Meta has laid off about 1,500 employees from its Reality Labs division, reducing the unit’s workforce by roughly 10% as the company shifts resources away from the metaverse and toward artificial intelligence-powered wearables. The Reality Labs division oversees Meta’s virtual and augmented reality products, which have required heavy investment but delivered limited consumer adoption so far. The job cuts were reported as part of a broader effort to realign spending priorities and focus on areas showing stronger commercial momentum.
A Meta spokesperson said the layoffs follow the company’s decision to move some investment from metaverse initiatives toward wearables. Reports earlier this week had already indicated that Meta planned to reduce staffing in Reality Labs as it scaled back its emphasis on virtual reality products in favor of AI-driven hardware. In December, the company was also reported to be considering budget cuts of up to 30% for its metaverse group as it redirected resources toward artificial intelligence.
The workforce reduction comes as Meta prepares to report its fourth-quarter and full-year 2025 earnings later this month. Reality Labs has been a significant financial drag on the company, with operating losses exceeding $4 billion per quarter as of late 2025. Analysts and industry observers have pointed to unclear benchmarks for success and slow adoption as key factors behind the division’s struggles.
While Meta has reduced its metaverse ambitions, it continues to invest aggressively in artificial intelligence. Chief Executive Mark Zuckerberg has said he is focused on establishing Meta as a leading AI research and development organization, signaling a long-term commitment to the technology despite recent cost-cutting moves elsewhere.
At the same time, Meta’s AI-powered wearables appear to be gaining traction. Demand for the company’s smart glasses has reportedly outpaced current supply, prompting discussions with manufacturing partners about expanding production capacity. Plans under consideration include doubling output by the end of the year and increasing it further if demand continues to rise. Earlier this month, Meta paused a planned global expansion of the smart glasses, citing limited inventory and unusually strong demand in the United States.
Together, the layoffs and investment shifts highlight Meta’s strategic pivot away from large-scale metaverse spending toward AI products with clearer market demand and near-term revenue potential.
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