When Mark Zuckerberg announced, in 2021, that Facebook would be reinvented and renamed as Meta, the move was interpreted as more than a marketing ploy (see our abstract, “The Meta Future: What Moves Is Facebook Making Now, and Why?” from November 2021). It represented a shift in the company’s fundamental strategy, focused on what Zuckerberg believed would occur in the digital future, in which people’s lives would be dominated by and largely take place within an augmented reality that revolved around the metaverse. He wanted Meta to be designed and positioned explicitly to meet the needs of consumers functioning within the metaverse.
In support of this vision, Meta invested massively in its Reality Labs division, pouring funding into the teams tasked with conducting research and development into virtual and augmented reality solutions and platforms. But while Zuckerberg may have been remarkably prescient in anticipating and exploiting social media, his predictions about people’s desire for and interest in such augmented technology appear to have been off the mark.
Since the rebranding took place, Meta has lost more than $70 billion. Even for a company as massive and powerful as Meta, such losses are unsustainable, and the executive team appears to be throwing in the towel—or at least scaling back the vision. For example, at the end of 2025, Meta indicated that the budgets it allocated to extended reality development efforts would decrease by about one-third.
Instead, it is redirecting more attention and resources to more consumer-friendly offerings, including hardware that also provides augmented capabilities. In particular, in its partnership with Ray-Ban to market smart glasses, Meta gives consumers a familiar product, in the form of sunglasses they can wear in their regular lives. Through this pathway, it helps users gain familiarity and comfort with AI tools integrated into the smart glasses. In turn, it can continue to advance and roll out new generations of the devices.
In support of such expansions, as well as in response to moves by competitors functioning in related tech fields, Meta also is investing heavily in expanding its AI capabilities, developing data centers, training large language models (LLM), and strengthening its infrastructure. Funneling more than $70 billion to such efforts means that Meta can match investments reportedly made by top competitors such as Apple, Alphabet, Microsoft, and Amazon.
For example, it recently announced its acquisition of Manus AI, for a reported $2.5 billion investment, to gain access to that startup’s advanced LLM. The model reportedly can perform a wide range of agentic tasks with substantial dexterity and speed, including data analytics, market research, and coding. But even this strategic acquisition implies a pivot away from its own “Large Language Model Meta AI,” or Llama. Meta might have believed it could develop its own LLM, but the in-house version prompted mostly negative reviews, and tests suggested that its capabilities paled in comparison with what competitors like Open AI were offering. Thus, rather than internal capability development, Meta found itself forced to pivot toward acquisition efforts to compete effectively.
Still, the company has been able to salvage some of its strategic efforts and at least parts of its existing software. The Meta chatbot has been subjected to targeted improvements, designed to expand its capabilities in the hope of attracting new customers. In support of this drive, the tech giant signed licensing deals with many of the largest news outlets in the world, including CNN, Fox News, USA Today, and Le Monde. Beyond conventional news reports, it also seeks to appeal to consumers by expanding access to human interest pieces, such as through a content deal with People Magazine as well. These contracts allow Meta to integrate third-party news briefs from trusted, well-researched sources into its chatbot, which then can cite these publications when questioned on a relevant topic. It also helps add a stamp of legitimacy to the answers the company generates, seemingly as a way to address criticisms of Meta’s data practices in the past and avoid such critiques in the future.
In this sense, Meta may have learned a valuable lesson. It’s not easy to undertake a strategic pivot when you are one of the largest, most closely watched companies in the world. But if any part of your strategy isn’t working, it’s also not possible to stay the same course and survive.
Discussion Questions
- What kinds of analyses do firms need to undertake to determine when it is time to alter their marketing, product, or brand strategy?
- Why, in your view, has the metaverse not emerged and succeeded the way that its promoters, including Mark Zuckerberg, predicted it would?
Sources: Eva Roytburg, “Mark Zuckerberg Rebranded Facebook for the Metaverse. Four Years and $70 Billion in Losses Later, He’s Moving On,” Yahoo! Finance, December 5, 2025; Dan Primack and Megan Morrone, “Meta’s Deal for Manus AI Could Be Worth $2.5 Billion,” Axios, December 5, 2025; Zaheer Kachwala, “Meta Strikes Multiple AI Deals with News Publishers,” Reuters, December 5, 2025.