The metaverse is dying and it’s AI’s fault; Meta would be cutting 10% of Reality Labs

According to the latest leaks from the United States, Meta is reportedly preparing to lay off about 10% of the workforce employed in Reality Labs.

This division, once the flagship of the company’s futuristic vision, is responsible for the development of the metaverse, virtual reality (VR) and augmented reality (AR).

The metaverse is being cannibalized by AI

The decision would mark a fundamental turning point in the American giant’s strategy, signaling a perhaps definitive handover from virtual ambitions to the concreteness of AI investments and wearable devices.

Currently, Reality Labs employs about 15,000 employees out of a total company headcount of 78,000, meaning that the cuts could involve hundreds of highly skilled engineers and developers.

Critical hours in Menlo Park: an emergency meeting convened

The atmosphere inside Meta’s offices is described as extremely tense. According to the New York Times, the official announcement of the cuts could come as early as today.

To confirm the urgency and gravity of the situation is a background report revealed by Business Insider: Meta’s Chief Technology Officer, Andrew Bosworth, has convened an extraordinary meeting for the entire Reality Labs staff scheduled for tomorrow, Wednesday, January 14.

In the note sent to employees, Bosworth used authoritative tones, defining the meeting as the “most important” of the year and urging workers to attend in person. While the CTO did not provide specific details in the invitation, the timing suggests that the agenda will concern the restructuring of the division and the new strategic direction the company intends to pursue for the rest of 2026.

The pivot to AI and Smart Glasses

The cuts do not arrive as a bolt from the blue, but seem to be the culmination of a strategic reflection started already at the end of 2025.

In December, in fact, the first reports had emerged that Meta’s management was considering a reduction of the overall budget by up to 30% for the year. The official reason, filtered through a company spokesperson, is linked to a reallocation of resources based on technological momentum.

The company has explicitly stated its intention to move a significant portion of investments from the pure concept of the metaverse towards the development of AI glasses and wearable technologies.

These devices are now seen as the most promising vehicle to integrate AI into users’ daily lives, at the expense of fully immersive virtual worlds that have struggled to achieve mass adoption.

The absence of significant competition in the metaverse space, paradoxically, has made it easier for Meta to decide to slow the race, not feeling the pressure to oversee a sector that proved less competitive and profitable than expected.

A $70 billion flop

Heavy on Zuckerberg’s decisions are the merciless balance sheet figures. Since Facebook rebranded to Meta in 2021, betting everything on the virtual future, the company has accumulated losses exceeding $70 billion to support metaverse-related projects.

The Reality Labs division has turned into a real financial hemorrhage, hardly sustainable even for a tech giant.

Looking at the most recent data, the picture looks bleak. In February 2025, the company revealed that, despite revenue of $1.08 billion in the last quarter of 2024, the division posted an operating loss of almost $5 billion.

The entire 2024 fiscal year closed with a “red” of $17.7 billion for Reality Labs, compared to revenues of $2.1 billion.

Also 2025 did not show signs of reversal: in the quarter ended September 30, the division generated $470 million in revenue but lost another $4.4 billion. The forecasts of Chief Financial Officer Susan Li for the last quarter of 2025 indicated further declines in revenue, confirming that the metaverse, at least in its current incarnation, is a business operating at a loss.

This restructuring thus appears to be a necessary move to placate investors, tired of funding an expensive dream, and to redirect resources toward artificial intelligence, the real technological battleground of the next decade.