Meta has laid off about 700 employees across Facebook and its VR division, Reality Labs, as the company pivots away from its metaverse obsession and doubles down on artificial intelligence. The cuts, first reported by CNBC, hit teams responsible for the Quest VR headset and Horizon Worlds platform. This follows a previous round of 1,500 layoffs in January, mostly targeting Reality Labs.
The move is a clear signal: Meta’s metaverse gamble isn’t paying off. CEO Mark Zuckerberg famously rebranded Facebook to Meta in 2021, betting big on a future where everyone straps a headset to their face. But mass adoption never materialized. Reality Labs has burned through roughly $73 billion since the pivot, with little mainstream traction. Meanwhile, Meta’s Ray-Ban smart glasses-which look like normal eyewear-have outsold the bulkier VR gear, hinting at where consumer interest actually lies.
For players and VR fans, this shakeup means more uncertainty. Last week, Meta announced it would shut down Horizon Worlds, only to reverse course days later. Meta CTO Andrew Bosworth said in an Instagram AMA: “We have decided, just today in fact, we will keep Horizon Worlds working in VR for existing games.” But with layoffs hitting the teams behind these projects, future updates and support could slow down.
Meta isn’t just dealing with internal chaos. The company suffered two legal defeats in the past week. In New Mexico, Meta was ordered to pay about $375 million in civil penalties after a lawsuit alleged it misled consumers about product safety and harm to children. That’s a fraction of the $2 billion originally sought, but it’s still a heavy hit. On Wednesday, Meta and Google lost a case brought by a woman who said she became addicted to Instagram and YouTube as a child, with the jury awarding her $3 million. These cases are just the tip of the iceberg-around 2,000 similar lawsuits are pending in federal court, all focused on child safety and social media addiction.
For investors and tech watchers, the layoffs are about cost-cutting and re-prioritization. Reuters recently reported that Meta could lay off up to 20% of its workforce-potentially 15,000 jobs-to offset “costly artificial intelligence infrastructure bets” and chase “greater efficiency” promised by AI. Meta called that report “speculative”, but the current cuts show the company isn’t afraid to trim aggressively.
Meta’s new focus is AI, with reports suggesting Zuckerberg is developing a personal AI agent for Meta employees. The company is pouring resources into AI infrastructure, hoping to catch up with rivals and find the next big thing after the metaverse fizzled.
The bottom line
- Meta is slashing VR and metaverse jobs as it pivots to AI.
- Players can expect less clarity and slower updates for Quest and Horizon Worlds.
- Legal and financial pressures are forcing Meta to rethink its priorities.