Meta Platforms, Inc., under the leadership of Mark Zuckerberg, has laid off approximately 1,500 employees from its virtual reality (VR) division, known as Reality Labs. This significant reduction in workforce comes after the division has struggled to achieve profitability, reportedly incurring losses exceeding $77 billion since its establishment in 2020. The layoffs were detailed in a report by The Wall Street Journal, marking a pivotal moment for the company as it shifts its focus towards artificial intelligence.
The recent job cuts represent nearly 10 percent of Reality Labs’ total staff. As part of this restructuring, three VR game studios have been closed, leaving only Horizon Worlds operational, albeit on a diminished scale. This move aligns with Meta’s broader strategy to reallocate resources from its Metaverse initiatives to the development of AI technologies and devices. A spokesperson for Meta remarked, “We said last month that we were shifting some of our investment from Metaverse towards wearables. This is part of that effort.”
The decision to pivot away from the Metaverse comes after analysts suggested that the rebranding of Facebook to Meta in 2021 was not adequately supported by successful product launches or user adoption. Critics argue that a more timely shift could have mitigated the extensive financial losses the company has faced.
In addition to the layoffs, Meta is facing scrutiny from the UK Gambling Commission regarding its handling of illegal gambling advertisements on its platforms, including Facebook and Instagram. The Commission’s executive director, Tim Miller, highlighted the prevalence of ads for unlicensed gambling sites targeting UK users, particularly those who have opted out of online gambling through GamStop, a self-exclusion scheme. Miller stated, “If we can find them, then so can Meta: they simply choose not to look.”
Recent investigations have also revealed that Meta is running advertisements for illegal gambling operations in multiple countries where such activities are prohibited, including India, Malaysia, and Saudi Arabia. The UK has already taken action against hundreds of thousands of unlicensed gambling websites, issuing cease-and-desist orders to protect local consumers.
This confluence of layoffs and regulatory challenges underscores a tumultuous period for Meta as it navigates significant changes in its business model and public scrutiny. The company’s future success may hinge on its ability to innovate within the AI space while addressing critical compliance issues that could impact its reputation and financial standing in the global market.
