Mark Zuckerberg, CEO of Meta, has stepped away from the metaverse to focus on AI.
ALEX WONG—GETTY IMAGES

Facebook founder Mark Zuckerberg once hoped his virtual and augmented reality metaverse would reach a billion people. Now it seems the passion project of the Meta CEO is being asked to reign in its spending.

Reality Labs, the division of the tech giant which focusses on the research and development of augmented and virtual reality (AR and VR) products and services, has reportedly been asked to curb its spending over the next couple of years.

The hardware teams—responsible for the likes of headsets and intelligent sunglasses—have been asked to axe their spending by 20% between now and 2026, The Information reports.

Citing an unnamed former Reality Labs manager, the bulk of the cost cutting is expected to happen this year.

The move comes on the heels of reported layoffs in the team working on silicons for the metaverse. In October Reuters reported cuts to Reality Labs employees who were creating a custom silicon used to make Meta devices more efficient than other products on the AR and VR market.

Meta did not immediately respond to Fortune’s request for comment.

Zuckerberg changes direction

The expected spending cut follows a reported shift of even Zuckerberg himself.

In 2021 the entrepreneur worth $170 billion, per Bloomberg’s Billionaire Index, wanted the entire company to be focussed on the metaverse. He wrote: “Over time, I hope we are seen as a metaverse company, and I want to anchor our work and our identity on what we’re building towards.”

“From now on, we will be metaverse-first, not Facebook-first,” he added.

Since then the company has spent tens of billions of dollars on the project—despite the fact Reality Labs has lost at least $46.5 billion since 2019.

Criticism has also been mounting—both internally and from shareholders.

Internal documents said of the metaverse that “an empty world is a sad world,” while Altimeter Capital chair and CEO, Brad Gerstner, wrote in an open letter to Zuckerberg that “people are confused by what the metaverse even means.”

The longtime backer of Meta urged metaverse and Reality Labs spending to be cut down to no more than $5 billion a year, adding: “We have little doubt investors and others would happily support scaling up these investments as the ROI becomes more tangible—even if still long-term.”

More time on AI

Since the launch of a certain chatbot, the Big Tech world has abruptly shifted its priorities.

Everyone from Google to Tesla to Amazon is pivoting toward artificial intelligence in a bid to keep up with the technology released by OpenAI, and Zuckerberg is apparently no different.

In April last year Andrew Bosworth, chief technology officer at Meta, told Nikkei Asia  that he, chairman Zuckerberg, and chief product officer Chris Cox were spending “most” of their time working on the then newly-formed AI team.

“We feel very confident that we are at the very forefront,” the Reality Labs leader added.