Meta Plans Big Cuts to Its Metaverse Efforts

Bloomberg

Watch Meta Plans Big Cuts to Its Metaverse Efforts - Bloomberg on Dailymotion

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00:00Sounds like in the last few weeks, last month, Zuckerberg assembled leadership.

00:05They looked at the budget for next year and metaverse is where they want to focus their cuts.

00:09Bring us your reporting.

00:10Yes. So this is an annual thing, right?

00:12Looking ahead to 2026 budgets.

00:14In this case, Mark Zuckerberg has a nice home in Hawaii where they have a series of meetings.

00:20Executives come in in the month of November.

00:23And to your point, they talk about this year 10 percent cuts sort of across the board,

00:28looking at all the different teams, but that the metaverse has been asked to cut much more deeply than that.

00:34As much as 30 percent is currently being discussed, I should point out it hasn't been decided yet,

00:39but a cut of 30 percent would certainly also come with layoffs.

00:42So to your point, this is an effort that Mark Zuckerberg has touted as being the future of the company for years.

00:48So it's a pretty meaningful change there.

00:51Let's go back to when he thought it was the future of the company.

00:55Just take a listen to Mark Zuckerberg back in 2021.

00:59If we all work at it, then within the next decade, the metaverse will reach a billion people,

01:04host hundreds of billions of dollars of digital commerce,

01:07and support jobs for millions of creators and developers.

01:13Boy, a lot has changed since then.

01:15And that was a long time ago, Kurt.

01:17But we still will get the idea that we'll have augmented reality.

01:21We're still focusing in on the glasses.

01:23It's just not the actual virtual worlds and working out.

01:27That's right.

01:28And the virtual worlds aren't going away, to be clear.

01:30It's still going to be something that they invest in, just not quite as aggressively as they had.

01:35And what was explained to me by sources this week is that part of that is that the market has not really materialized.

01:42I think they originally spent a lot of money building out this metaverse group,

01:47thinking that they would have competition from others in the industry rushing towards a metaverse-like product as well.

01:52That has not happened.

01:54And so it's not necessarily that Mark Zuckerberg no longer believes in this.

01:58I'm told that he still does.

02:00But clearly they have overspent to try to build this thing.

02:04And I think the ultimate goal is to get to these AI-inspired glasses and AR glasses.

02:09And maybe the metaverse was a stepping stone to that all the way.

02:12So actually it signals a commitment to AI hardware, distinct from metaverse hardware.

02:17I thought it was really interesting that shares of Essela Loxotica,

02:20who they partner with to make the Ray-Ban Metas, kind of rose a little bit after the story.

02:25And all of the analysts notes, and there are many actually reacting to our reporting,

02:29say this is probably bullish for AI spending.

02:32At the same time, Bloomberg reporting that Apple's most senior design executive going to meta.

02:37Right.

02:38They are not giving up on hardware, right?

02:39The VR virtual reality group is expected to be hit by these metaverse cuts, right?

02:44That is the immersive metaverse product.

02:47But they are still investing in AI glasses, the Ray-Bans that you mentioned, Ed.

02:52They are still obviously bringing in big talent and poaching people to design these things.

02:58This is what Mark Zuckerberg talks about on earnings calls.

03:00AI, he talks about the glasses.

03:02Those things are not going away.

03:03It is the specific kind of immersive virtual stuff that it looks like they're taking a second look at.

03:08Okay.

03:11Okay.

03:20Bye.

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