Meta, the parent company of Facebook, is preparing to reduce its workforce significantly. The company plans to cut approximately 10% of employees in its Reality Labs division. This division develops popular products like Meta Quest headsets, Ray-Ban Smart Glasses, and the virtual reality social network known as the Metaverse.
Shifting Priorities Toward Artificial Intelligence
According to a Bloomberg report citing people familiar with the development, these job cuts reflect a major strategic shift. Meta is moving resources away from virtual reality projects to focus on building next-generation artificial intelligence systems. This change in direction may slow down CEO Mark Zuckerberg's long-standing vision for the metaverse.
Zuckerberg first pursued this virtual reality dream in 2014 when Meta acquired Oculus, a virtual reality startup, for $2 billion. The company took another significant step in 2021 by rebranding Facebook as Meta to emphasize its commitment to the metaverse concept.
Imminent Layoff Announcement Expected
Meta's Reality Labs division currently employs roughly 15,000 people. The Bloomberg report suggests Meta could announce these cuts as early as January 13, 2025. Sources indicate the layoffs will disproportionately affect employees working on virtual reality headsets and the VR-based social network.
Company memos sent to employees last week reveal important developments. Andrew Bosworth, Meta's chief technology officer who also leads Reality Labs, has scheduled what he calls a "most important" meeting for Wednesday, January 14. He has asked staff to attend this meeting in person, suggesting significant announcements are forthcoming.
Budget Reallocations and AI Investments
Last year, Zuckerberg instructed top executives to reduce their 2026 budgets while he directed more money toward AI research. As Meta faces intense competition from companies like OpenAI and Google, Zuckerberg has increased funding for TBD Lab. This specialized unit within Meta aims to develop superintelligence, described as a godlike AI system.
The company also plans to redirect some funds from virtual reality products to its wearables division. This division creates smart glasses and wristband computing devices, representing another area of strategic focus for Meta.
Investor Concerns and Market Response
Despite spending tens of billions of dollars on virtual reality headset development, consumer adoption has been slower than Meta anticipated. Investors have grown increasingly concerned about the company's substantial spending in this area.
In December last year, a Meta spokeswoman confirmed the company was "shifting some of our investment from Metaverse toward A.I. glasses." She emphasized the company was not planning "any broader changes" at that time, though current developments suggest a more significant restructuring is now underway.
The upcoming workforce reductions in Reality Labs represent a pivotal moment for Meta. They signal a strategic realignment from virtual reality toward artificial intelligence as the company responds to competitive pressures and investor concerns about its spending priorities.
