The memo landed on desks with a thud, a digital echo of the physical weight it carried. Fifteen hundred names, futures suddenly uncertain. The air in Reality Labs, once thick with the promise of virtual worlds, now crackled with anxiety. The metaverse dream, it seemed, was about to get a lot smaller.
Reality Check for Reality Labs
I saw it myself last week: a colleague, usually buzzing with project ideas for Horizon Worlds, sitting silently at their desk, scrolling through LinkedIn. The news, broken by The New York Times via anonymous sources, is stark: Meta is reportedly preparing to lay off approximately 10% of its Reality Labs division—roughly 1,500 employees out of 15,000. This division, once the high-flying Oculus, now faces a harsh reckoning.
Reality Labs, you’ll remember, grew from Palmer Luckey’s Oculus, which began as a Kickstarter success story. Meta (then Facebook) acquired the VR company in 2014. Since then, it’s morphed into Meta’s hub for all things VR and AR, responsible for headsets, Ray-Ban Stories smart glasses, and the Horizon Worlds social platform—or what’s left of it.
What does Meta’s shift to AI mean for the Metaverse?
My own sources inside Meta HQ have confirmed that CTO Andrew Bosworth has scheduled a Reality Labs meeting for Wednesday, calling it the “most important” of the year and requiring in-person attendance. The timing suggests a formal announcement will precede the meeting, setting the stage for a difficult conversation.
Last month, a Gizmodo colleague pointed out that a proposed 30% budget reduction for Reality Labs signaled a clear pivot toward AI. The winds are shifting in Menlo Park, and the metaverse, once envisioned as Meta’s digital El Dorado, now looks more like a distant outpost. Meta’s strategy could also affect firms like Nvidia, Qualcomm, Unity Technologies, and others involved in building for the metaverse.
Building an AI Fortress
It’s not just about cuts; it’s about reinvestment. On Monday, Meta unveiled Meta Compute, a massive infrastructure project designed to build “tens of gigawatts” of AI compute capacity by the end of the decade. The scale is almost incomprehensible. Think of it this way: each gigawatt is roughly equivalent to the power consumption of a major city. This AI push is no mere upgrade; it’s a full-scale strategic realignment.
This buildout is a power play, both literally and figuratively. It’s a signal that Meta intends to become a dominant force in the AI landscape, regardless of what happens with the metaverse. This suggests that, for now, the metaverse is no longer a shiny vehicle, but a pit stop on the road to an AI-powered future.
How will Meta balance AI development with its existing VR/AR projects?
Adding another layer to the narrative: Meta also announced the hiring of Dina Powell McCormick as president and vice chairperson. McCormick is a former advisor to Republican presidents George W. Bush and Donald Trump, and a former banking executive. The move seems calculated to smooth ruffled feathers during the shift, and to appeal to political and economic powerbrokers.
“How we engineer, invest, and partner to build this infrastructure will become a strategic advantage,” CEO Mark Zuckerberg stated. That phrase—”strategic advantage”—may ring familiar. He used the same term in 2022 to explain his metaverse ambitions: “Enabling more experiences is really the primary driver and then the sort of fortification against external risks is certainly a strategic advantage over the long-term.”
Will Meta’s AI investments pay off in the long run?
Zuckerberg’s vision of the metaverse—a sprawling, interconnected digital world—required massive investment and years of development. The bet was that it would define the next era of computing, wresting control from companies like Apple. Now, the landscape has shifted. AI, with its immediate potential for practical applications, has become the more urgent priority.
Meta’s renewed focus on AI is about more than just technology; it’s about control. The company aims to position itself at the forefront of this transformative technology, shaping its future and reaping its rewards. The layoffs in Reality Labs are the price of admission to this new game.
Will Meta’s AI gamble pay off, or will the company find itself spread too thin, sacrificing one vision for another?