Meta’s Strategic Pivot: Shifting Billions from Metaverse to AI

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After years of multibillion-dollar investment with limited financial return, Meta Platforms appears to be executing a major strategic overhaul. According to a Bloomberg report, CEO Mark Zuckerberg is planning substantial budget reductions for the loss-making "Reality Labs" metaverse division, signaling a potential retreat from its previous all-in virtual reality focus. The company is now channeling its resources toward a different technological frontier with the aim of redefining its future and improving its cost structure sustainably.

This strategic realignment is not without external complications. The European Commission has formally opened an antitrust investigation into Meta. The probe centers on a new company policy that allegedly restricts AI providers' access to WhatsApp Business tools if their primary service is also AI-based. EU competition regulators suspect Meta may be abusing its market dominance to stifle innovative rivals.

A conviction for breaching antitrust rules could result in fines of up to ten percent of the company's global annual revenue. A WhatsApp spokesperson has called the allegations unfounded. Separately, Meta has committed to offering Facebook and Instagram users in the EU a choice regarding personalized advertising to comply with the Digital Markets Act.

A Potential End to the "Money Burn"?

The management is reportedly considering cutting the metaverse division's budget by as much as 30 percent by 2026. This would impact both the "Horizon Worlds" platform and the hardware unit developing VR headsets. Should these plans be fully implemented, layoffs could follow as early as January 2026.

The driving force behind this drastic measure is the project's staggering cost. Since late 2020 alone, the division has accumulated losses exceeding $70 billion. Market analysts view the potential cuts favorably, interpreting them as a necessary recalibration of spending to align with realistic revenue expectations.

AI and Wearables Take Center Stage

As Meta scales back its metaverse ambitions, it is making targeted investments in artificial intelligence. Its latest move is the acquisition of the startup Limitless, which develops AI-powered wearable devices. The company produces a pendant, among other items, capable of recording and transcribing conversations.

This technology is intended to complement Meta's existing partnership on smart glasses, whose sales tripled last year according to company statements. Limitless CEO Dan Siroker confirmed joining Meta to advance their shared vision of a "personal superintelligence."

Market Reaction and Forward Look

Despite the regulatory headwinds, investors have responded positively to the restructuring plans. The company's shares gained approximately 4.5 percent over the week, currently trading at 577.00 euros. However, this price still remains about 18 percent below its 52-week high.

The coming weeks will reveal the seriousness of Zuckerberg's commitment to fiscal restraint. Investors are now looking ahead to the quarterly results at the end of January 2026. This report will likely confirm whether the proposed budget cuts are officially proceeding and if the integration of new AI technologies is advancing swiftly enough to support sustainable growth.