Meta, the company behind Facebook and Instagram, is reviewing its long-term investments after several products failed to deliver profits in recent years.

The biggest losses came from Meta’s Reality Labs division, which develops virtual reality headsets and augmented reality smart glasses. This unit supports Meta’s broader metaverse vision but has lost around $73 billion since 2021.

In the third quarter of 2025 alone, Reality Labs posted an operating loss of $4.43 billion, according to Meta’s latest earnings report.

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Market data shows falling demand for Meta’s Virtual Reality (VR) products. Research firm IDC reported that Meta shipped just 1.7 million Quest headsets in the first nine months of 2025, down 16% from the same period last year.

IDC said earlier that hopes that Augmented Reality (AR) and Virtual Reality (VR) would replace smartphones never came true. “All of these ideas that AR and VR would replace smartphones didn’t happen,” he said, adding, “It will never happen.”

Meta invested heavily in the metaverse, once promoted as a future digital world for socializing, shopping, and gaming. However, public interest has dropped sharply in recent years.

Google Trends data shows searches for “metaverse” peaked in late 2021 and early 2022 and have declined since. A survey also found that most Americans had not used the metaverse in 2024.

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As demand weakens, Meta has decided to lay off more than 1,000 employees from Reality Labs, according to Bloomberg. The division employs about 15,000 people, meaning nearly 10% of the team will be affected.

The cuts follow internal discussions about reducing metaverse budgets by up to 30%. They also come after Meta cut about 5% of its workforce last year by removing low-performing roles.