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Meta, which rebranded from Facebook to Meta in its effort to develop ‘metaverse’ technology, is exploring a strategy to cut the budget of relevant departments by as much as 30% and shrink the workforce. The metaverse, once seen as a ‘future space for work and entertainment,’ has experienced a significant drop in popularity amid the rise of AI investments.

As reported by Bloomberg News on the 4th, local time, Meta’s leadership is evaluating a proposal to reduce the funding for metaverse-focused teams by as much as 30% in the coming year. The metaverse refers to a ‘3D virtual environment’ where digital representations of individuals interact. Specifically, departments within ‘Reality Labs,’ the division responsible for the metaverse, VR, AR, mixed reality, and the hardware network at Meta, are potential targets for reductions. Teams affected by the budget cuts include the ‘Horizon Team,’ which develops Meta’s primary metaverse platform ‘Horizon Worlds,’ and the ‘Quest Team,’ which works on hardware associated with the metaverse. Bloomberg News noted, “There could also be significant layoffs within this group in January.”

Since 2021, Meta has been investing in the development of metaverse technology, rebranding itself from Facebook to Meta, with the vision that the ‘metaverse’ would serve as a future environment for both entertainment and work. Nevertheless, following the release of ChatGPT by OpenAI in 2022, leading tech companies redirected their focus towards AI technology, and Meta also entered this race. As attention and funding moved toward AI, Meta’s ‘Reality Labs’ incurred losses surpassing 70 billion dollars since 2021.

Meta intends to boost its investments in the AI sector following the reduction of its metaverse division. As reported by Business Insider, funds previously allocated to the metaverse are set to be redirected towards AI glasses and other hardware products. This year, Meta has recruited AI experts from rival companies such as OpenAI by providing compensation packages valued at hundreds of billions of South Korean won to enhance its AI technology capabilities, while also increasing funding for AI infrastructure, including AI data centers.

Some voices in the technology sector suggest that the term ‘metaverse’ might soon fall out of use. This is due to the fact that, as artificial intelligence advances, augmented reality and mixed reality technologies—capable of merging virtual environments with physical spaces in real-time—are becoming more prominent than the metaverse, which refers to digital spaces. Meta is still working on these technologies while also developing AI-enabled glasses such as the genuine ‘Meta Ray-Ban displays.’