Meta job cuts impact Reality Labs team amid AI shift

Meta has started laying off hundreds of employees this week, according to reports from The Information and Reuters. The layoffs are affecting individuals in Meta’s Reality Labs team, as well as those in social media and recruiting, based on information from two people familiar with the situation cited by The Information.

This news follows earlier reports from Reuters that Meta was planning significant layoffs that could impact up to 20% of its workforce. If these recent reports are accurate, the current layoffs will affect only a small portion of Meta’s nearly 79,000 total employees, as disclosed in its annual filing at the end of 2025.

Earlier this month, Meta indicated a shift away from its metaverse initiatives, which had inspired the company’s name change in 2021. In March, Meta announced plans to shut down Horizon Worlds for its Quest VR headset this summer, intending to focus instead on the mobile version.

However, after receiving feedback from users, Meta reversed that decision but will only allow players to access existing experiences, stopping the launch of new game experiences in VR. The Reality Labs team, which is reportedly part of the layoffs, operates Horizon Worlds and developed the Quest headsets.

Spending on AI is the major cause of the layoffs across the tech industry, including at Meta. In January, Meta’s CEO, Mark Zuckerberg, informed investors of a significant increase in AI spending planned for 2026.

The company intends to nearly double its investment in AI, budgeting up to $135 billion, which is almost equivalent to the total of $140 billion spent over the previous three years combined.

However, despite significant investment, Meta has encountered challenges with AI. The company’s new foundational model, codenamed Avocado, is reportedly delayed after it failed to surpass the capabilities of Google’s Gemini 3.0 in early testing.

With significant investment in AI, companies are also announcing major layoffs. In January, Amazon cut 16,000 jobs, while Microsoft eliminated more than 15,000 roles in 2025.