Meta is finally putting hard numbers behind its strategic pivot, cutting jobs in the very division that once embodied its metaverse ambitions while steering money and talent into artificial intelligence hardware. The company is shrinking its virtual reality footprint and betting that AI-infused glasses, wearables, and phone features will deliver the kind of mainstream adoption that virtual worlds never did. The shift marks a sharp turn from the era when Mark Zuckerberg pitched the metaverse as the company’s defining future.
From metaverse moonshot to AI hardware bet
Meta Platforms Inc spent years telling investors that immersive virtual worlds would justify massive losses in its hardware and research arm, Reality Labs. Now the company is beginning to cut more than 1,000 jobs tied to that vision as it reallocates resources to AI devices that can reach far more people through everyday products like glasses and phones. Internally, executives have framed the move as a recognition that the metaverse, a virtual world that was supposed to transform how people work and socialize, has not delivered the scale or revenue to match the investment.
The retrenchment caps a four year experiment in which Meta Platforms poured money into Reality Labs, which has racked up losses of $60 billion since the metaverse push began. Earlier guidance signaled that Meta Platforms, which trades under the ticker META, would cut metaverse investments by up to 30 percent in 2026, and the new layoffs show that shift moving from spreadsheets to people. For a company that once cast the metaverse as Silicon Valley’s next dominant obsession, the new priority is clear: AI features that can be layered onto existing platforms and hardware, rather than a wholesale reinvention of the internet.
Reality Labs takes the hit
The sharpest pain is landing inside Reality Labs, the division that builds Meta’s virtual reality headsets and mixed reality software. Meta has confirmed that at least 1,000 roles are being eliminated there as the company shifts investment toward wearables, a restructuring that effectively concedes that the original metaverse roadmap was too ambitious. Separate reporting indicates Meta is preparing to cut roughly 1,500 jobs in Reality Labs overall, a figure that underscores how deeply the knife is cutting into the group that once symbolized Meta’s future. Mark Zuckerberg, who championed that unit as the engine of a new computing platform, is now described as doubling down on AI instead.
The restructuring is not limited to headcount reductions. Meta is also shutting down or consolidating virtual reality studios as part of a broader AI pivot, with one report describing how Meta cuts 1,000 plus VR jobs while closing content operations that once produced flagship metaverse experiences. Inside the company, Reality Labs is being reframed less as a metaverse skunkworks and more as a hardware incubator for AI glasses and related devices. For employees who joined to build virtual worlds, the message is blunt: the company’s patience for long term, low adoption bets has run out.
Horizon Worlds and Quest fall short
Meta’s change of heart is rooted in performance, not just fashion. The company’s own social VR platform, Horizon Worlds, has struggled to attract the volume of users originally expected, and its Quest headsets have not broken out beyond a devoted niche of gamers and early adopters. Internal assessments acknowledge that Horizon Worlds and the Quest line have fallen short of the mass market traction that would justify continued, open ended spending. However, the company still sees value in the underlying technology, particularly as a test bed for sensors, displays, and on device AI that could migrate into lighter, more socially acceptable hardware.
That is where AI glasses and wearables come in. Earlier guidance from Meta’s leadership made clear that, within its overall Reality Labs portfolio, the company is shifting some of its investment from the metaverse toward AI glasses and wearables, a strategy described as reallocating funds within Reality Labs rather than abandoning hardware altogether. The idea is to take lessons from Quest and Horizon Worlds, from hand tracking to spatial audio, and apply them to products that look more like Ray-Bans than sci fi helmets. If Meta can embed AI assistants, translation, and real time information overlays into everyday eyewear, it may finally find the mainstream computing platform it hoped the metaverse would become.
Inside the layoff calculus
For workers, the pivot is playing out as a series of targeted cuts that reach beyond a single lab. Facebook parent company Meta has begun restructuring its Reality Labs division, initiating job cuts that are expected to impact around 10 percent of the unit’s workforce as it shifts toward AI wearables and mobile integration. Company leaders, including the division’s overseers, have told staff that the larger potential user base for AI wearables justifies moving headcount away from pure VR projects, a rationale reflected in the estimate that roughly a tenth of Reality Labs roles are on the line.
The cuts are not confined to metaverse teams either. Meta has also announced 600 job reductions in its AI division, a reminder that even favored areas are being reshaped to fit a new performance driven culture. Under the new system, a small group of standout employees will be eligible for bonuses worth up to 300% of their base payout, a dramatic skew toward top performers that aligns with the company’s broader efficiency push. In practice, that means Meta is not just swapping one technology bet for another, it is also tightening expectations around output and impact for the teams that survive the restructuring.
Why AI gadgets look safer than virtual worlds
Meta’s leadership is betting that AI gadgets will deliver a clearer path to revenue than virtual reality ever did. In internal and external messaging, executives have emphasized that AI wearables and phone features can be sold to hundreds of millions of existing users, rather than relying on them to buy expensive new hardware and learn unfamiliar behaviors. Meta Platforms Inc is beginning to cut more than 1,000 jobs from its metaverse efforts while talking up the growth of wearables this year, a juxtaposition that captures how quickly the company’s narrative has flipped. For investors, the appeal is obvious: AI features can be monetized through ads, subscriptions, and hardware margins without the same level of speculative world building.
There is also a reputational angle. Meta’s metaverse push became a punchline in some corners of the industry, a symbol of a company chasing a future that users did not want. By contrast, AI assistants embedded in glasses or phones feel like a more incremental, less risky evolution of existing products. Meta has already signaled that it will scale back metaverse spending, with one Quick Read noting that Meta Platforms and META are preparing for significant reductions in that budget. The company is not abandoning hardware or long term bets, but it is clearly aligning them with AI, where it believes the next wave of consumer demand will actually show up.
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