Meta is cutting more than 1,000 jobs in its Reality Labs division, a unit working on virtual and augmented reality hardware, software and platforms. The move cements a strategic pivot away from the costly metaverse toward AI-powered wearables and phone-based features. 

Bloomberg reported on Tuesday that Meta is eliminating roughly 10% of the staff in Reality Labs, which employs about 15,000 people. Internal communications indicate that layoff notifications begin on Tuesday morning and continue throughout the week. 

“We said last month that we were shifting some of our investment from metaverse toward wearables,” a Meta spokesperson told Bloomberg. “This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year.”

Reality Labs includes teams behind Quest virtual reality headsets. The division has generated more than $70 billion in losses over the past four years, per The New York Times. Meta executives talked about budget cuts as high as 30% for the division in December, according to Bloomberg. 

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The cuts are part of a broader reallocation of capital from metaverse projects towards AI wearables, phone-based AI features and massive data center investments branded internally as Meta Compute. Meta CEO Mark Zuckerberg said on Monday that Meta is planning on building “tens of gigawatts” of AI compute capacity this decade, positioning its infrastructure as a key competitive advantage against rivals like OpenAI, Google and Microsoft. 

Zuckerberg is also reshaping the company’s priorities around devices that can bring AI into everyday life, including smart glasses. That focus arrives as Meta’s latest Ray-Ban smart glasses have received a strong reception, reportedly outperforming internal sales expectations. 

“We’re entering a new era where AI glasses and other devices will change how we connect with technology and each other,” Zuckerberg wrote in a Threads post last month. “The potential is enormous, but what matters most is making these experiences feel natural.”

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Strategically, the layoffs signal Meta’s belief that AI-enhanced phones and lightweight wearables are a more immediate path to widespread appeal than full metaverse immersion, per Bloomberg. By moving resources toward AI features that can reach billions of existing smartphone users, Meta is chasing scale and advertising opportunities that its virtual reality ecosystem has yet to deliver. 

Meta intends to reduce its virtual reality investments to create a “more sustainable” business, its chief technology officer, Andrew Bosworth, said in an internal post reviewed by Bloomberg. 

“With the larger potential user base and the fastest growth rate today, we are shifting teams and resources almost exclusively to mobile to continue to accelerate adoption there,” Bosworth wrote.

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