Meta to Cut About 1,500 Metaverse Jobs as Focus Shifts to AI
Meta is preparing to cut roughly 10% of its Reality Labs staff, signaling a major shift in priorities from the metaverse to artificial intelligence.
Key Points
The cuts will impact around 1,500 employees at Reality Labs, the division behind Meta’s virtual and augmented reality projects, including Horizon Worlds, Horizon Workrooms, and VR hardware.
The move comes after years of heavy losses in Reality Labs and slower-than-expected user adoption of Meta’s virtual platforms.
Meta is redirecting some funding from Reality Labs to its wearables business, including smart glasses and wrist-worn devices like the Meta Neural Band.
The layoffs could be announced as soon as Tuesday, according to the New York Times.
Reality Labs’ Challenges
Reality Labs employs about 15,000 people and has faced significant financial hurdles since its launch in August 2020, accumulating over $70 billion in losses. In its latest earnings report for Q3 2025, the division posted $4.4 billion in operating losses.
User engagement on Meta’s metaverse platforms has struggled to meet expectations. Gaming-focused virtual worlds like Roblox and Fortnite dominate the space, while blockchain-based worlds and corporate-focused metaverses have attracted very few users. For example:
The Sandbox had just 776 active wallets over the past 30 days.
Meta’s Horizon Worlds reportedly sees fewer than 900 daily active users.
Shift to AI and Wearables
The layoffs follow reports that Meta plans to cut metaverse spending by up to 30% and funnel resources toward AI development. This move reflects CEO Mark Zuckerberg’s renewed focus on AI, which the company views as its next major growth area.
At the same time, Meta is investing more in its wearables business, a sector that includes devices like smart glasses and the Meta Neural Band, hinting at a broader strategy that combines AI with physical hardware.
Meta’s Wider Financial Decisions
This isn’t Meta’s first controversial strategic move. In June 2025, shareholders overwhelmingly rejected a proposal to put Bitcoin on Meta’s balance sheet, with less than 0.1% of shares in favor. The proposal, submitted by Bitcoin advocate Ethan Peck, argued Meta should use part of its $72 billion cash reserve as a hedge against inflation, but it was effectively blocked by Zuckerberg, who controls 61% of voting power.
In short, Meta is scaling back its metaverse ambitions while betting big on AI and wearables, marking a major pivot in the company’s multi-billion-dollar vision for the future.
