reality Labs will likely continue working on next-generation VR headsets and AR glasses.

However, the pace of investment and product launches may slow significantly.

The bigger question remains unresolved. Is this the end of the metaverse as Silicon Valley’s most hyped vision? Or is it a temporary retreat until technology, users, and economics align?

For Zuckerberg, the shift carries symbolic weight. He rebranded the entire company around the metaverse idea. The pullback suggests his most ambitious bet has stalled.

For now, Meta appears focused on nearer-term growth. AI has taken centre stage. The metaverse, once seen as the next digital frontier, now looks more like a long-term experiment than the core of Meta’s future.