The most powerful competition the metaverse faced was not another VR platform — it was everything that already existed. Meta has shut down Horizon Worlds on VR — off the Quest store by March, terminated on June 15 — after close to $80 billion in losses. Mark Zuckerberg underestimated how good existing digital platforms already were and how difficult it would be to motivate consumers to exchange them for something unfamiliar. Close to $80 billion confirms the underestimation.
The existing competition was formidable. Smartphones offered immediate, frictionless access to social interaction, entertainment, information, and commerce through interfaces that billions of people had already mastered. Social media platforms served genuine social needs with remarkable efficiency. Video calling made distance irrelevant for personal and professional relationships. Gaming offered immersive entertainment without requiring a dedicated VR setup. Each of these alternatives satisfied the needs the metaverse was designed to serve, at lower cost and with greater convenience.
Horizon Worlds had to compete against this ecosystem of satisfying alternatives while asking consumers to invest in new hardware, develop new skills, and modify established habits. The exchange the metaverse offered — greater immersion in return for greater effort — was not compelling enough to motivate the switch for mainstream consumers who were already satisfied with their existing digital lives.
Reality Labs registered close to $80 billion in losses in the competition against existing alternatives. The platform’s few hundred thousand monthly users had found Horizon Worlds compelling enough to add to their digital lives alongside existing platforms. The mainstream population, evaluating the same trade-off, consistently chose not to make it. Layoffs of more than 1,000 Reality Labs employees in early 2025 acknowledged the outcome.
AI succeeds partly because it integrates with existing tools rather than competing against them. AI writing assistance makes word processors better. AI coding assistance makes development environments better. AI search makes information retrieval better. The competition AI faces is not “why use AI instead of your existing tools?” but “why not let AI make your existing tools more powerful?” That integration model, so different from the metaverse’s replacement model, may explain much of the difference in their respective adoption curves.