Bloomberg Intelligence Podcast

Episode: Zuckerberg Plans to Cut Metaverse Group's Budget Up to 30%
Date: December 4, 2025
Hosts: Ed Ludlow, Scarlet Fu, Paul Sweeney
Guests: Caroline Hyde (Bloomberg Technology Co-Anchor), Anurag Rana (Bloomberg Intelligence Senior Technology Analyst), Lindsey Dutch (Bloomberg Intelligence Analyst), Mark Douglas (CEO, Mountain)

Episode Overview

This episode centers on Meta’s decision to scale back its Metaverse investment—reportedly cutting the Reality Labs (Metaverse group) budget by up to 30% for 2026. Hosts unpack what this means for Meta, AI spending, investor reactions, and the overall tech landscape. The episode includes a broader look at industry impacts: from tech rivalries and Apple’s internal shifts, to the evolution of streaming and media M&A, and consumer trends in retail.

1. Meta’s Strategic Shift: Slashing Metaverse Spending

Key Segment

• [02:06–03:41]

Ed Ludlow sets the stage:
Meta, once all-in on the Metaverse (even changing its name from Facebook to Meta), is now slashing Reality Labs’ budget by up to 30%. This dramatic allocation shift comes after years of heavy investment in VR and immersive technologies.

Caroline Hyde’s Analysis:

• Zuckerberg and Meta execs convened in Hawaii to rethink priorities.
  • "They're going to make layoffs. They're going to cut about 10% across the entire business...How can he offset that? Well, 30% more cuts, therefore, going to this particular part of Reality Labs." (Caroline Hyde, 02:45)
• Reality Labs will still make Ray Ban Meta Glasses (grabbing consumer interest in AR), but less so with VR, which hasn’t gained expected traction.
  • "Virtual reality, we're not living in it yet. He really thought we'd all be doing our workouts there...it just hasn't caught on in the way that was expected." (Caroline Hyde, 03:22)

Notable Quote:

“For now, it’s becoming sort of a metaverse of AI and augmented reality rather than virtual reality right here, right now.”
(Caroline Hyde, 03:34)

Audience Reflection:

• Co-hosts ask if Meta was just “too early” to the VR push; guest concedes general tech adoption simply isn’t there yet, sharing a personal anecdote for color.

2. Tech Talent Wars: Meta Poaches Apple’s Design Guru

Key Segment

• [03:41–05:23]

Caroline Hyde Exposes Apple’s Brain Drain:

• Apple’s Alan Dye, key to iPhone X design and software interface, leaves to join Meta—a “huge coup” that signals design talent shift.
• Apple’s ongoing loss of senior design and AI staff is traced to Jony Ive’s 2019 departure, flagging both morale and leadership transitions as issues.
  • “This is also turning of the guard...the real loss has been in the AI area...they might even be turning to Google for its large language model rather than building in house." (Caroline Hyde, 04:43–05:18)

Security vs. Scale at Apple:

• Apple’s insistence on "edge AI" (keeping all computation on-device) is characterized as noble but limiting—constraining their ability to build competitive large language models.

3. Meta’s AI Pivot & Global Competitive Pressures

Key Segment

• [06:13–07:29]

Inside the AI Race:

• Meta is publicly shifting resources from the Metaverse to AI, evidenced by the success of Ray Ban Meta glasses and adoption of generative AI in advertising and user content recommendations.
• Nonetheless, challenges persist in having people actually use "Meta AI" apps, especially in markets like the EU where integration hurdles and regulatory scrutiny are significant.

Quote:

“They still have to show that they're the place that you're going to use large language models...they're the place you're going to come for a chat bot.”
(Caroline Hyde, 07:06)

• Meta is also eyeing cost savings via partnerships with Google’s AI hardware (TPUs).

4. Market and Investor Response to Meta News

Key Segment

• [10:18–12:59]

Ed Ludlow:

• Meta’s stock is up ~4% on news of Metaverse spending cuts, revealing clear investor approval.
  • "The Stock's only about 13% year to date. Let's check in with Anurag Rana..." (10:18)

Anurag Rana’s Analyst Deep Dive:

• Funding billion-dollar AI/data center initiatives means Meta—despite good cash flow—needs to find savings elsewhere.
  • "It makes sense for them to cut in other regions or areas to fund this particular project." (Anurag Rana, 10:53)
• Investors now demand evidence ROI on these AI investments—impact on core business revenues or cost reductions.
  • "They will ask, you know, the management team...what is the net effect addition to your revenue or reduction to your expenses down the road." (Anurag Rana, 11:26)
• Consensus: Metaverse remains a tough sell to Wall Street; redirecting resources to proven or promising ventures is a market positive.

