Meta Shifts Focus from Metaverse to AI, Plans Reality Labs Layoffs

Meta is laying off approximately 10% of its Reality Labs workforce, affecting around 1,500 employees, as the company pivots toward artificial intelligence initiatives. The division, which specializes in virtual reality hardware and platforms like Horizon Worlds, has faced mounting losses totaling $70 billion since its 2020 launch.

The cuts follow a year of budget reductions, with December reports indicating a potential 30% slash in metaverse funding. Reality Labs' struggles are underscored by dismal user engagement—fewer than 900 daily active users on Horizon Worlds—and a $4.4 billion quarterly loss.

Resources are now being redirected to wearables, including smart glasses and neural wristbands, marking a stark reversal from Meta's 2021 rebranding as a metaverse-focused entity. This strategic realignment reflects broader industry skepticism toward immersive virtual environments and intensifying competition in AI development.