Meta cuts 1,500 Reality Labs jobs in metaverse retreat

Meta is reportedly laying off roughly 1,500 employees from Reality Labs—its virtual reality and augmented reality division—representing about 10% of the unit’s staff. According to The Wall Street Journal, the company is also shutting down several of its VR game studios. The impacted studios reportedly include Armature Studio, Twisted Pixel, Sanzaru, and Camouflaj. Additionally, the VR fitness app Supernatural is moving to maintenance mode, and Meta is pausing its program to share its Meta Horizon operating system with third-party headset makers.

The restructuring marks a significant reversal for the company, which has spent some $73 billion on Reality Labs. To put this scale of investment into perspective:

• The total spend of some $73 billion is equivalent to spending $1 million per day for 200 years.
• The division faced budget cuts in December, as reported by Bloomberg.

The company is now pivoting its focus toward artificial intelligence and other hardware products.

Meta’s “build in the open” model struggled with middling consumer demand. Global VR headset shipments fell by 12% in 2024, even though Meta accounted for 77% of those shipments. This decline has led the company to shift its focus toward other hardware products, such as Ray-Ban smart glasses.

While Meta sought to build an independent platform to bypass the app store fees of Apple and Google, adoption remained small compared to its core business. Since May 2018, the Meta Horizon app has been downloaded 60.4 million times globally and 39.8 million times in the U.S., according to estimates from app intelligence provider Apptopia. In terms of activity, average sessions per daily active user in the U.S. grew from 3.49 in January 2023 to 4.93 in January 2026. By comparison, Meta has over 3.5 billion daily active users across its social apps.

Zuckerberg previously expressed frustration with existing mobile ecosystems, stating: “This period has…been humbling, because as big of a company as we are, we’ve also learned what it is like to build for other platforms. And living under their rules has profoundly shaped my views on the tech industry.” However, Meta’s own platform strategy drew criticism when it announced a 47.5% fee on digital assets in Horizon Worlds—Meta’s virtual reality social platform—which consisted of a 30% hardware platform fee and a 17.5% Horizon Worlds fee.

The metaverse push was also weighed down by broader corporate controversies and safety issues. The brand faced persistent scrutiny over Facebook’s historical data privacy scandals like Cambridge Analytica, negative impacts on children and teens, Congressional hearings over Facebook’s digital surveillance, its role in the spread of misinformation, and its monopolistic practices. Within the virtual platform itself, safety failures further damaged the project’s reputation, as users were experiencing sexual harassment in the metaverse and users had even engaged in virtual rape and gang rape in Meta’s Horizon Worlds.

Why it matters

Meta’s significant layoffs and closure of multiple VR studios signal a definitive pivot away from its multi-year, $73 billion investment in the metaverse, as the company shifts focus toward AI and other hardware products.