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Meta to Cut About 10% of Reality Labs Workforce as Metaverse Push Scales Back

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Meta Platforms plans to cut around 10% of employees in its Reality Labs division, according to a report by the New York Times citing three people familiar with the discussions. The layoffs, which could be announced as soon as Tuesday, are expected to fall disproportionately on teams working on metaverse-related products, including virtual reality headsets and virtual social platforms.

Reality Labs employs roughly 15,000 people and has been at the center of Meta’s long-running bet on the metaverse, an immersive digital universe championed by Chief Executive Mark Zuckerberg. Since 2020, the division has burned more than $60 billion, as heavy investment failed to translate into mass adoption or meaningful revenue.

Beyond the metaverse, Reality Labs is responsible for several of Meta’s hardware initiatives, including Quest mixed-reality headsets, smart glasses developed in partnership with EssilorLuxottica under the Ray-Ban brand, and longer-term augmented reality glasses. While Meta has struggled to sell its broader vision of interconnected virtual worlds, its smart glasses have shown early traction—an area where rivals such as Google and Apple have so far failed to gain momentum with initial products.

According to the report, Meta Chief Technology Officer Andrew Bosworth, who oversees Reality Labs, has scheduled an in-person staff meeting for Wednesday and urged employees to attend, citing an internal memo.

Meta declined to immediately comment on the report. The planned cuts come as the Facebook parent faces growing pressure to refocus resources while trying to regain ground in Silicon Valley’s artificial intelligence race. Meta has recently struggled to generate enthusiasm around its latest AI efforts, including the Llama 4 model, adding to investor scrutiny over spending priorities.

Meta Exempts Italy From WhatsApp Ban on Rival AI Chatbots After Antitrust Order

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Meta Platforms will exclude Italy from its planned ban on rival artificial intelligence chatbots on WhatsApp, following an order from the country’s antitrust authority, according to a notice sent to AI providers and developers and seen by Reuters.

Italy’s competition watchdog, AGCM, last month instructed Meta to suspend the proposed ban while it investigates the company for a suspected abuse of market power, after complaints from rival AI providers. At the European level, the European Commission is also examining whether Meta violated competition rules by restricting access for third-party AI chatbots on WhatsApp, although it has not imposed interim measures.

Blocking rival AI providers from WhatsApp could significantly benefit Meta’s own chatbot and virtual assistant, Meta AI, which was integrated into the messaging platform last year. Critics argue that limiting competitors’ access would further strengthen Meta’s position in AI-powered consumer services.

In its notice to developers circulated earlier this month, Meta said that phone numbers with an Italian country code (+39) are currently exempt from WhatsApp’s updated terms of service, in order to comply with the Italian regulator’s order. The revised terms are scheduled to take effect on January 15 for users outside Italy.

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Meta declined to comment on the changes, referring instead to a previous statement that said the rapid emergence of AI chatbots has placed strain on WhatsApp’s systems, which were not originally designed to support such services. The Italian antitrust authority also declined to comment.

The Italian carve-out drew sharp criticism from rivals. The Interaction Company of California, which developed the AI assistant Poke.com and filed complaints with both Italian and EU regulators, said Meta’s response was insufficient.

“Meta’s move to keep enforcing its new WhatsApp API policy—shutting out AI rivals like Poke.com while only carving out +39 numbers—is deeply disappointing,” said Marvin von Hagen, the company’s co-founder and chief executive. He added that the Italian authority had already found Meta’s conduct to be, at first glance, anti-competitive under EU law, and urged the European Commission to adopt interim measures across the bloc.

Meta Launches “Meta Compute” to Scale AI Infrastructure and Power Superintelligence Push

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Meta has unveiled a new initiative called Meta Compute, aimed at building large-scale artificial intelligence infrastructure and managing the company’s global network of data centres and supplier partnerships as it pursues what it calls superintelligence.

Chief Executive Mark Zuckerberg said the initiative will be co-led by Santosh Janardhan, Meta’s head of global infrastructure, and Daniel Gross. Janardhan will continue overseeing Meta’s technical foundations and data centre operations, while Gross will head a newly created group responsible for strategic capacity planning and business partnerships.

Both executives will work closely with Dina Powell McCormick, who recently joined Meta’s leadership team, Zuckerberg said in a post on Threads.

Meta Compute sits at the core of Meta’s aggressive push into frontier AI and so-called personal superintelligence—a theoretical stage where machines surpass human cognitive abilities. Zuckerberg said the company is investing heavily in data centres and the energy systems required to run them, noting that Meta plans to build “tens of gigawatts” of capacity this decade and potentially “hundreds of gigawatts or more” over the longer term.

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Such computing ambitions would consume electricity on the scale of small cities or even countries, raising concerns about pressure on resources such as power and water. The move comes as Meta seeks to regain momentum in the competitive AI race following a lukewarm response to its Llama 4 model. The company has committed up to $72 billion in capital expenditure in 2025 alone.

Across the tech sector, rising AI workloads are driving a surge in U.S. power demand for the first time in two decades. To secure long-term energy supplies, Meta has signed 20-year agreements to purchase electricity from nuclear plants operated by Vistra and has partnered with two companies developing small modular nuclear reactors.