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Meta (NASDAQ: META) plans to slash the budget for its metaverse division, Reality Labs, by 20% over the next two years, a new report has revealed. Once seen as the company’s future, Reality Labs has lost favor with the leadership as the company’s metaverse ambition waned and its focus increasingly turned to other areas led by artificial intelligence (AI). According to The Information, the Facebook owner is rescinding the blank check freedom that Reality Labs has enjoyed since its launch. The outlet cited a former manager at the metaverse division who revealed that Meta’s leadership wants the budget cut by up to 20%, and it wants the bulk of the cuts to come this year. Meta could save at least $3 billion with its intended spending cuts, analysts at the Bank of America say. The cuts came just weeks after the division was reorganized and some of its staff laid off. Reality Labs now houses Wearables, where products like the Ray-Ban AI glasses fall, and Metaverse, which focuses on the Quest headset line and other related hardware and software. Reality Labs has been a money pit for Meta, but CEO Mark Zuckerberg has unwaveringly supported it. He has justified the spending by claiming that it’s a long-term bet and that if Meta emerges as the pioneer, the upside could be massive. He has previously pledged to “increase meaningfully” the company’s metaverse spending. “I can’t guarantee you that I’m going to be right about this bet. I do think that this is the direction that the world is going in,” he said. Since 2019, Reality Labs has lost the company nearly $50 billion. In the first quarter of this year, it lost $3.84 billion, just slightly lower than its combined revenue for the past two years. ‘Employee bingo’ at Reality Labs While…

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Filed under: News - @ July 26, 2024 2:28 pm