Mark Zuckerberg bet the company's future on the metaverse, changed Facebook's name to Meta, and spent over $70 billion building virtual worlds that almost nobody wanted to visit. Now, after four years of staggering losses, he's finally admitting defeat. Meta is planning to cut up to 30% of its metaverse division's budget in 2026.

In October 2021, Zuckerberg stood on stage and announced that Facebook was becoming Meta. He promised we'd all be working and socializing in virtual reality. Wall Street was skeptical, but Zuckerberg was certain he was right.

The $70 Billion Question: Why Did Nobody Want It?

Meta's Reality Labs division has lost more than $70 billion since the start of 2021. Even in Q3 2025 alone, Reality Labs posted an operating loss of about $4.4 billion. Every quarter, billions more disappeared into virtual worlds that remained largely empty.

The problem was simple. For most people, the value proposition was unclear. Why would someone buy an expensive headset and hold virtual meetings when Zoom works perfectly fine?

Wall Street Cheers as Zuckerberg Finally Gives Up

Meta founder Mark Zuckerberg asked all departments to find 10% in cost savings, but the metaverse team was asked to go deeper with up to 30% cuts. The cuts could translate to $4 billion to $6 billion in reduced spending. Layoffs are expected as early as January 2026.

Meta shares rose 4% following the report, adding roughly $69 billion in market value. For years, investors complained that the metaverse was draining resources without producing revenue. Now that Zuckerberg is finally cutting it, they're celebrating.

From Metaverse to AI: The Expensive Lesson Learned

Meta isn't abandoning ambitious technology investments, they're just shifting to something investors actually believe in which is artificial intelligence. Meta expects to spend around $72 billion on AI this year. The difference is that AI has immediate applications that make money.

On the company's most recent earnings call, executives didn't use the word "metaverse" once. The Ray-Ban Meta glasses, which augment reality rather than replace it, have tripled in sales. This proves people want technology that enhances their real life, not escapes from it.

The Legacy: Tech's Most Expensive Cautionary Tale

Meta's metaverse bet will be studied in business schools for decades as a cautionary tale about visionary leadership gone wrong. When a CEO has too much conviction in an idea the market doesn't want, even $70 billion isn't enough to make it succeed. Zuckerberg renamed the entire company and spent years defending losses that never stopped growing.

Now he's cutting budgets and quietly moving on to AI while pretending the metaverse pivot was always temporary. The metaverse didn't fail because of technology limitations. It failed because Zuckerberg tried to sell people a future they didn't want, and sometimes no amount of money can change that.