Meta is reportedly preparing to cut approximately 10% of its workforce within the Reality Labs division, its arm dedicated to the metaverse, virtual, and augmented reality technologies. These significant Meta Reality Labs layoffs, affecting around 1,500 employees, underscore persistent financial pressures and a potential strategic re-evaluation by the tech giant.
The planned cuts, which could be announced as early as January 13, 2026, follow earlier reports in December 2025 suggesting broad budget reductions of up to 30% across Meta’s various segments for the upcoming year. Andrew Bosworth, Meta’s Chief Technology Officer, reportedly summoned Reality Labs staff to a critical in-person meeting, signaling the gravity of the situation.
While a Meta spokesperson previously indicated a shift in investment from the broader metaverse towards AI glasses and wearables, the scale of these reported Meta Reality Labs layoffs suggests a more profound recalibration. This division has been a substantial financial drain since Facebook rebranded as Meta in 2021, accumulating over $70 billion in losses on its ambitious metaverse vision.
Financial realities behind Meta’s metaverse strategy
The financial performance of Reality Labs has consistently raised investor concerns. According to reports, including one by GamesIndustry.biz, the division posted a staggering $4.967 billion operational loss in Q4 2024, despite generating $1.08 billion in revenue. For the full 2024 financial year, Reality Labs recorded a $17.7 billion loss against $2.1 billion in revenue.
More recently, Q3 2025 saw revenue drop to $470 million with a $4.4 billion loss. Meta’s Chief Financial Officer, Susan Li, projected further revenue declines for Q4 2025 year-on-year, intensifying scrutiny on the division’s long-term viability. These persistent losses highlight the immense capital required to build out the metaverse, as detailed in Meta’s investor relations disclosures.
Shifting focus: AI glasses and the competitive landscape
Meta’s decision to pivot investments from the broader metaverse to AI glasses and wearables reflects a pragmatic response to market dynamics and internal performance. The initial vision for a ubiquitous digital world faced slow adoption rates and a lack of significant competitive pressure, making it difficult to justify continued massive expenditure without clearer returns.
Experts suggest this move aligns with broader tech trends, where practical, tangible applications of augmented reality and artificial intelligence are gaining traction. A recent report by Gartner, for example, highlighted increased enterprise interest in AR/VR for specific use cases rather than consumer-centric metaverse platforms. This strategic shift aims to capitalize on more immediate opportunities.
The competitive landscape for AI-powered wearables is also heating up, with companies like Apple and Google making significant strides. Meta’s pivot positions them to leverage their existing VR/AR expertise into a market segment with clearer commercial applications and a faster path to profitability, contrasting sharply with the still-nascent metaverse.
The reported Meta Reality Labs layoffs signify a critical juncture for Mark Zuckerberg’s ambitious metaverse project. It suggests a necessary re-evaluation of where Meta can most effectively deploy its vast resources. While the long-term vision for a connected digital future remains, the immediate focus appears to be on more viable, near-term hardware and AI applications that can deliver tangible value and stem financial bleeding.
This strategic adjustment could see Meta streamline its metaverse efforts, concentrating on foundational technologies while accelerating development in AI-driven wearables. The coming months will reveal the full extent of this pivot and its implications for Meta’s position in the evolving tech landscape.
