The first thing that came to the minds of many employees when Meta layoffs started to feature in the news was the rumor that the company might reiterate the mass performance-based layoffs that rocked the company a few years back. Following the removal of approximate 1,500 positions in its Reality Labs unit, Meta is now making it clear that it has no plans to revive the performance witch hunt that it introduced last year. That is reassuring to a workforce that has been over the last few years flighting restructuring, rebranding, and fast technological changes.
A spokesperson of Meta acted directly on the whim of the speculation saying, these are individual cases that have nothing to do with any company wide initiatives. An example of this would be that we are not doing any 5 percent low performers as we did last year. It was a very straightforward statement, but the message was serious. The ruling to eliminate the bottom 5 percent of the standings of performers in the organization last year brought about anxiety and debate on how the tech companies measure the productivity in the times of constant change. The way Meta is signaling a more restrained attitude toward workforce management is by assuring that the policy will not turn into an annual ritual.
Nevertheless, reality comes to the rescue. Recently, the company reduced around 10 percent of its Reality Labs employees. Together with approximately 1,000 employees that the official figures indicate, multiple reports indicate that the number can be as high as 1,500. The retrenchments focused on the virtual reality headset and Horizon Worlds social VR team, which at one time was to form the foundation of the long-term vision of Meta.
To appreciate the seriousness of this change, it is better to go back to the year 2021 when Mark Zuckerberg renamed Facebook to Meta. This new name was to represent a bold speculation on the metaverse, a virtual economy where individuals would labor, socialize and create using immersive technologies. The move was then packaged as an eye opener. In itself it was a call to arms. Externally, it was a risk.
The driving force of that vision was Reality Labs. Millions were invested in hardware, virtual and experimental research. However, the consumer reaction was never that predicated. VR headsets were not a mainstream product in spite of the vigorous marketing and technological advances. Horizon Worlds was not able to achieve mainstream penetration. The extent of the challenge was revealed in the long run through financial disclosures. Reality Labs has lost more than 70 billion dollars since the year 2020. That is a number that needs to be considered regarding any company, including one that is so financially strong as Meta.
The new layoffs did not come out of the blue. In January, the Chief Technology Officer of Meta Andrew Bosworth held a meeting dubbed by him as the most important of the year, during which he requested his workers to meet physically. Such expression is not common in announcing updates in the tech industry. Soon, Zuckerberg was reported to have requested top leaders to cut their budgets by 2026. This was meant to be a shift toward artificial intelligence research.
The development AI has gone through has quickly transformed an auxiliary technology into the focal point of the technology industry. The stakes are huge, in terms of generative models up to the state of the art recommendation systems, and work on artificial general intelligence. Meta has also put large investments in AI infrastructure, open model, and a dedicated research division also known as TBD Lab, which addresses long-term ambitions of superintelligence. Practically, this involves refocusing the attention and investments in immersive virtual environments and machine learning systems that can redefine the area of advertising, content moderation, productivity tools and further consumer products in the future.
Such a turn is an indication of market trends. The last couple of years have seen AI breakthroughs that have captured the interest of the masses and the energy of investors unlike the metaverse. Chat interfaces, generators of images, and enterprise AI tools have proved to be useful in the short term. In the case of businesses that are subject to shareholder scrutiny, short-term effects tend to have a greater influence than hypothetical outlooks.
However, the move by Meta to withdraw its expansion into the aggressive use of the metaverse is not an abandonment. The hardware presence is not entirely lost, and there is a single product that has been promising in the company. The Ray-Ban smart glasses have sold over two million units, which is more than most of the early VR devices. Being lightweight, socially acceptable, and embedded with AI capabilities, the glasses are a more affordable way of using wearable technology. Instead of putting the users in complete virtual worlds, they improve the real world. That slight change in design ideology can be more sustainable.
Organizationally, the fact that the performance purge is over implies that Meta is attempting to balance morale and implement strategic change. Massive annual performance reductions have the potential to establish a culture of fear, particularly in knowledge-intensive sectors where psychological safety supports the growth of teamwork and innovation. By not identifying itself with an in-variable bottom-five-percent criteria, Meta might be accepting that long-term innovation needs more than hard measures.
Meanwhile, the actions of the company highlight one hard truth of the tech industry: the priorities change rapidly, and the team that was in line with the vision of yesterday may be at a disadvantage. Those workers who came to Reality Labs to create the future of virtual interaction are currently confronting an AI-based roadmap. Such a pivot might be a personal one even when it is discussed as strategic.
To the viewers, the Meta layoff in 2026 is not about cost reduction, but about tuning. The Meta rebrand was a declaration of an unprecedented leap into an unknown future. The renewed attention to AI implies moving back to the technologies that can provide quantifiable returns and competitive advantage in the short term. There is no exception to ambitious experiments coming first with course corrections. To a large extent, this is how big technology companies are educated.
Of course there are questions which remain unresolved. Will investments in AI provide the level of transformational returns the company anticipates? Is Meta able to balance its hardware ambitions and software-based intelligence? And what will employees take to the assurances of stability when they have been through turbulent times in a few years?
