Meta Platforms, the parent company of Facebook, has decided to restructure its metaverse business after four years, following cumulative losses exceeding 100 trillion won without creating a viable market.
Bloomberg reported Wednesday that Meta held a budget planning meeting for next year at CEO Mark Zuckerberg's Hawaii residence and reviewed a plan to cut metaverse-related spending by 30%. The company decided to reduce the budget because the technology competition it anticipated has not materialized in the market.
Bloomberg projected that most of the cuts would be concentrated on Reality Labs, which manufactures virtual reality devices, and the metaverse platform Horizon Worlds. Once the budget is finalized, Reality Labs is expected to begin workforce reductions as early as January next year.
Meta changed its name from Facebook in October 2021, declaring its intention to build a three-dimensional virtual world. "I've been thinking a lot about our identity," Zuckerberg said at the time. "Over time, I hope we're seen as a metaverse company."
Contrary to Zuckerberg's vision, the metaverse business has only generated losses and become a burden on the company. Reality Labs has posted annual operating losses since early 2021, accumulating more than $70 billion in losses to date. Market observers have labeled the metaverse business a "leaky bucket" and called for Meta to shut it down immediately.
Zuckerberg has recently refrained from mentioning the metaverse in public appearances and has been focusing the company's resources and capabilities on artificial intelligence. Meta's stock rose 3.43% on the New York Stock Exchange on the news of metaverse cuts.
Bloomberg noted, however, that Meta will maintain development projects for consumer augmented reality hardware that has received positive market reception, such as Ray-Ban smart glasses. Meta recently hired Alan Dye, Apple's chief design officer, as its chief design officer for these efforts. Bloomberg added that layoffs at Reality Labs have not been finalized.
