Meta Faces Twin Crises: Metaverse Cuts & EU Antitrust Probe

Meta is confronting major strategic and legal challenges. CEO Mark Zuckerberg plans deep cuts to the money-losing metaverse division. Simultaneously, European Union regulators launched a formal antitrust investigation into Meta’s AI plans for WhatsApp.These developments mark a pivotal moment for the social media giant. Internal budget discussions and a new EU probe signal significant pressure on the company’s future direction.

Metaverse Ambitions Face Deep Budget Cuts

Mark Zuckerberg is reconsidering his massive bet on the virtual world. According to internal sources, executives have discussed cutting the metaverse budget by up to 30% for 2026. This could trigger another round of layoffs as early as January.The unit, called Reality Labs, has lost over $73 billion since 2021. It lost $4.4 billion in just the third quarter of 2025. This staggering financial drain is forcing a dramatic strategic shift.Meta changed its name from Facebook to reflect this focus in 2021. Now, the company appears to be pulling back. Artificial intelligence has emerged as a new, more immediate priority for investment.

EU Launches Formal Antitrust Investigation

The European Commission opened its probe on December 4, 2025. It focuses on Meta’s policy to integrate its own AI, Meta AI, into WhatsApp. The policy would block rival AI companies from accessing WhatsApp’s users.This policy is set to take full effect on January 15, 2026. EU antitrust chief Margrethe Vestager stated the commission is examining if Meta is breaking competition rules. She warned that interim measures could be imposed before the investigation ends.Complaints from smaller AI firms like Poke.com and Luzia drove the EU’s action. These companies argue the policy locks them out of a vital market. Meta defends its move, citing technical strain and competition elsewhere.

 

Financial and Legal Repercussions Loom Large

The potential fines from the EU are substantial. If found guilty of abusing its dominant position, Meta could face a penalty of up to 10% of its global annual turnover. Based on recent revenue, that could mean a fine exceeding $3 billion.This EU case is part of a broader crackdown on Big Tech. Similar investigations are underway into Amazon AWS and Microsoft under new digital rules. Italy’s antitrust authority is also running a parallel probe into Meta’s AI restrictions.For Meta, the twin pressures of financial reality and regulatory scrutiny are creating a perfect storm. The company must balance its futuristic ambitions with present-day profitability and legal compliance. The coming months will be critical.

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Meta’s path forward is now defined by cost-cutting and regulatory navigation. The outcome of the EU antitrust probe and the scale of metaverse cuts will reshape the company’s strategy for years to come.

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What is the EU investigating Meta for?

The European Union is investigating whether Meta is breaking competition law. The probe focuses on Meta’s plan to block rival artificial intelligence services from its WhatsApp platform. Regulators fear this unfairly harms smaller competitors.

How much has Meta’s metaverse division lost?

Meta’s Reality Labs division has lost over $73 billion since 2021. In the third quarter of 2025 alone, it reported an operating loss of $4.4 billion. These massive losses are prompting planned budget cuts.

When could metaverse layoffs happen?

According to reports, layoffs within Meta’s metaverse groups could begin as early as January 2026. This would follow earlier job cuts in October 2025, where around 600 AI-related positions were eliminated.

What is the potential EU fine for Meta?

If the European Commission finds Meta violated antitrust rules, the fine could be up to 10% of the company’s global annual turnover. Based on recent financials, this penalty could amount to more than $3 billion.

Why did Meta change its name from Facebook?

Meta changed its corporate name in 2021 to signal a strategic focus on building the “metaverse,” a future vision of interconnected virtual worlds. The current budget cuts represent a significant scaling back of that ambitious initial goal.