Meta Platforms, the parent company of Facebook and Instagram, is reportedly planning to implement massive budget cuts of up to 30% for its ambitious metaverse initiative, according to a report from Bloomberg News on Thursday.

The news served as immediate relief for investors, sending Meta’s shares surging by nearly 4% in morning trading, as the move signals a major strategic pivot away from a costly long-term bet that has burned more than $70 billion since 2020.

The proposed cuts are part of the company’s annual budget planning for 2026, which included a series of executive meetings last month at CEO Mark Zuckerberg’s Hawaii compound. Cuts of this magnitude, which are expected to predominantly affect the Virtual Reality (VR) group and the Horizon Worlds social platform, would most likely include significant layoffs as early as January, though Meta has not officially confirmed the report.

“Smart move, just late,” said Craig Huber, an analyst at Huber Research Partners. “This seems a major shift to align costs with a revenue outlook that surely is not as prosperous as management thought years ago.”

The metaverse efforts sit within the Reality Labs division, which is responsible for the company’s hardware—including the Quest mixed-reality headsets, smart glasses made with EssilorLuxottica (ESLX.PA)’s Ray-Ban, and upcoming augmented-reality glasses. The division has been a staggering financial drain, accumulating over $70 billion in cumulative losses since early 2021, and reported a loss of $4.4 billion in the most recent quarter alone.

While Meta has struggled to sell its vision of an immersive, interconnected metaverse to the mainstream, the division has achieved an early lead with its Ray-Ban smart glasses, finding a niche where competitors like Alphabet’s Google, Apple, and Snap have previously failed to capitalize. However, this success has not been enough to offset the enormous capital drain from the VR projects.

Shift to AI: The New $72 Billion Priority

The proposed metaverse cuts underscore a critical shift in the company’s focus: the Artificial Intelligence (AI) race. Meta is aggressively attempting to gain ground in Silicon Valley’s AI competition, especially after its highly anticipated Llama 4 model met with a poor reception from the developer and research communities. The model was criticized for being underwhelming on key benchmarks (like coding and complex reasoning), having a restrictive open-source license, and being perceived by some as a rushed release.

To fuel its new AI ambitions, Meta has committed as much as $72 billion in capital spending this year, contributing to the nearly $400 billion in total expected AI expenditure by large tech companies across the industry. The company has reorganized its AI efforts under Superintelligence Labs, with Zuckerberg personally leading an aggressive talent acquisition effort, reportedly floating million-dollar pay packages and directly courting top prospects on WhatsApp.

Centralized Support for Facebook, Instagram

In a separate move, Meta announced the launch of a new, centralized support hub for Facebook and Instagram users, acknowledging that its prior support options haven’t “always met expectations.” The hub aims to centralize account recovery options, offer clearer guidelines, and use new AI systems to help users report issues, recover lost accounts, and get answers via an AI-powered search and assistant.

The company claims its use of AI is improving user safety, noting that account hacks have decreased by over 30% globally across Facebook and Instagram. AI is also used to identify and stop other threats, such as phishing and suspicious logins, and has helped speed up the appeals process for mistakenly disabled accounts.

However, this official claim stands in contrast to the “lived experience of thousands of users” who complain of losing access to their accounts or business pages due to perceived system errors, with many suspecting the lack of human oversight in AI-driven decisions is to blame.

The severity of the issue has led to the creation of an entire Reddit forum dedicated to helping people who are suing Meta over these disabled accounts. Meta believes the new hub, which includes an optional selfie video verification for identity, will address these long-standing customer service problems.

Google Cloud’s new multi-year partnership with Replit has become more than a standard vendor contract. It is part of a larger repositioning inside Silicon Valley as the ground under the software industry shifts rapidly toward AI-generated code, a trend insiders now call vibe-coding.

The move strengthens Google’s posture in a market where Anthropic and Cursor have posted staggering revenue numbers and pulled enterprise customers into a fresh wave of competition.

Under the agreement announced Thursday, Replit will keep Google Cloud as its primary provider, rely more heavily on the company’s infrastructure, and integrate additional Google AI models into its platform. The startup will also expand support for enterprise cases where companies want AI systems to generate code and automate development work.

The relationship lands at a moment when Google is pushing its newest flagship model, Gemini 3, into every corner of its cloud business. Alphabet shares have climbed more than 12 percent since the model’s launch, a sign that investors see a pathway for the company to regain ground it ceded to rivals earlier in the AI boom.

Replit, founded almost ten years ago, has become one of the fastest-rising names in the AI software space. Its September funding round secured $250 million and nearly tripled the company’s valuation to $3 billion. Its revenue jump — from $2.8 million to $150 million in less than a year — startled larger software vendors that had never seen such acceleration in developer-focused products.

Ramp, a fintech platform that monitors enterprise software spending, reported that Replit logged the fastest new-customer growth among all software companies it tracks. Ramp’s data also showed Google adding customers at a quickening pace.

To understand why the partnership came together with such urgency, it helps to revisit how vibe-coding emerged. The phrase took off earlier this year as AI models showed they could generate functional code from plain conversational prompts. Early tools required careful instructions from advanced developers. The newest generation, including offerings from Google, Anthropic, OpenAI, and Cursor, can take a loose description of a goal and produce editable, runnable code. That jump lowered the entry threshold for millions of people who had previously found programming inaccessible.

The development opened a new user base composed of hobbyists, designers, students, analysts, and workers in non-technical roles who suddenly saw a way to build tools without learning formal programming. It also gave professional engineers a method to produce prototypes or rough drafts in minutes. What began as an online novelty turned into a serious commercial sector by mid-year, with rapid adoption in finance, retail, logistics, and entertainment.

The financial numbers from major players show how quickly the market grew. Anthropic announced on Tuesday that its Claude Code product reached a run-rate of $1 billion. Cursor, which positions itself toward professional developers, closed a funding round in November that valued the company at $29.3 billion and reported $1 billion in annualized revenue. The speed at which both firms grew placed unusual pressure on Google to secure territory of its own.

The company has faced a crowded competitive landscape since 2023. OpenAI’s influence over developers surged with tools like GPT-powered assistants and custom coding environments. Microsoft extended that influence through GitHub Copilot, which became a standard tool for engineering teams across several industries. Anthropic gained momentum after securing large enterprise contracts. Cursor locked down the higher-end segment of the coding market with an interface designed for full-time engineers.

Google had the technical depth but struggled to convert it into equal commercial impact. Gemini 3 became the anchor of the company’s effort to close the gap, with benchmarks that helped rebuild its standing in the developer community. What it needed next was a partner that could carry its AI footprint into the widening circle of new users, particularly those who are not fully embedded inside engineering departments. Replit fits that role neatly. Its platform is built around immediacy; users open a browser tab and begin writing or generating code without installation, configuration, or setup.

Google now gains a route into enterprises that are experimenting with AI not only for software development but for departments that want automated tasks, lightweight tools, internal dashboards, and prototypes that move faster than conventional IT workflows. The partnership also gives Google a foothold in a consumer-to-enterprise funnel that Replit has already proven it can convert.

For Replit, the deal offers the scale and stability needed to handle surging traffic. It also gives the startup technical advantages from Google’s compute capacity and model library, at a time when competitors are raising the bar in speed and output quality.

The broader context is a shifting software economy where AI-generated code is becoming a central part of cloud strategy. Companies that control the platforms, models, and distribution channels will influence not just how software is built, but who gets to build it. Google’s new partnership signals that it aims to compete on every front — from the seasoned engineer’s terminal to the newcomer’s first AI-assisted project.