Meta Reality Labs is facing up to 30% budget cuts, Bloomberg reports, higher than the 10% Mark Zuckerberg normally asks for during budget cycles.
Reality Labs, if you’re unaware, is the division of Meta behind its Quest headsets, Horizon software, smart glasses, and sEMG wristband, as well as researching future technologies such as Codec Avatars and true AR glasses.
Since Meta started breaking out the financial results of Reality Labs in its earnings calls in Q4 2020, it’s been public knowledge that the division spends significantly more than it brings in, resulting in a financial “loss” that has been the fuel for countless clickbait articles each quarter.
But while describing this as a “loss” is technically correct in an accounting sense, much of it would be more accurately described as long-term investment. XR headsets like Quest are still a relatively early technology. Further, as of 2022 more than 50% of Reality Labs spending was on the research and development of AR glasses, and the company has yet to even launch a true AR glasses device.
Still, Meta is a business, and at some point, it wants Reality Labs to be profitable, a goal that will involve spending less, transitioning from a bloated research and development group to a viable business.
In July 2024, The Information reported that Reality Labs was told to cut spending by 20% by 2026. But the first three quarters of 2025 have seen Reality Labs spend roughly the same as it did in 2024.
Bloomberg’s new report comes as Meta is planning its budget for next year. According to the report, executives are “considering” a cut “as high as 30%” for Reality Labs, with associated layoffs that would arrive as early as January.
Proposed cuts would primarily target VR and Horizon Worlds, according to the report, at a time when Meta is hoping to scale up its smart glasses ambitions.
As Ray-Ban Meta Sales Skyrocket, Quest Sales Are Down Again
Meta Reality Labs revenue rebounded in Q2, up 5% compared to 2024. But this was driven by the Ray-Ban Meta glasses, while Quest headset sales were again down.
The company, with its partner EssilorLuxottica, is still selling many of its smart glasses models as fast as it can make them. Simultaneously, it has seen Quest headset sales decline in 2025 compared to 2024, with Quest 3S proving only a hit during the holidays, not the rest of the year.
This combination of significant success in the smart glasses space and relative failure in growing its VR headset business is likely the driver of the company’s decision to focus cuts on the latter, and it will be paying close attention to the sales of its next headset to decide how to invest through the rest of the decade.
Apple’s Head Of UI Leaves To Lead Design At Meta Reality Labs
Apple’s head of user interface design is leaving the company, after almost 20 years, to lead design at Meta Reality Labs.
