Meta Slashes Metaverse Team by 10% as Zuckerberg Bets Big on AI

After burning $70 billion on virtual worlds, Meta signals a dramatic retreat from the metaverse as artificial intelligence takes over the company’s future.

Meta is preparing to cut roughly 10% of its metaverse workforce, dealing a major blow to the division that once defined CEO Mark Zuckerberg’s grand vision of the future. The layoffs, expected to hit Reality Labs, come as Meta aggressively redirects talent and capital toward artificial intelligence, following years of ballooning losses and disappointing user adoption.

According to a report by The New York Times, the job cuts could be announced as early as this week, underscoring how quickly Meta’s priorities have shifted. What was once pitched as the next evolution of the internet is now being overshadowed by the explosive rise of AI.

Reality Labs, which employs around 15,000 people, oversees Meta’s virtual and augmented reality ambitions, including Quest VR headsets, Horizon Worlds, and Horizon Workrooms. A 10% reduction would translate to roughly 1,500 job cuts, marking one of the most significant retreats yet from Meta’s metaverse bet.

The move follows mounting evidence that the division has failed to gain meaningful traction. Since its launch in 2020, Reality Labs has racked up more than $70 billion in losses, including $4.4 billion in operating losses in Q3 2025 alone.

Internally, Meta has already begun reshuffling budgets. Reports in December suggested the company was considering slashing up to 30% of metaverse spending, with those funds instead flowing into AI research, smart wearables, and neural interface technologies, including projects like the Meta Neural Band.

Meta declined to comment on the impending layoffs.

Meta’s pullback marks a stunning reversal from its 2021 rebrand, when the company renamed itself after the metaverse and promised a future built around immersive virtual worlds, digital identities, and Web3 economies.

While gaming-driven platforms like Roblox and Fortnite continue to thrive with hundreds of millions of users, most corporate and blockchain-based metaverses have struggled to attract sustained engagement. Data from DappRadar shows The Sandbox recorded just 776 unique active wallets over the past month, highlighting the gap between early hype and real-world usage.

Meta’s own flagship world, Horizon Worlds, has fared no better. Multiple reports suggest daily active users remain below 1,000, a stark contrast to the scale Zuckerberg once envisioned.

As enthusiasm faded, investors grew restless — and Meta’s metaverse losses became harder to justify in a market increasingly obsessed with AI.

Meta’s retreat from the metaverse mirrors its broader caution around blockchain initiatives. In 2025, shareholders overwhelmingly rejected a proposal to add Bitcoin to the company’s balance sheet, with just 0.08% of votes cast in favor. With Zuckerberg controlling 61% of voting power, the outcome was never in doubt.

The message from investors has been clear: focus on what works.

That focus is now firmly on artificial intelligence. Meta has rapidly expanded investment in generative AI models, recommendation engines, AI-powered assistants, and wearable-integrated intelligence, positioning itself to compete directly with OpenAI, Google, and Anthropic.

After years of chasing virtual worlds that never reached escape velocity, Meta appears to be embracing a more immediate, revenue-driven future. The metaverse may not be dead — but at Meta, it’s no longer the main character.