Disruption has limits. 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 spent close to $80 billion attempting to disrupt how human beings socialize, work, and connect — to replace physical presence and flat-screen digital interaction with immersive virtual experience. The disruption did not succeed. The thing being disrupted — the deeply embedded human preference for familiar, convenient, low-friction interaction — proved more resilient than the disruptive force being applied to it.
The disruption thesis was clear. VR would disrupt video calling by providing more presence. Virtual spaces would disrupt physical meeting by eliminating geography. Avatar commerce would disrupt physical retail by providing richer digital shopping. Each proposed disruption followed the standard pattern: new technology offers better performance on key dimensions, at lower cost, that will eventually capture the market currently served by the incumbent.
The disruption failed because the incumbent’s advantages were underestimated. Video calling is extraordinarily convenient and familiar — the disruption it would require to make users switch to VR for routine communications was not justified by the incremental richness VR provided. Physical meeting offers non-virtual dimensions of human connection that VR cannot replicate. Physical retail satisfies immediate, tactile needs that virtual commerce cannot serve. The incumbents were resilient because they were genuinely satisfying genuinely felt needs.
Reality Labs spent close to $80 billion in the disruption attempt. Monthly active users in the hundreds of thousands confirmed that the disruption was not succeeding at scale. Layoffs of more than 1,000 Reality Labs employees in early 2025 and the AI pivot acknowledged that the disruption had failed. AI disrupts incumbents more successfully partly because it makes incumbents better rather than replacing them. The contrast with the metaverse is instructive about which disruption strategy the market is currently willing to reward.