Meta mulls cutting Reality Labs budget by up to 30%…reducing metaverse investment

Meta is reportedly considering a plan to cut the budget for Reality Labs, which oversees its metaverse business, by as much as 30% in 2026.

On the 4th (local time), according to crypto-focused media The Block, the review suggests the largest reduction in metaverse-related spending since the 2021 rebranding.

The report said the internal review includes a plan to cut Reality Labs' budget by up to 30%. The outlet noted that CEO Mark Zuckerberg has emphasized sticking to the metaverse vision, but recently Meta's focus appears to be shifting toward generative artificial intelligence (AI) technologies and quickly commercializable hardware such as AI-based Ray-Ban smart glasses.

Market observers say that a large-scale cost restructuring could lead to a reordering of Reality Labs' investment priorities. Reality Labs has been cited as a core pillar of Meta's long-term growth strategy but has been viewed as a costly business unit in the short term.

The Block also reported that the virtual asset market related to the metaverse remains sluggish. Render (RENDER), which touts 3D rendering and AI workload capabilities, saw its market capitalization fall below $1 billion and drop out of the top 100, while Sandbox (SAND) and Decentraland (MANA) also plunged to all-time lows. It added that the total market cap of the metaverse sector has fallen from over $500 billion at the start of the year to about $3.4 billion now.

If the budget cut review is actually implemented, even if Meta maintains its long-term metaverse investment stance, its short-term strategy is likely to shift toward focusing more on areas where efficiency improvements and monetization are possible.