The concept of the metaverse, once hailed as the internet’s inevitable evolution, has seen a significant shift, particularly following Meta’s multi-billion dollar investment and subsequent strategic reevaluation. This ambitious digital frontier, envisioned as an immersive virtual reality, now serves as a cautionary tale in the rapid cycles of technological hype and investment.
For years, enthusiasts painted a picture of the metaverse as the successor to the mobile internet, a realm where gaming, retail, and social interactions would merge in a persistent, interconnected digital space. This vision, often linked to the broader Web3 movement, promised community-owned platforms and privacy by design, aiming to redefine how we engage with the digital economy.
However, the reality proved far more complex than the initial hype suggested. As detailed by Fast Company in early 2026, Meta effectively began scaling back its metaverse efforts, instructing its Reality Labs division to cut its budget by 30% after accumulating over $73 billion in losses since 2021. This move signaled a broader industry recalibration, raising questions about the viability and true demand for such virtual worlds.
The grand vision and its inflated promises
The initial buzz around the metaverse was fueled by perpetually inflating definitions and staggering market forecasts from major financial institutions. In June 2022, McKinsey & Company projected the metaverse could generate “up to $5 trillion in impact by 2030,” equating to the world’s third-largest economy. This included an estimated $2 trillion to $2.6 trillion from e-commerce within these virtual spaces.
Even more optimistically, Citigroup predicted a total addressable market between $8 trillion and $13 trillion by 2030, with five billion users, positioning it as “the next iteration of the internet, or Web3.” Similarly, Morgan Stanley saw an $8 trillion market opportunity in China alone. These projections, while exciting, often seemed to “talk new realities into being,” as tech critic Evgeny Morozov observed, creating visions unmoored from existing demand.
Underneath the grand narratives, the metaverse pivot also harbored profit-driven ambitions, including potential new models for labor. Some scenarios envisioned employers bypassing traditional labor laws and misclassifying workers, subjecting them to algorithmic oversight in virtual environments. This blend of speculative finance and re-imagined work structures highlighted a deeply cynical effort to rebrand existing digital markets.
A dress rehearsal for the AI boom?
Looking back, the metaverse era can be viewed as a crucial dress rehearsal for today’s artificial intelligence boom. Both phenomena share striking similarities: perpetually inflating definitions, a single-minded focus on profit, and manufactured narratives about inevitability and technological progress. Both also saw enormous sums burned on infrastructure for products that, in many cases, lacked broad public appeal.
The rapid ascent and subsequent cooling of interest in the metaverse provide valuable lessons for current technological cycles. This “mass hallucination,” as some termed it, demonstrated how easily industries can become captivated by speculative futures, investing heavily in concepts that struggle to find a genuine market fit or deliver on their expansive promises. The parallels with the current AI discourse are difficult to ignore.
Ultimately, what was the metaverse stands as a testament to the volatile nature of technological innovation and investment. While it failed to materialize into the ubiquitous digital universe many envisioned, its legacy offers critical insights into market speculation, the power of narrative, and the importance of user-centric development over abstract, profit-driven projections. These lessons are particularly pertinent as new technologies, like AI, promise even more profound transformations.
