Meta is planning to cut approximately 10% of its Reality Labs workforce as the company doubles down on artificial intelligence development and away from its struggling metaverse initiatives.
The layoffs, which could affect around 1,500 employees out of Reality Labs’ 15,000-person workforce, are expected to be announced this week. The reductions will primarily impact teams working on virtual reality headsets and Horizon Worlds, Meta’s VR-based social network.
Strategic Shift from Metaverse to AI
Meta’s leadership has made clear that artificial intelligence is now the company’s priority over immersive technologies. The company has already committed significant resources to AI initiatives, including AI-powered recommendations across Facebook and Instagram, the open-source Llama large language model family, and custom chip development for AI infrastructure.
This marks a significant departure from Meta’s previous strategy. Reality Labs, founded in 2020, was positioned as central to Mark Zuckerberg’s metaverse vision. However, virtual reality and metaverse experiments have failed to achieve mainstream adoption.
Mounting Losses and Previous Cuts
Reality Labs has become increasingly costly for Meta, accumulating more than $70 billion in losses since its 2020 founding, with the division losing $4.4 billion in the most recent quarter alone. These mounting losses have prompted repeated workforce reductions over the past year, including over 100 layoffs in April 2025 and 600 cuts from Superintelligence Labs in October.
The Announcement Meeting
Andrew Bosworth, Meta’s Chief Technology Officer who oversees Reality Labs, has called an all-hands meeting for Wednesday, January 14, which he described as the “most important” of the year. Managers have urged employees to attend in person, signaling the significance of the announcement.
The reported layoffs reflect broader trends in the technology industry, with an estimated 250,000 tech workers laid off in 2025 alone, driven by the rise of AI and focus on profitability.