Meta Platforms Inc. is initiating a significant strategic shift, moving resources away from its ambitious and expensive metaverse projects toward artificial intelligence (AI) and wearable devices. The transition includes cutting more than 1,000 positions within the company's Reality Labs division.
Layoffs and Strategic Redirection
According to an internal memo from Chief Technology Officer Andrew Bosworth reviewed by Bloomberg News, affected employees began receiving layoff notifications on the morning of Tuesday, January 13, 2026. The cuts are expected to impact approximately 10 per cent of the roughly 15,000 workers within Reality Labs.
This move is part of a broader plan to redirect investment. "We said last month that we were shifting some of our investment from metaverse toward wearables," a Meta spokesperson stated. "This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year."
The Costly Metaverse Dream
The metaverse—a virtual world concept for work, play, and socializing—has been a massive financial undertaking for Meta. Since the start of 2021, the Reality Labs division, which houses VR headsets, AI glasses, and metaverse software, has lost more than US$70 billion.
Meta, formerly Facebook, was renamed in 2021 by CEO Mark Zuckerberg to signal his vision for the company's future in the metaverse. The company invested heavily in high-end virtual reality hardware and digital features like avatars, anticipating fierce competition from other tech giants. However, that expected rivalry never fully materialized, and mainstream adoption of the fully immersive VR metaverse has not met initial expectations.
A New Focus: AI, Mobile, and Wearables
As detailed in Bosworth's memo, Meta's metaverse efforts are now pivoting to focus on mobile devices. The team building metaverse software experiences, known as Horizon, will "double down on bringing the best Horizon experiences and AI creator tools to mobile." The company believes the mobile platform offers a larger potential user base and faster growth.
Concurrently, Meta is ramping up its investment in AI-powered wearables. The company is in discussions with its partner, EssilorLuxottica SA, to potentially double production capacity for its AI smart glasses by the end of 2026. These glasses, sold under brands like Ray-Ban, are a key part of Zuckerberg's plan to increase adoption of Meta's AI assistant and have reportedly performed better than expected.
This refocusing follows executive discussions in December about cutting the metaverse group's budget by as much as 30% to funnel more capital into other projects like AI glasses. While Meta will continue to develop the metaverse concept, the emphasis has shifted from fully immersive VR headsets to experiences accessible via mobile phones and wearable AI devices.
The market reacted to the news, with Meta shares trading down 1.9 per cent in New York on the Tuesday morning the layoffs were announced.
