Meta to Reduce Metaverse Unit by 10% as AI Takes Priority
Meta is preparing to cut around 10% of staff in its Metaverse-focused division, a move that underscores the company’s accelerating shift toward artificial intelligence. This decision is expected to affect approximately 1,500 employees, given that Reality Labs, the unit responsible for Meta’s virtual and augmented reality ambitions, employs around 15,000 people.
Key Takeaways
The layoffs could be announced as early as Tuesday, according to a New York Times report, citing people familiar with the matter. The cuts are expected to affect Reality Labs, which supports hardware such as VR headsets and virtual platforms like Horizon Worlds and Horizon Workrooms. A cut of about 10% would affect about 1,500 employees, given the unit’s workforce of around 15,000 people.
Metaverse Ambitions and AI Shift
Meta, formerly Facebook, rebranded in October 2021 in a high-profile bet on virtual worlds, VR, and augmented reality. However, since Reality Labs launched in August 2020, the unit has accumulated more than $70 billion in losses. In Meta’s most recent earnings report for the third quarter of 2025, Reality Labs posted operating losses of $4.4 billion. This significant financial burden, coupled with weaker-than-expected user adoption, has led to a reevaluation of the company’s priorities, with AI development taking precedence.
The broader Metaverse market has also shown uneven engagement, with gaming-focused platforms like Roblox and Fortnite dominating the landscape, each attracting hundreds of millions of users. In contrast, blockchain-based virtual worlds have seen particularly little traction, with The Sandbox recording just 776 unique active wallets in the last 30 days, according to data from DappRadar. Some reports also suggest that Meta’s Horizon Worlds attracts fewer than 900 daily active users, further highlighting the challenges faced by Metaverse projects in gaining widespread adoption.
Investor Perspectives and Bitcoin Proposal
In June last year, Meta investors overwhelmingly rejected a proposal calling for the company to explore adding Bitcoin to its balance sheet, according to a May 28 filing. The measure received only 3.92 million yes votes, about 0.08% of total votes, while nearly 5 billion voted against. This outcome was largely expected, given CEO Mark Zuckerberg’s control of 61% of the voting rights. The suggestion, made by Bitcoin advocate Ethan Peck, argued that Meta should invest some of its $72 billion cash holdings in BTC to hedge against inflation and falling real yields on cash and bonds.
As Meta navigates this significant shift towards AI and potentially adjusts its Metaverse ambitions, the company’s future direction will be closely watched by investors and industry observers alike. For more information, visit https://cryptonews.com/news/meta-to-cut-around-10-of-metaverse-unit-as-ai-takes-priority/
