Meta Plans 10% Workforce Reduction at Reality Labs as AI Strategy Takes Priority

Meta is preparing to reduce its workforce within Reality Labs, its metaverse-focused division, as the company intensifies its push into artificial intelligence development. The reported move reflects a broader shift in strategic priorities as spending on virtual worlds continues to decline.

According to reports, Meta is expected to lay off around 10% of Reality Labs staff, potentially impacting roughly 1,500 employees as early as this week. Reality Labs currently employs about 15,000 people and is responsible for Meta’s virtual reality hardware, including VR headsets, as well as its metaverse platforms such as Horizon Worlds and Horizon Workrooms.

The planned reductions come after months of tightening budgets within the metaverse unit. Meta has gradually scaled back spending on Reality Labs while redirecting resources toward AI research, infrastructure, and product development. In recent months, investor sentiment improved following reports that a significant portion of the metaverse budget could be reassigned to AI initiatives.

Part of the reallocation is also expected to benefit Meta’s wearables division, which focuses on smart glasses and wrist-based devices. These products are increasingly seen as complementary to AI-driven consumer experiences rather than purely metaverse-related bets.

Since its launch in 2020, Reality Labs has accumulated over $70 billion in losses, including $4.4 billion in operating losses reported in the most recent quarterly results. While Meta’s leadership continues to express long-term confidence in immersive technologies, user adoption across most metaverse platforms remains limited.The latest cuts underline Meta’s recalibration, with AI now positioned as the company’s primary growth engine, while the metaverse takes a more measured, longer-term role.

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