Meta Slashes 10% of Reality Labs Jobs in Bold Pivot Toward AI Devices

Mark Zuckerberg is making another brutal bet—and this time, the metaverse is paying the price.

Meta confirmed today it's cutting a tenth of its workforce at Reality Labs, the division responsible for its ambitious virtual and augmented reality projects. The move signals a dramatic strategic shift, redirecting resources and talent toward the company's burgeoning artificial intelligence and hardware ambitions.

The AI Hardware Arms Race Heats Up

Forget floating meeting rooms. The new battleground is in your pocket, on your face, and in your home. Meta's pivot underscores a industry-wide scramble to own the next generation of AI-powered devices—smart glasses, advanced assistants, and whatever form factor comes next. They're not just building apps anymore; they're building the literal lenses through which we'll interact with AI.

Reality Labs Reckoning

The 10% cut is more than a trim; it's a course correction. After pouring billions into a future that's been slow to materialize for the average consumer, Meta is pulling capital from its speculative moon shot to fund the here-and-now AI war against Google, Apple, and OpenAI. The message is clear: immersive digital worlds can wait; the race for ambient, everyday AI cannot.

One finance wonk's take? 'They're finally admitting that selling $1,500 VR headsets to a recession-weary public is a tougher ask than convincing shareholders to fund another hype cycle.'

Zuckerberg is all-in on AI. Again. The only question is what—or who—gets left behind in the virtual dust.

Meta intends to make significant investments in other AI wearables

Regarding Meta’s plan to initiate layoffs affecting one-tenth of its employees in the Reality Labs Division, reports mentioned that the company’s CEO, Mark Zuckerberg, issued an order to executives instructing them to develop effective ways to reduce expenses within Reality Labs. These expenses include allocating funds to specific virtual reality and metaverse products.

Meanwhile, it is worth noting that Reality Labs, responsible for building the future of connection via augmented reality (AR) and virtual reality (VR) technologies that develop smart glasses like Ray-Ban Meta, the Horizon Worlds platform, and foundational technologies for the metaverse, among other products, struggled with ongoing financial setbacks totaling billions each quarter that lasted for several years. 

Interestingly, this business and research unit of Meta Platforms incurred losses while making significant investments in products that have not yet yielded notable returns.

To address this situation, executives at Meta held a meeting in December 2025, during which they discussed various cost-cutting measures. Many proposals were submitted for a 30% budget decrease, particularly for the metaverse team within Reality Labs, which comprises approximately 15,000 individuals, according to a report that recently released data.

In attempts to address the controversy raised in the tech industry, reporters contacted a representative from the tech company for comment on the topic of discussion, but the representative declined to respond.

Zuckerberg calls for a change in Meta’s operation

Meta’s recent announcement aligns with earlier predictions raised by analysts suggesting that Zuckerberg might consider minimizing the resources set aside to support the development of the metaverse.  

Before this cost-cutting plan, the metaverse was regarded as the tech giant’s future. This initiative contributed to the factors that prompted Meta to shift its name from Facebook Inc.

Concerning the tech firm’s intention to reduce budget for metaverse, a spokesperson stated, “We are reallocating some of our investments from the Metaverse to AI glasses and wearables because of their growing potential. We do not plan any larger changes beyond this.” 

In the meantime, sources claim that Meta’s proposed reductions to the metaverse are part of its extensive budget planning for this year. These talks began in December with multiple meetings carried out at the industry leader’s estate in Hawaii.

When Zuckerberg requested that executives consider a 10% cost reduction, sources pointed out that the metaverse team had been instructed to implement significant cuts in 2026 because the tech giant had encountered tough competition in the ecosystem it had never anticipated.

Additionally, these sources highlighted the likelihood that the proposed reductions WOULD impact Meta’s virtual reality team, which is considered the primary driver of expenses related to the metaverse. Meanwhile, apart from the metaverse, these layoffs are set to affect Horizon Worlds, another part of Reality Labs.

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