Meta slashes metaverse funds by 30% as AI takes center stage

Meta's Strategic Shift: From Metaverse to AI

Meta, formerly known as Facebook, has been at the forefront of developing 'metaverse' technology. However, recent reports indicate that the company is considering a significant budget reduction for its metaverse-related divisions by up to 30%. This move is part of a broader strategy to reallocate resources towards emerging technologies, particularly artificial intelligence (AI).

The metaverse, once seen as the future of digital interaction, has experienced a decline in interest due to the surge in AI investments. As major tech companies pivot their focus towards AI, Meta is following suit, adjusting its priorities to align with current market trends.

Budget Cuts and Organizational Restructuring

According to Bloomberg News, Meta's management is contemplating a plan to cut the budget of metaverse-related teams by up to 30% next year. The affected departments include 'Reality Labs,' which oversees the metaverse, virtual reality (VR), augmented reality (AR), mixed reality, and hardware ecosystems. Specific teams targeted for downsizing include the 'Horizon Team,' responsible for creating Meta's metaverse space 'Horizon Worlds,' and the 'Quest Team,' which develops metaverse-related hardware. There are even suggestions of large-scale layoffs in January, signaling a potential restructuring of these divisions.

A Shift in Focus: Embracing AI

Since 2021, Meta has invested heavily in metaverse technology, rebranding itself as Meta with the vision of a future where people work and play in virtual spaces. However, after the release of OpenAI's ChatGPT in 2022, the focus of major tech companies shifted towards AI development. Meta joined this competition, leading to a significant shift in investment and interest away from the metaverse.

As a result, Meta's 'Reality Labs' has recorded losses exceeding $70 billion since 2021. In response, the company plans to increase its investment in AI, reallocating funds from the metaverse sector to develop AI glasses and other hardware devices. This strategic move highlights Meta's commitment to staying competitive in the rapidly evolving tech landscape.

Strengthening AI Capabilities

Meta has been actively attracting AI talent from competitors like OpenAI by offering lucrative compensation packages. These packages, worth hundreds of billions of Korean won, aim to bolster Meta's AI technology sector. Additionally, the company is expanding its investments in AI infrastructure, including the development of AI data centers.

Changing Perceptions of the Metaverse

There are growing sentiments within the tech industry that the term 'metaverse' may become obsolete in the future. As AI advances, augmented reality and mixed reality technologies, which blend virtual worlds with real spaces in real-time, are gaining more attention than the traditional concept of the metaverse. Meta is continuing to develop these technologies while also working on AI glasses, such as the 'Meta Ray-Ban displays.'

Conclusion

Meta's decision to reduce its metaverse budget and focus on AI reflects a strategic adaptation to changing market dynamics. While the metaverse may not be the central focus anymore, the company is positioning itself to lead in the next wave of technological innovation. By investing in AI and related technologies, Meta aims to remain a key player in the ever-evolving tech industry.