Meta to Slash Metaverse Division by Up to 30% as Focus Shifts to Artificial Intelligence

The company’s dramatic restructuring signals a retreat from its once-grand metaverse vision as Meta pivots toward AI as its dominant growth engine.

By yourNEWS Media Newsroom

Meta is preparing to cut as much as 30% of its metaverse workforce, a sweeping reduction across its Reality Labs division as the company shifts resources toward artificial intelligence, Bloomberg reports, citing sources familiar with the matter.

The Reality Labs unit—responsible for Meta’s VR headsets, AR research, and Horizon Worlds platform—has long been the centerpiece of CEO Mark Zuckerberg’s effort to define the next digital frontier. But the multibillion-dollar investment has yet to achieve broad consumer or enterprise adoption. Hardware sales have slowed, user engagement in Horizon Worlds remains tepid, and the company’s vision of a vibrant virtual ecosystem has failed to materialize at scale.

Executives now see artificial intelligence as Meta’s most reliable and lucrative opportunity. The pivot follows the rapid success of the company’s AI models and their integration across Facebook, Instagram, and WhatsApp, where AI tools are driving new advertising and engagement revenue.

According to insiders, Meta’s restructuring will consolidate overlapping VR software teams, reduce investment in long-term augmented reality projects, and pause hiring for metaverse engineering roles. The company will instead focus on mixed-reality features already integrated into newer headsets, favoring incremental progress over ambitious, multi-year ventures.

Since 2021, Meta has poured nearly $70 billion into the metaverse initiative, with Reality Labs reporting annual losses exceeding $10 billion. Those figures have fueled investor frustration and pressure on leadership to scale back unprofitable projects. Analysts expect the upcoming cuts to reduce expenses substantially while preserving Meta’s most commercially viable extended-reality technologies.

Despite the retrenchment, Meta insists it is not abandoning the metaverse. The company’s revised approach aims for a leaner, more cost-disciplined strategy that ties virtual experiences directly to its AI ecosystem. Zuckerberg has maintained that AI and the metaverse will ultimately converge—envisioning intelligent avatars, adaptive digital assistants, and immersive environments powered by generative models.

For now, however, Meta’s message to employees and investors is unmistakable: the metaverse is no longer its flagship pursuit. As the company doubles down on AI innovation heading into 2026, Reality Labs is preparing for its most significant transformation since the concept of the “metaverse” became the company’s defining mission.