Meta Slashes 10% of Metaverse Workforce as AI Becomes Top Priority

Mark Zuckerberg's empire pivots hard—again. The company once known as Facebook is cutting deep into its Reality Labs division, the unit tasked with building the metaverse. Roughly one in ten employees in that futuristic wing are getting the axe.

The AI Gold Rush

It's a classic corporate shuffle of resources. The capital and talent once earmarked for virtual worlds and VR headsets are being aggressively rerouted. The new destination? Artificial intelligence. Meta's leadership is betting the farm that AI—not the metaverse—is the next trillion-dollar platform. They're chasing the same hype cycle that has every tech CEO from Sundar Pichai to Satya Nadella scrambling for AI supremacy.

Reality Bites for Reality Labs

This isn't a minor course correction. A ten percent reduction in a core, future-facing unit signals a profound strategic shift. The metaverse, once the centerpiece of Zuckerberg's vision and even the company's rebrand, is now playing second fiddle. The move suggests that the immersive digital future is taking longer—and costing more—to materialize than anyone in Menlo Park anticipated. Wall Street, ever impatient for returns, is likely cheering the newfound 'fiscal discipline.'

The Bottom Line

Forget building a new reality—Meta is now focused on optimizing the current one with smarter algorithms and chatbots. It's a pivot from the speculative to the immediately monetizable. The cynical take? This is what happens when your moonshot burns more cash than a crypto hedge fund and your shareholders start asking for, you know, actual profits. The metaverse dream isn't dead, but it's definitely on a stricter budget while AI gets the blank check.

Meta’s Reality Labs Faces 1,500 Job Cuts in Metaverse Pullback

Reality Labs employs about 15,000 people and oversees hardware such as VR headsets alongside virtual platforms including Horizon Worlds and Horizon Workrooms.

A reduction of around 10% WOULD affect roughly 1,500 employees. Meta declined to comment on the report.

The move follows a series of budget adjustments that signal a cooling commitment to the metaverse as Meta doubles down on AI.

In early December, the company’s shares ROSE after reports suggested Meta was considering slashing as much as 30% from its metaverse spending and redirecting those resources toward AI development.

The latest report also said Meta plans to shift some funding from Reality Labs to its wearables business, which includes smart glasses and wrist-worn devices such as the Meta Neural Band.

Meta, formerly Facebook, rebranded in October 2021 in a high-profile bet on virtual worlds, VR and augmented reality.

That pivot came as metaverse projects gained traction across tech and crypto, but user adoption has struggled to meet early expectations.

BREAKING: META $META PLANNING TO CUT AROUND 10% OF EMPLOYEES IN ITS REALITY LABS DIVISION, PER NYT.

Reality Labs has roughly 15,000 employees, so this could mean ~1,500 layoffs.

Cuts will disproportionately affect those working on VR headsets and the metaverse. Could be… pic.twitter.com/lQArx04Yg7

Since Reality Labs launched in August 2020, the unit has accumulated more than $70 billion in losses.

In Meta’s most recent earnings report for the third quarter of 2025, Reality Labs posted operating losses of $4.4 billion.

The broader metaverse market has also shown uneven engagement. Gaming-focused platforms such as Roblox and Fortnite remain dominant, each drawing hundreds of millions of users.

Outside those ecosystems, activity levels are far lower. Blockchain-based virtual worlds have seen particularly limited traction, with The Sandbox recording just 776 unique active wallets over the past 30 days, according to data from DappRadar.

Some reports have also suggested that Meta’s Horizon Worlds attracts fewer than 900 daily active users.

Meta Shareholders Reject Call to Add Bitcoin to Company Treasury

In June last year, Meta investors overwhelmingly shot down a proposal urging the company to explore adding bitcoin to its balance sheet, according to a May 28 filing.

The measure received just 3.92 million votes in favor, roughly 0.08% of all shares, while nearly 5 billion voted against it.

With CEO Mark Zuckerberg controlling 61% of voting power, the outcome was effectively predetermined.

The proposal came from Bitcoin advocate Ethan Peck, who argued Meta should allocate part of its $72 billion cash pile into BTC as a hedge against inflation and diminishing real returns on cash and bonds.

Peck cited BlackRock’s guidance supporting a small Bitcoin allocation and submitted the proposal on behalf of his family’s Meta holdings.

He serves as Bitcoin director at Strive and has pushed similar campaigns at other tech giants.