5. Related Tech Industry Insights

Salesforce and AI, Broader Market Themes

Key Segment

• [12:17–14:38]

Salesforce’s Position:

• Results only slightly ahead of expectations; core business remains sluggish due to slower hiring by major clients.
  • "You have a revenue base of $41 billion, it takes a lot to move the needle." (Anurag Rana, 12:17)
• AI is not (yet) an existential threat for established enterprise providers—it’s macro IT spend and hiring that's the challenge.

Retail and Consumer Hardlines
(Segment beginning at [17:24], less relevant to Meta but covered for completeness):

• Discussion with Lindsey Dutch on Dick’s Sporting Goods, its acquisition strategies, consumer demand in retail, and similar sector shifts.

6. The Changing Media Landscape: Streaming, M&A, and Content Wars

Key Segment

• [27:59–35:21]

Streaming & Media M&A:

• Mark Douglas (Mountain CEO) weighs in on the potential Warner Brothers Discovery M&A saga, where Netflix and traditional players vie to acquire blockbuster content libraries.
  • “Literal word on the street is Netflix. Netflix kind of has the inside track, but it’s some pretty serious bidders.” (Mark Douglas, 28:45)
• Antitrust not a major concern—industry is highly fragmented (200+ streaming services).
  • "I think it’s pretty hard even to look at this from an antitrust perspective." (Mark Douglas, 29:22)
• Streaming platforms need unique value propositions to survive; consolidation is both inevitable and healthy.
  • “If I name a streaming network and you can’t tell me immediately why you watch it, then it probably should not exist.” (Mark Douglas, 33:14)

Future of Streaming, Content is King:

• 2026 will see “the official death of cable”; sports moves rapidly to streaming.
  • "This is the year where like it's kind of the official death of cable in a sense...all content consumption is streaming, I think with the live sports in particular." (Mark Douglas, 34:25)
• Ad-supported streaming models are now almost universal.

Notable Quotes & Memorable Moments

• On Meta’s strategic pivot:

  "They really got to understand the integration...For now, it’s becoming sort of a metaverse of AI and augmented reality rather than virtual reality."
  (Caroline Hyde, 03:34)

• On Apple’s dilemma:

  “They might even be turning to Google for its large language model rather than building in house.”
  (Caroline Hyde, 05:18)

• On investor sentiment:

  “I think most shareholders are like, I don't really get the whole Metaverse thing. So to extent you can scale back investment there, put it anywhere else, that's probably a good thing.”
  (Ed Ludlow, 11:56)

• On streaming survival:

  “If I name a streaming network and you can't tell me immediately why you watch it, then it probably should not exist.”
  (Mark Douglas, 33:14)

• On the demise of legacy TV:

  “This is the year where like it's kind of the official death of cable in a sense...all content consumption is streaming.”
  (Mark Douglas, 34:25)

Timestamps for Critical Segments

• [02:06] – Meta’s Metaverse budget cuts announced and context
• [02:45–03:41] – Caroline Hyde details the internal strategy and Reality Labs’ focus shift
• [03:41–05:23] – Apple executive departures and implications for both Apple and Meta
• [06:13–07:29] – Meta’s AI ambitions, competitive context
• [10:18–12:59] – Analyst (Anurag Rana) interprets Meta news and AI funding priorities
• [27:59–35:21] – Mark Douglas on the streaming/media M&A landscape and the future of cable

Summary Takeaways

• Meta is decisively cutting back on its Metaverse group (~30%) to free up resources for AI investment. The move is cheered by investors, who prefer clear ROI and proven consumer adoption.
• VR has not achieved mass market penetration; focus is shifting to successful AR products (Ray Ban Meta glasses) and AI-powered experiences.
• Major design talent migration from Apple to Meta indicates a shifting balance in hardware/software innovation. Meanwhile, Apple faces internal AI constraints related to its privacy-first approach.
• The streaming wars continue to heat up, with Netflix angling for Warner Brothers Discovery, signaling further industry consolidation and the decline of legacy cable models.
• Investors across tech sectors (including Salesforce and retailers like Dick’s Sporting Goods) are focused on practical growth amidst rapid technological change and shifting consumer preferences.

This summary highlights the episode’s central insights, quotes, and major themes, providing a thorough briefing for listeners seeking to understand the episode’s business and technology implications.