Meta is preparing significant layoffs in its Reality Labs division, affecting approximately 10% to 15% of the unit’s 15,000 employees, according to reports from Business Insider and The New York Times. The cuts, expected to be announced this week, will disproportionately impact teams working on virtual reality headsets and Horizon Worlds, Meta’s VR-based social network.
The layoffs come as Meta CTO and Reality Labs chief Andrew Bosworth has scheduled what he describes as the “most important” division-wide meeting of the year for Wednesday, urging employees to attend in person. This move signals a critical juncture for the struggling division.
Reality Labs has been an extraordinarily costly venture for Meta, accumulating more than $70 billion in losses since 2020. The division has endured multiple rounds of cuts as Meta strategically pivots its resources and attention toward artificial intelligence development. This shift reflects the company’s recognition that AI represents a more immediate and potentially profitable investment compared to its metaverse ambitions.
In a memo obtained by Business Insider last year, Bosworth characterized 2025 as “the most critical” year of his tenure, warning that the outcome would determine whether Reality Labs is ultimately remembered as visionary work or “a legendary misadventure.” This stark assessment underscores the pressure facing the division to demonstrate tangible results and justify its massive expenditures.
The layoffs represent the latest chapter in Meta’s ongoing struggle to balance its long-term bet on virtual and augmented reality with the immediate demands of competing in the rapidly evolving AI landscape. As companies like OpenAI, Google, and Microsoft race to dominate AI technology, Meta has increasingly redirected investment toward AI infrastructure, large language models, and AI-powered features across its social media platforms.
The Reality Labs cuts highlight a broader trend in the tech industry, where companies are reassessing expensive moonshot projects in favor of AI initiatives that promise more immediate returns and competitive advantages in the current market environment.
Key Quotes
the most important
Andrew Bosworth, Meta’s CTO and Reality Labs chief, described Wednesday’s division-wide meeting using this phrase, signaling the critical nature of the announcement and urging employees to attend in person. This language suggests major organizational changes are imminent.
the most critical
In a memo from last year, Bosworth characterized 2025 as “the most critical” year of his tenure at Reality Labs, warning that the outcome would determine whether the division is remembered as visionary work or “a legendary misadventure.” This statement reveals the existential pressure facing the VR/AR division.
a legendary misadventure
Bosworth used this phrase to describe the potential negative legacy of Reality Labs if it fails to deliver results. This remarkably candid assessment acknowledges the possibility that Meta’s massive $70 billion investment in VR/AR technology may not pay off as the company shifts focus to AI.
Our Take
Meta’s Reality Labs layoffs represent more than just cost-cutting—they signal a fundamental recalibration of Big Tech’s future vision. The metaverse, once positioned as the next computing platform, is being deprioritized in favor of AI, which offers more immediate competitive advantages and revenue opportunities. This shift validates concerns that Meta’s VR bet was premature or overly ambitious. The $70 billion loss figure is staggering and raises questions about corporate governance and strategic decision-making at the highest levels. As Meta redirects resources to compete with OpenAI, Google, and Anthropic, we’re witnessing a rare moment where a tech giant publicly acknowledges a strategic miscalculation. The human cost—potentially 1,500-2,250 jobs—reminds us that these industry pivots have real consequences for workers who believed in the metaverse vision.
Why This Matters
This story represents a pivotal moment in Big Tech’s strategic priorities, illustrating how the AI boom is forcing companies to make difficult choices about resource allocation. Meta’s decision to cut Reality Labs staff while ramping up AI spending demonstrates that even the most well-funded tech giants must prioritize investments in the face of fierce AI competition.
The $70 billion in losses accumulated by Reality Labs since 2020 stands as one of the most expensive corporate bets in tech history, and its scaling back signals that the metaverse vision may be losing ground to AI’s immediate potential. This shift has significant implications for the thousands of employees who joined Meta to work on VR/AR technology, as well as for the broader XR industry that looked to Meta as a leading investor and innovator.
For the AI industry, Meta’s reallocation of resources reinforces the narrative that AI development has become the central battleground for tech dominance. Companies are increasingly willing to sacrifice other ambitious projects to ensure they remain competitive in AI, which is seen as foundational to future products, services, and business models across all sectors.
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Source: https://www.businessinsider.com/meta-layoffs-reality-labs-vr-horizon-worlds-teams-2026-1