Meta, the company founded by Mark Zuckerberg, has laid off approximately 1,500 workers from its virtual reality division, Reality Labs. This decision comes as the division has struggled to achieve profitability, incurring estimated losses exceeding $77 billion since its establishment in 2020. The layoffs were reported by The Wall Street Journal and mark a significant reduction in staff, representing nearly 10 percent of Reality Labs’ workforce.
As part of the restructuring, Meta has closed three virtual reality game studios, leaving only Horizon Worlds operational, albeit in a scaled-down format. A spokesperson for Meta stated, “We said last month that we were shifting some of our investment from Metaverse towards wearables. This is part of that effort.” This move reflects the company’s pivot towards artificial intelligence and related technologies.
The layoffs come in the wake of Meta’s broader strategy to realign its business model following a troubled period for its VR efforts. Analysts have suggested that the decision to move away from a heavy focus on the Metaverse, which the company rebranded to emphasize in 2021, is a necessary one, even if it has come later than ideal. Zuckerberg had already indicated a shift in priorities earlier this year.
Challenges in the VR Market
The financial difficulties facing Meta’s VR division have raised questions about the long-term viability of its virtual reality products. Since 2020, the division has reported extensive financial losses, leading to increased scrutiny from investors and analysts alike. The shift in focus towards AI technologies coincides with a growing trend in the tech industry, where companies are investing in more profitable avenues.
In September, Meta announced several new initiatives, including the launch of AI glasses, such as the Meta Ray-Ban Display and Oakley Meta Vanguard, aimed at integrating artificial intelligence into consumer products. The company also expanded access to its Llama AI, which supports U.S. government agencies and national security efforts, and rolled out a School Partnership Program.
Concerns Over Illegal Advertising
In addition to the job cuts, Meta faces scrutiny from regulatory bodies regarding its advertising practices. The UK Gambling Commission has raised concerns about the presence of illegal gambling advertisements on platforms like Facebook and Instagram. Executive Director Tim Miller pointed out that many of these ads target individuals who have opted out of online gambling through the GamStop self-exclusion scheme.
Miller emphasized that while Meta claims to remove illegal advertisements when notified, the reality suggests a lack of proactive measures to identify such content. He stated, “If we can find them then so can Meta: they simply choose not to look.” This criticism comes amid reports that Meta has also allowed illegal gambling advertisements in countries where such activities are prohibited, including India, Malaysia, and Saudi Arabia.
As the company navigates these challenges, it remains to be seen whether the shift toward AI and wearables will yield the financial stability that Meta seeks. The evolving landscape of technology and regulatory scrutiny will undoubtedly influence the company’s future direction.
