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Meta’s Rebrand Goes South
Melting down // Image by Kait Cunniff with DALL-E
Meta’s big bet on the metaverse — Mark Zuckerberg did change the name of his company to Meta, after all — is coming up short, prompting a major budget cut for its Reality Labs division next year.
The Big Picture: Reality Labs has lost more than $70 billion since 2021, sparking concern from Wall Street analysts and major shareholders. While Zuck has stopped mentioning the metaverse in earnings calls, he reportedly still believes in a future digital world where people work and play. But the breakneck AI race is now consuming most of the company’s resources.
Behind The Cuts: Meta plans to cut up to 30% of Reality Labs’ budget in 2026.
The cuts are expected to affect the company’s metaverse platform, Horizon Worlds, and its Quest VR unit — about $4 to $6 billion in savings.
That will mean more layoffs in January and a cut to operating expenses, such as deals with third-party studios to develop games for Horizon.
Meta’s stock popped 5.7% at the news — the biggest intraday gain since July 31st, per Bloomberg.
Closing Thoughts: Facebook’s rebrand to Meta may go down as the biggest “putting the cart before the horse” corporate move in Silicon Valley history. While the metaverse was hyped during COVID, competition in the space never really materialized, and the public wasn’t all that interested. In fact, Meta CTO Andrew Bosworth wrote in a memo a year ago saying 2025 would be critical for tech’s future at the company, openly wondering if it would be a “legendary misadventure.”
While Bosworth may have been proven right, part of the savings from the metaverse cuts will be redirected to other projects within Reality Labs that are working. That includes AI glasses (its Ray-Ban partnership has been a bright spot) and immersive entertainment (it’s making 3D projects with James Cameron). In fact, Meta just hired top Apple designer Alan Dye to head up a new design studio that will blend hardware, software, and AI. Talk about a pivot.
The Future: While wide adoption of the metaverse may never come to fruition, Reality Labs might still have the goods to lead the development of mixed-reality entertainment… especially as Apple quietly backs away from expanding the Vision Pro.
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Today’s email was written by David Vendrell.
Edited by Nick Comney. Polled and Copy-edited by Kait Cunniff.
Published by Darline Salazar.