Facebook’s parent company, Meta, is making budget cuts to its Reality Labs division, which is dedicated to developing the metaverse. A company spokesperson confirmed to Reuters May 12 that several ongoing projects will be canceled and others will be delayed.
Meta makes drastic decisions by canceling some projects
By taking the name Meta in 2021, Facebook has clearly displayed its ambitions to create the internet of tomorrow. The tech company has invested heavily in this sector and created the Reality Labs division which is entirely dedicated to projects related to the metaverse. It looks at virtual (VR), augmented (AR) and mixed reality headsets.
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Significant hires were made in 2021 with more than 13,000 new employees and 6,000 more in the first quarter of 2022. The creator of Facebook has spent lavishly. As detailed in its latest financial report, Reality Labs lost $10.2 billion in 2021 and $3 billion in the first quarter of 2022. A situation that led to a sharp drop in Meta’s stock, angering investors. To reassure them, major budget cuts have been announced.
With this in mind Meta announced in early May to slow down the pace of hiring. Reuters reports that Meta CTO Andrew Bosworth told Reality Labs teams on May 10 that there will be changes within the division. Even if there should be no job cuts, the company announces that it can no longer finance certain projects, which are too expensive, and will delay others. It does not specify which projects are in question.
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Meta had revealed to be looking at four VR headset projects, among which is the “Cambria” project, a mixed reality headset planned for 2022. There are also two augmented reality glasses projects, “Nazare” and “Hypernova”. , which should pave the way towards the end of smartphones according to the founder of Meta, Mark Zuckerberg.
Estimates for the 2022 budget have been revised down to between $87-92 billion from $90-95 million previously. This corresponds to the words of Mark Zuckerberg in April: he announced that he wanted to reduce investments in the commercial division and in artificial intelligence.
Meta can still rely on Facebook, Instagram and WhatsApp to generate the revenue that funds Reality Labs. However, Mark Zuckerberg clarified during the first quarter results that 2022 will not allow the firm to increase its income. In October 2021, he recalled that it would take at least ten years for investments in the metaverse to become truly profitable.