Meta is reportedly preparing to cut around 10 percent of staff in its Reality Labs division – with Metaverse and virtual reality teams expected to take the largest hit.
The move, first reported by The New York Times highlights how the company is pivoting toward artificial intelligence and away from immersive VR projects – a shift that mirrors broader changes across the tech industry.
Reality Labs, which employs roughly 15,000 people, has received extensive investment over the years.
Despite this, it has struggled to achieve mainstream consumer adoption.
Sources familiar with internal discussions say the layoffs could be announced this week.
AI Ambitions Reshape Meta’s Reality Labs Strategy
The reported cuts come as Meta increases investment in artificial intelligence.
CEO Mark Zuckerberg is reportedly redirecting funds to data centre build-outs, advanced computing infrastructure, and the recruitment of top AI talent.
Executives are said to be tightening 2026 budgets to free up resources for AI initiatives.
These initiatives include work by Meta’s advanced research unit, TBD Lab, which focuses on building next-generation AI systems.
This strategic shift reflects a larger trend in the tech sector.
Companies are prioritizing AI and cloud technologies even when it requires scaling back long-term moonshot projects like fully immersive virtual worlds.
Within Reality Labs, AI is increasingly the primary driver of investment decisions, product development, and workforce planning.
Transitioning resources from VR to AI signals a recalibration of what Meta considers the future of computing and social interaction.
The Metaverse Struggle Continues
Meta’s metaverse projects have encountered repeated adoption and growth challenges.
Despite billions of dollars spent on VR hardware and virtual social worlds, consumer uptake has remained limited.
Analysts have questioned the long-term return on investment, with metaverse budgets already scaled back in 2025.
Earlier Reality Labs reductions included cuts to VR gaming teams and internal studios, highlighting a scaling back of projects that have struggled to find sustainable audiences.
Meanwhile, augmented reality and wearable technology teams, such as those working on Ray-Ban smart glasses with integrated AI assistants, are reportedly less affected.
Those devices have seen stronger market adoption and are emerging as Meta’s more commercially viable hardware platform.
The contrast between VR struggles and AR/wearable successes highlights a strategic shift.
Meta appears to be moving away from immersive, resource-intensive VR worlds and toward AI-powered wearables that integrate more naturally into everyday life.
This could position Meta to compete more effectively with Apple, Google, and other tech giants in the emerging AR/AI wearable space – while also mitigating the high costs and limited adoption that VR projects continue to face.
In addition, wearable devices may help Meta generate revenue faster while keeping the metaverse concept alive in smaller, more manageable steps. As a result, the company may maintain long-term consumer engagement without over-investing in underperforming VR projects.
Tech Industry Layoffs Show a Wider Trend
Meta’s reported layoffs are part of a broader wave of workforce reductions across the tech sector as companies adjust to changing markets and AI-first priorities.
Microsoft announced two rounds of layoffs in 2025. The first round cut about 6,000 employees, focusing on efficiency and prioritization of AI and cloud services. Later that year, the company implemented an additional 9,000 job cuts – roughly 4 percent of its workforce – to further streamline operations.
Amazon also announced significant cuts in 2025, reducing around 14,000 corporate roles in what the company described as a push to eliminate redundancies and accelerate AI-driven automation across its business.
Earlier in 2025, Meta itself conducted layoffs within Reality Labs, affecting teams tied to Oculus Studios and other VR projects as part of initial structural adjustments. In addition, Meta confirmed cuts affecting over 300 employees at its Menlo Park, California headquarters in 2025, connected to shifts within its AI and superintelligence research units.
This reflects a wider trend in which tech companies are reducing headcount in traditional or underperforming divisions while redirecting investment toward AI, automation, cloud and other high-priority technologies.
Data tracking suggests that tens of thousands of tech jobs were eliminated across software, hardware, cloud and services sectors in 2025 as businesses adapted to cost pressures and strategic shifts, with analysts predicting this pattern will continue throughout 2026.
Meta has said it is not abandoning the metaverse entirely – but the layoffs suggest a serious strategic recalibration.
For employees, particularly those working on VR projects, the message is clear – AI-first initiatives now dominate the company’s strategy, and projects without a direct path to scale or profitability are under increasing scrutiny.
UC Today contacted Meta for comment but did not receive a response at the time of publication.
