In a nutshell: Remember how much faith Mark Zuckerberg had in the metaverse? He even renamed his company after the concept of a shared VR social platform. That was before AI became the tech industry's new obsession, of course. As a result of these shifting priorities, Meta is preparing to lay off hundreds of employees in its Reality Labs division this week.
The cuts are expected to affect 10% of Reality Labs' approximately 15,000 employees, reports The New York Times, which cites three people with knowledge of the discussions. The publication says that the final figure could be even higher.
The vast majority of those losing their jobs are working in the Metaverse unit on virtual reality headsets and virtual social networks, the report said. An announcement on the cuts could come as soon as today.
According to a memo obtained by the Times, Andrew Bosworth, Meta's chief technology officer who oversees the division, called a meeting for Wednesday and urged employees to attend in person. He described it as the "most important" meeting of the year.
Since Meta started reporting Reality Labs' revenue in Q4 2020, the division has reported total operating losses of around $70-75 billion (not million). It was more of the same in its most recent quarter: despite Meta posting strong results, the division reported $4.4 billion in losses on $470 million in revenue.
News of the job losses doesn't come as a surprise. It was reported in December that Zuckerberg was planning to slash Reality Labs' budget by 30%, with the cuts starting this month. A spokesperson confirmed at the time that the company was shifting some of its investment from the Metaverse group toward AI glasses and wearables as it looked to capitalize on the "momentum" in the segment.
Meta has placed a lot of effort into its smart glasses products recently. In September, the company unveiled the second-generation Ray-Ban Meta, the Oakley Meta Vanguard, and the Meta Ray-Ban Display.
Even before the influence of AI, it never looked like the Metaverse was going to live up to Zuckerberg's expectations. The CEO repeatedly said that the industry would be worth billions or even trillions of dollars after 2030 – Meta even commissioned a report in 2023 that claimed the metaverse could contribute $760 billion to the US GDP by 2035. But most people treat the idea of a shared virtual universe with indifference at best.
Zuckerberg might even be relieved that the AI revolution has come along. It gives him an excuse to shutter his Metaverse projects instead of watching them lose billions more dollars as they fail to gain interest.