Zuckerberg's metaverse cuts shouldn’t be interpreted as a retreat from his passion project

“Finally,” offered Henry Blodget, a man who made his name hyping doomed dot-com stocks. “Points for trying. Now on to other things.” The Wall Street Journal called it a ‘pivot’ away from a “yearslong vision.” Investors cheered. “The potential cost cuts could somewhat offset the historic spend to build out Meta’s AI infrastructure,” TD Securities analysts wrote, estimating cost savings of $5 billion to $6 billion. Meta shares closed the week up almost 4%.

But this isn’t a pivot from the metaverse. It’s a rebrand. Not for the first time, Meta’s CEO has reframed his ambitions to make his corporate spending more palatable to Wall Street—and it’s worked.

The metaverse has always been seen as Zuckerberg’s nerdiest folly. It has lost a staggering $71 billion since 2021 with little to show for it. Fewer than a million Quest headsets, the gateway to the metaverse, were shipped globally in the second quarter of this year. Meta’s Horizon Worlds platform, a place for your virtual self to live and hang out, is a lonely place. “Ready Player None,” joked tech news site The Verge.

But if mockery and poor sales were enough to put Zuckerberg off his passion project, he would have scrapped it years ago. To see the impending cuts—part of broader tightening across Meta—as evidence of a change of heart would be a mistake; a misunderstanding of his aim to build the ‘one’ device that, yes, will one day have us living in the metaverse.

Two important developments have happened in the past couple of years that have shaped the company’s thinking and driven these planned cuts.

The first was that Apple’s entry into the sector was a flop. The iPhone-maker offered no real technical innovation that Meta’s Reality Labs team hadn’t already solved nor any previously unthought of creative use cases. Its user interface, however, was much slicker and more intuitive. Meta just hired the executive in charge of making it.

The second one was the strong performance of Meta’s Ray-Ban smart glasses. EssilorLuxottica, which makes the device, said in October that it was gearing up to ship as many as 10 million units a year. Meta has taken an almost 3% stake in the company.

These events have signalled to Meta that it can safely cut back on the R&D spending that had been ramped up in nervous anticipation for a long, hard rivalry with Apple on high-end virtual and mixed reality. That battle, which could have played out like a bitter console war, is not happening. Instead, Meta can focus on a product consumers do seem to want (glasses) instead of one they don’t (the headsets).

That changes the road map but not the destination. Initially, Zuckerberg’s plan had been to prioritize large full-featured headsets that he could then make smaller, mirroring the path of personal computing. Instead, consumers are telling him loud and clear he should start with the smallest form factor, even if it does much less, and work on adding features later.

Eventually, as Zuckerberg has maintained for more than a decade, a time will come when full mixed reality—the metaverse—can be achieved through a pair of glasses that’s indistinguishable from regular frames.

To achieve all this, Zuckerberg has formed a new design studio within the company. “Our idea is to treat intelligence as a new design material,” he wrote last week. On Friday, the company announced it would acquire wearable AI company Limitless for an undisclosed amount. The company makes a wearable pendant that records and interprets conversations.

That the AI industry is front and centre in developing wearables gives Zuckerberg additional cover to keep working on the metaverse while keeping investors at bay. “Glasses are the ideal form factor for both AI and the metaverse,” he said last year. Nothing about the coming cuts suggests he sees things differently today.

Expecting Zuckerberg to give up the metaverse would be like expecting Elon Musk to stop posting messages on X. Yes, it’s embarrassing at times. Yes, it has cost Meta an enormous amount. And yes, investors would much prefer it if he stopped. But he just can’t help himself: There’s a sci-fi world out there that, as long as he’s running Meta, Zuckerberg seems determined to reach.

If he ends up being right, come back and watch today’s metaverse detractors say they believed him all along. ©Bloomberg

The author is Bloomberg Opinion’s US technology columnist.