Meta to Cut 1,500 Reality Labs Jobs as AI Takes Centre Stage

Meta is preparing for another major round of job cuts, with around 1,500 employees in its Reality Labs division expected to be laid off as early as this week. The move reflects a broader shift in the company’s strategy, as it pours more money and attention into artificial intelligence and the massive data centres needed to support it.

According to a New York Times report that cited people familiar with the matter, the layoffs will affect roughly 10 per cent of Reality Labs’ workforce. The division currently employs about 15,000 people and is responsible for Meta’s virtual and augmented reality efforts, including VR headsets, smart glasses, and its digital worlds platform, Horizon Worlds.

The timing of the cuts has added to anxiety inside the company. Meta’s chief technology officer, Andrew Bosworth, has called an all-hands meeting for Reality Labs staff this week, describing it as the “most important” meeting of the year. Employees have reportedly been asked to attend in person, and the meeting is scheduled to take place a day after the layoffs are expected to be announced, intensifying concerns about what lies ahead for the team.

Reality Labs has long been central to Meta’s identity since the company rebranded itself around the metaverse. The unit grew out of Oculus, the virtual reality startup founded by Palmer Luckey and acquired by Facebook in 2014. Over the past decade, it became the company’s home for ambitious projects aimed at building immersive digital experiences through VR and AR technologies. These include Quest headsets, Ray-Ban smart glasses, and the Horizon Worlds platform that once symbolised Meta’s push into a new kind of online interaction.

However, signs of a change in direction have been building for months. In December, technology journalist James Pero reported that Reality Labs was facing a 30 per cent budget reduction, an indication that its once-prized metaverse projects were no longer at the top of Meta’s spending list. While the company did not formally announce a retreat from the metaverse, the financial tightening suggested that other priorities were taking over.

That shift became even clearer this week when Meta unveiled a sweeping expansion of its AI infrastructure. Under a new initiative called Meta Compute, the company plans to build “tens of gigawatts” of computing capacity by the end of the decade. This scale of power consumption would rival that of multiple large cities, underlining how seriously Meta is betting on artificial intelligence as the backbone of its future products.

Alongside the infrastructure push, Meta also announced a high-profile leadership hire. Dina Powell McCormick, a former adviser to US presidents George W. Bush and Donald Trump and a senior banking executive, will join the company as president and vice chairperson. Her role is expected to focus on managing policy, government relations and partnerships, particularly as Meta moves forward with large and politically sensitive data centre projects.

Meta CEO Mark Zuckerberg framed the company’s AI strategy in bold, long-term terms. He said, “How we engineer, invest, and partner to build this infrastructure will become a strategic advantage.” The words echo his defence of heavy metaverse spending back in 2022, when he argued that investing early in emerging technologies would give Meta a lasting edge.

For employees in Reality Labs, however, the future feels far less certain. If the reported job cuts go ahead, they will reinforce the sense that Meta is rebalancing its ambitions — moving away from its once-grand vision of the metaverse and placing its biggest bets on artificial intelligence instead.