Meta to Cut Around 10% of Metaverse Unit as AI Takes Priority
Meta is preparing to cut roughly 10% of staff from its metaverse-focused division, a move that underscores the company’s accelerating shift toward artificial intelligence.
Key Takeaways:
- Meta plans to cut about 10% of Reality Labs staff as it shifts investment from the metaverse toward AI.
- The move follows years of heavy losses at Reality Labs and weaker-than-expected user adoption.
- Gaming-focused worlds dominate engagement, while blockchain and corporate metaverses continue to struggle for users.
The layoffs could be announced as soon as Tuesday, according to a report from the New York Times, which cited people familiar with the matter.
The cuts are expected to hit Reality Labs, the unit responsible for Meta’s virtual and augmented reality ambitions.
Meta’s Reality Labs Faces 1,500 Job Cuts in Metaverse Pullback
Reality Labs employs about 15,000 people and oversees hardware such as VR headsets alongside virtual platforms including Horizon Worlds and Horizon Workrooms.
A reduction of around 10% would affect roughly 1,500 employees. Meta declined to comment on the report.
The move follows a series of budget adjustments that signal a cooling commitment to the metaverse as Meta doubles down on AI.
In early December, the company’s shares rose after reports suggested Meta was considering slashing as much as 30% from its metaverse spending and redirecting those resources toward AI development.
The latest report also said Meta plans to shift some funding from Reality Labs to its wearables business, which includes smart glasses and wrist-worn devices such as the Meta Neural Band.
Meta, formerly Facebook, rebranded in October 2021 in a high-profile bet on virtual worlds, VR and augmented reality.
That pivot came as metaverse projects gained traction across tech and crypto, but user adoption has struggled to meet early expectations.
Since Reality Labs launched in August 2020, the unit has accumulated more than $70 billion in losses.
In Meta’s most recent earnings report for the third quarter of 2025, Reality Labs posted operating losses of $4.4 billion.
The broader metaverse market has also shown uneven engagement. Gaming-focused platforms such as Roblox and Fortnite remain dominant, each drawing hundreds of millions of users.
Outside those ecosystems, activity levels are far lower. Blockchain-based virtual worlds have seen particularly limited traction, with The Sandbox recording just 776 unique active wallets over the past 30 days, according to data from DappRadar.
Some reports have also suggested that Meta’s Horizon Worlds attracts fewer than 900 daily active users.
In June last year, Meta investors overwhelmingly shot down a proposal urging the company to explore adding Bitcoin to its balance sheet, according to a May 28 filing.
The measure received just 3.92 million votes in favor, roughly 0.08% of all shares, while nearly 5 billion voted against it.
With CEO Mark Zuckerberg controlling 61% of voting power, the outcome was effectively predetermined.
The proposal came from Bitcoin advocate Ethan Peck, who argued Meta should allocate part of its $72 billion cash pile into BTC as a hedge against inflation and diminishing real returns on cash and bonds.
Peck cited BlackRock’s guidance supporting a small Bitcoin allocation and submitted the proposal on behalf of his family’s Meta holdings.
He serves as Bitcoin director at Strive and has pushed similar campaigns at other tech giants.
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