Meta abandons the metaverse dream? 10%-30% team layoffs, funds shift to AR glasses

Meta’s metaverse ambitions are quietly adjusting. According to the latest news, Meta plans to lay off 10%-30% of the metaverse team within Reality Labs, potentially starting as early as next month. The saved funds will be redirected to the AR glasses project. This shift reflects Meta’s new prioritization of hardware and AI infrastructure.

The Metaverse Team Faces Significant Downsizing

According to The New York Times, three informed employees stated that Meta is considering layoffs within the Reality Labs division that handles metaverse-related business. Reality Labs comprises the metaverse and wearable device departments, with the affected team primarily responsible for VR headsets and VR-based social networks.

This is not Meta’s first adjustment of its metaverse investments. Management is reevaluating its metaverse strategy and considering substantial cuts to VR-related positions within the division. The message is clear: the metaverse, once seen by Zuckerberg as the company’s future, is now a lower priority.

AR Glasses Become a New Investment Focus

On the other side of the shift is the unexpected success of the AR glasses business. In 2021, Meta partnered with Ray-Ban to launch AR glasses, which have already exceeded the company’s internal sales targets. This achievement led management to change course—redirecting the funds saved from layoffs into the AR glasses project.

From VR social networks to AR glasses, this is not just a product line adjustment but a strategic shift in focus. AR glasses are closer to consumer applications, and their sales performance aligns better with expectations, making them more convincing than the elusive metaverse.

The Bigger Context: AI Infrastructure Becomes the New Money Pit

This shift is not isolated. On the same day, Zuckerberg announced the launch of the Meta Compute project, aiming to “build tens of gigawatts of infrastructure within this decade and gradually scale to hundreds of gigawatts or more in the future.” This is a significant investment by Meta to maintain an advantage in AI competition.

More broadly, the entire tech industry is reprioritizing. According to recent data, major cloud service providers like Amazon, Microsoft, and Meta have issued over $120 billion in bonds for AI infrastructure, with capital expenditures soaring to the $400 billion level. Against this backdrop, Meta’s reduction of metaverse investments in favor of hardware and AI infrastructure reflects a industry consensus: AI is now, the metaverse is the future of the future.

What Does This Mean

Meta’s adjustment indicates a pragmatic reality: while the concept of the metaverse still exists, the company recognizes that rather than burning money in virtual worlds, it’s better to invest in hardware and AI—areas with clearer paths to returns.

In a way, this is Meta admitting reality. Zuckerberg’s previous obsession with the metaverse was impressive, but market and sales data ultimately speak volumes. The outperformance of AR glasses gives management reason to reallocate resources.

Summary

Meta’s shift from metaverse to hardware and AI infrastructure reflects a pragmatic attitude among tech companies facing reality. Cutting back on metaverse team investments is not a abandonment of the concept but an acknowledgment that current resources should be directed toward areas with more immediate returns. The strong sales of AR glasses are key evidence of this shift, and investments in AI infrastructure are a shared industry choice. For Meta, this transition is a rational allocation of capital, but for former metaverse dreamers, it may seem somewhat ironic.