Meta is preparing to dramatically scale back its metaverse ambitions, with the company planning cuts of up to 30% across its virtual-reality division as it shifts focus toward more immediate, AI-driven revenue opportunities, Bloomberg reports, citing people familiar with internal strategy discussions.

The reductions are expected to ripple across Meta’s Reality Labs unit, which oversees VR headsets, AR development, and the Horizon Worlds virtual platform.

While the company is not abandoning the metaverse outright, the retrenchment marks one of the strongest signals yet that Meta is rethinking an initiative CEO Mark Zuckerberg once championed as the next era of the internet.

The scale-back comes as Meta increasingly centers its business around artificial intelligence, following the commercial success of its AI models and the rapid rollout of Meta AI across Facebook, Instagram, and WhatsApp.

Executives have acknowledged internally that the company’s massive metaverse investment—now totaling roughly $70 billion since 2021—has failed to gain broad traction.

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Hardware sales have cooled, Horizon Worlds engagement remains limited, and major enterprise adoption has not materialized.

In contrast, Meta’s AI offerings have delivered strong user engagement and opened new revenue paths in advertising, search, and chat-based services. The company now sees AI as its most reliable engine of growth heading into 2026.

Sources say the restructuring will involve consolidating overlapping VR software teams into fewer units, scaling back spending on long-term AR hardware efforts, and slowing hiring for metaverse engineering roles.

The company is also expected to shift resources toward mixed-reality features already embedded in its newer headsets, rather than pursuing expansive, multi-year projects.

Reality Labs has posted yearly losses exceeding $10 billion, drawing increasing scrutiny from investors frustrated by the division’s heavy spending and limited returns.

Analysts believe the upcoming cuts will significantly reduce expenses while preserving Meta’s most commercially viable XR initiatives.

Despite the reductions, Meta insists the metaverse remains part of its long-term roadmap.

The company’s latest strategy, however, reflects a move away from a sweeping, all-in vision toward a more incremental and cost-disciplined approach.

Zuckerberg has recently argued that AI and the metaverse will eventually intersect, with generative AI powering virtual environments, lifelike avatars, and immersive digital assistants.

For now, though, the message is clear: the metaverse is no longer Meta’s flagship frontier. As the company leans deeper into the AI race, Reality Labs is bracing for the most significant reset in its history.