The Reality Labs division, which employs roughly 15,000 people, could see more than 1,500 roles axed, according to people familiar with the matter. The layoffs will primarily affect teams working on virtual reality headsets and the company’s VR-based social network.
While the cuts represent a small slice of Meta’s total workforce of 78,000, the report indicates that this wave will disproportionately impact the metaverse group.
Meta’s big pivot to AI
Meta’s shift toward artificial intelligence has been years in the making, but this round of layoffs underscores just how far the pendulum has swung. As competitors like OpenAI and Google race ahead in generative AI, Zuckerberg is doubling down on efforts to make Meta a serious player in the space.
Last year, he reportedly instructed top executives to trim their 2026 budgets, redirecting those funds to AI research and infrastructure. A major beneficiary of this shift is TBD Lab, Meta’s skunkworks-style research unit tasked with developing what Zuckerberg has called “superintelligence”, a godlike AI system that can outperform human capabilities in key areas.
Andrew Bosworth, Meta’s chief technology officer who oversees Reality Labs, has called an all-hands meeting for Wednesday, describing it as the “most important” of the year. In a memo obtained by The New York Times, Bosworth urged staff to attend in person, though he did not elaborate on the specific agenda.
The timing of the meeting has sparked speculation among employees that it will coincide with the announcement of the layoffs.
What does it mean?
For Meta, this restructuring marks a clear turning point. Zuckerberg’s metaverse vision, which led to the company’s rebrand from Facebook in 2021, appears to be taking a backseat as investor confidence shifts toward AI.
The company has spent tens of billions of dollars building virtual reality products, but consumer adoption has been tepid. Sales of Meta’s Quest headsets have failed to meet expectations, and the company’s social VR platform hasn’t achieved mainstream traction.
The new cuts are set to slow down metaverse development considerably.
Meta also plans to reallocate funding from virtual reality projects to its wearables division, which builds smart glasses and wristband computing devices, products that the company now sees as a more practical bridge between the physical and digital worlds.
Investors, meanwhile, have grown increasingly wary of Meta’s heavy spending on hardware and virtual environments.
By contrast, AI offers clearer near-term revenue opportunities and stronger investor confidence. Meta expects to pour tens of billions into data centres and computing infrastructure to support its AI ambitions, and it has been handing out eye-catching pay packages to lure top researchers from rivals.
The layoffs may sting, but they reflect a hard reset for the company’s priorities.
