Meta Cuts 1,500 Reality Labs Jobs as AI Takes Priority

Meta is preparing to eliminate approximately 1,500 positions from its Reality Labs division this week, marking another shift in the tech giant’s strategic priorities.

The cuts represent roughly 10% of the division’s 15,000-person workforce and signal Meta’s accelerating pivot away from its metaverse ambitions toward AI dominance.

The New York Times reports that Chief Technology Officer Andrew Bosworth has called an urgent all-hands meeting for Wednesday (Jan. 14), describing it as the “most important” of the year.

Why Meta’s metaverse dream is becoming a nightmare

The financial carnage speaks volumes about Meta’s metaverse investments. Reality Labs has hemorrhaged over $70 billion since 2021, with the division posting a $17.7 billion operating loss in 2024 alone. Despite some bright spots — Reality Labs sales grew 40% in 2024 thanks to popular Ray-Ban Meta glasses — the division remains deeply unprofitable.

The layoffs will disproportionately impact employees working on virtual reality headsets and VR-based social networks. Meta executives are considering budget cuts as high as 30% for the entire metaverse division in 2026, with plans to redirect funding toward wearables like smart glasses and wrist-based devices. This represents a fundamental retreat from CEO Mark Zuckerberg’s original vision of interconnected digital worlds that drove the company’s 2021 rebrand from Facebook.

Competition pressures force Meta’s pivot

Meta’s Reality Labs cuts come as the company faces intensifying competition from OpenAI, Google, and Microsoft in the AI space. The company has already invested over $70 billion in AI development over six years and recently established “Superintelligence Labs” as a protected division focused on achieving human-level AI capabilities.

The shift became crystal clear two months ago when Meta cut 600 jobs from its traditional AI divisions while keeping its elite Superintelligence Labs untouched and actively hiring. The company has committed to spending up to $40 billion on AI infrastructure, making the Reality Labs cuts seem inevitable as resources get reallocated to what Meta sees as the more urgent technological battleground.

What this means for Meta’s future

This week’s layoffs mark the latest chapter in Meta’s ongoing transformation from a metaverse-focused company back to a more traditional tech giant prioritizing AI and core social media products. Eight months ago, the company eliminated over 100 positions from Reality Labs, primarily affecting the Oculus Studios unit, and last year Zuckerberg largely stopped mentioning the metaverse in public appearances.

The cuts will likely accelerate Meta’s focus on AI glasses, wearables, and large language models while scaling back experimental projects like Horizon Worlds. For the 1,500 employees facing layoffs, Meta will allow them to apply for other internal positions, but the writing is on the wall: the metaverse era at Meta is rapidly coming to an end, replaced by an all-in bet on AI supremacy.

With AI on the menu, Zuckerberg reveals that Meta Compute is being launched—a dedicated “top-level organization” that will build computing infrastructure measured in hundreds of gigawatts. 

The post Meta Cuts 1,500 Reality Labs Jobs as AI Takes Priority appeared first on eWEEK.