Meta Announces Major Job Cuts in Reality Labs, Shifts Focus to AI Wearables
Meta Platforms has announced the layoff of approximately 1,500 employees from its Reality Labs division. This represents a 10% reduction in the unit’s workforce and marks the tech industry’s first major job cuts of 2026. The move signals a dramatic strategic shift away from virtual reality (VR) and towards AI-powered wearables.
The layoffs were announced internally by Chief Technology Officer Andrew Bosworth on January 13, 2026. The cuts include:
- The closure of three VR game studios: Armature, Sanzaru, and Twisted Pixel
- Teams working on VR hardware
- Horizon OS development
- Horizon Worlds, Meta’s VR social platform
Meta confirmed that these moves are part of a broader reallocation of resources from metaverse initiatives to wearable technology. The focus is particularly on its successful Ray-Ban smart glasses.
Since late 2020, Meta’s Reality Labs has accumulated over $71 billion in cumulative losses. In contrast, the company’s Ray-Ban Meta smart glasses have sold over 2 million units since their launch in October 2023. Meta now holds 80% of the smart glasses market and plans to scale production from 2 million to 10 million annual units by the end of 2026.
The restructuring comes as Meta intensifies its focus on artificial intelligence to compete with OpenAI and Google. The company plans to release its next frontier AI model, codenamed Avocado, in the first quarter of 2026. Industry analysts noted that Meta’s stock jumped 4-6% following news of the Reality Labs budget cuts. This added $60-70 billion in market value as investors welcomed the pivot towards more profitable product lines.
Source: CNBC