Meta Plans Layoffs in Its Reality Labs Division as Company Shifts Focus

Meta is reportedly preparing to lay off employees from its Reality Labs division this week, according to reports from The Verge and Reuters.

The division, which focuses on metaverse and mixed reality products, is expected to be affected as the company continues to streamline operations and shift its focus toward Artificial Intelligence (AI).

The planned cuts would represent roughly 10% of the Reality Labs workforce, as cited by The New York Times through sources familiar with the matter. Reality Labs currently employs about 15,000 people and is responsible for Meta’s Quest headsets, Horizon Worlds platform, and Ray-Ban smart glasses partnership with EssilorLuxottica.

Here’s what the restructuring means for Meta and its metaverse ambitions.
 

TL;DR

• Meta plans to cut around 10% of employees in its Reality Labs division.
• The layoffs will affect teams working on VR, AR, and metaverse projects.
• Reality Labs houses Meta’s Quest, Ray-Ban smart glasses, and Horizon Worlds initiatives.
• The layoffs are part of Meta’s ongoing operational efficiency drive.
• Andrew Bosworth, Meta’s CTO, has called an in-person “most important of the year” meeting.

 

Inside The Restructuring

 

According to Reuters, the layoffs could begin as early as this week and will impact several Reality Labs teams focused on virtual and mixed reality development. The Verge reported that the division includes employees working on Meta’s immersive hardware and social experiences, areas that have seen slower commercial performance compared to the company’s core advertising and AI operations.

                   

 Source

Chief Technology Officer Andrew Bosworth, who oversees Reality Labs, has scheduled a mandatory in-person meeting for employees this week. The meeting, confirmed by internal sources cited in Reuters and Business Insider, signals that the layoffs will be accompanied by a larger internal reorganization of priorities.

AI Takes Priority

The layoffs highlight Meta’s growing shift toward AI and computing infrastructure as the company recalibrates after years of heavy investment in metaverse technologies. Reality Labs’ products — including the Quest VR lineup and Horizon Worlds, remain part of Meta’s broader strategy, but leadership has signaled that AI will now drive product development across all platforms. 

Meta has not issued a formal public comment on the reports. However, internal communications reviewed by Reuters indicate that the company views these layoffs as part of its “Year of Efficiency” restructuring, an initiative that began in 2023 to reduce costs and refocus teams on scalable technologies.
 

   

Industry Context

 

Reality Labs has long been one of Meta’s most expensive ventures. Since 2020, the division has racked up over $60 billion in operating losses, including $16.1 billion in 2025 alone, according to company filings. Despite massive investment, flagship projects like Horizon Worlds and Quest headsets have struggled to gain mainstream traction.

By contrast, Meta’s AI division has rapidly expanded, with the company developing its LLaMA 3 large language model and rolling out its Meta AI assistant across Facebook, Instagram, and WhatsApp. CEO Mark Zuckerberg recently called AI “the foundation of Meta’s future,” signaling a clear strategic pivot.
 

What Lies Ahead

 

Meta has not issued a public statement regarding the layoffs, though sources close to the company told The Verge that internal communications stress this is a “strategic realignment, not a retreat.” The company plans to continue developing future versions of Quest headsets and Ray-Ban smart glasses but under smaller teams and tighter budgets.

For an organization that once declared the metaverse as “the next evolution of the internet,” the change is striking. AI, once a secondary pillar of Meta’s innovation, has now become its primary engine for growth. In the race for artificial intelligence dominance, Meta seems ready to trade virtual worlds for real-world AI supremacy.