The company has reportedly laid off around 10% of its Reality Labs workforce representing around 1,500 workers, signaling a significant strategic shift away from virtual worlds toward more immediate AI opportunities.
Recently, we reported that the company planned to layoff workers, and now that plan has been set into motion, with Meta beginning to let go of workers this week.
The move comes just over four years after Zuckerberg rebranded Facebook to Meta in a bid to establish the company as synonymous with the metaverse, building on his view that virtual worlds would be the future of personal and professional spheres.
TL;DR
- Meta is cutting nearly 10% of Reality Labs staff.
- Mark Zuckerberg is reallocating resources from Metaverse to AI development.
- The layoffs affect AR/VR hardware and software teams, especially those tied to Quest and Horizon.
- Meta says it’s focusing investment on AI that enhances all of Meta’s apps.
Meta Refocuses Vision From Virtual To Artificial Intelligence
Meta Platforms Inc. is hitting pause on the metaverse and its virtual reality (VR) dreams, as it lays off 1,500 in its Reality Labs division, the team behind Quest headsets and augmented reality (AR) technologies, as part of a larger realignment to prioritize AI.
The cuts represent around 10% of Reality Labs’ workforce, impacting employees working on AR/VR software, hardware, and engineering infrastructure. This move underscores a company-wide shift in vision, where artificial intelligence now takes center stage over virtual reality.
A major contributing factor includes the surge of interest in mobile gaming and the declining sales and performance of VR headsets.
“It kind of follows that Meta will be moving it towards mobile as mobile gaming has become very popular over the last five years or so,” said Ben Hatton, an analyst for CCS Insight, who's an expert in connected devices.
Reality Labs Feels The Heat
Over the last four years, Meta's Reality Labs division has been hit with more than $70 billion in cumulative losses having spenr over $77 billion since its creation. This includes seeing a loss of $4.4 billion being reported last October, in constrast to sales worth just $470 million.
The restructured funds are being diverted towards wearables, including AI-powered glasses devices, as per a Meta spokesperson, who shared the information in December 2025.
“This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year,” said the spokesperson.
Despite repeated launches of new hardware like the Quest 3 headset and persistent investments in Horizon Worlds, the division has failed to achieve mainstream traction.
This latest round of layoffs affects engineers, designers, and researchers tied to the hardware supply chain and the Horizon OS project, a planned open operating system for AR/VR devices. Analysts interpret the move as Meta’s acknowledgment that its Metaverse vision was over-ambitious and underperforming in profitability.
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AI Takes The Driver’s Seat
Meta has already begun integrating advanced AI features across Facebook, Instagram, and WhatsApp. The company is also testing AI-powered tools for advertisers, creators, and customer support through its Meta AI assistant and Llama 3 large language model.
The decision to scale back Reality Labs comes as public enthusiasm for the Metaverse continues to wane. Other tech giants like Disney, Microsoft, and Google have also shuttered or restructured their virtual world projects in recent months.
While Meta insists it’s not abandoning virtual or mixed reality entirely, the company’s investment priorities now clearly lean toward artificial intelligence — a domain where it sees faster growth, broader adoption, and potentially higher returns.
