Meta has announced the layoff of approximately 1,500 workers within its virtual reality (VR) division, Reality Labs. This decision comes as the company grapples with significant financial losses, reportedly exceeding $77 billion since the division’s establishment in 2020. The layoffs reflect a strategic pivot for Meta, which is increasingly focusing its resources on artificial intelligence (AI) technologies.
The Wall Street Journal reported this week that Reality Labs has faced ongoing challenges in achieving profitability. As a result of the workforce reduction, Meta has shut down three VR game studios, leaving only Horizon Worlds operational. This platform is currently undergoing a scaled-down reorganization as Meta shifts its business strategy.
In a statement to The Wall Street Journal, a spokesman for Meta explained, “We said last month that we were shifting some of our investment from Metaverse towards wearables. This is part of that effort.” The company’s focus on AI reflects a broader industry trend, as many tech firms seek to capitalize on the growing demand for AI-driven solutions.
In September, Meta highlighted several new initiatives, including the launch of Meta Ray-Ban Display and Oakley Meta Vanguard AI glasses. The company also expanded access to its Llama AI, aimed at supporting government agencies and enhancing national security efforts.
In addition to restructuring its business model, Meta is facing scrutiny from regulators. The UK Gambling Commission has raised concerns regarding illegal gambling advertisements appearing on Facebook and Instagram. According to Tim Miller, the Commission’s executive director, these ads often promote unlicensed online casinos, particularly targeting users who have opted to self-exclude from gambling through the GamStop program.
Miller stated, “Anyone who spends even a little time on their platforms will more than likely have seen ads appearing in your feed of illegal online casinos.” He criticized Meta’s response to these issues, claiming that the company fails to actively monitor and remove such problematic ads unless alerted.
Investigations have revealed that Meta’s platforms may also be facilitating illegal gambling advertisements in countries where such activities are prohibited, including India, Malaysia, and Saudi Arabia. This has prompted regulatory bodies to intensify their efforts against illegal gambling operators, particularly those targeting local consumers while circumventing established laws.
As Meta continues to navigate these challenges, analysts suggest that the company’s decision to pivot from the Metaverse towards AI may have come too late. While the shift reflects a recognition of changing market dynamics, the long-term implications for Meta’s profitability and consumer trust remain uncertain.
