Meta has established an Applied AI Engineering organization within its Reality Labs division, according to a report by The Wall Street Journal.

Organizational Development

The formation of this specialized AI engineering unit within Reality Labs indicates Meta's strategic approach to combining artificial intelligence capabilities with its virtual and augmented reality initiatives. Reality Labs serves as Meta's dedicated division for developing metaverse technologies and immersive experiences.

Strategic Focus

The creation of an Applied AI Engineering organization suggests Meta's commitment to leveraging artificial intelligence technologies to enhance its Reality Labs operations. This organizational structure positions the company to integrate AI capabilities more effectively within its virtual reality and augmented reality product development processes.

Meta Platforms announced a major strategic shift on January 14, laying off more than 1,000 employees within its Reality Labs division as the company retreats from its metaverse-first vision. The cuts represent a significant downsizing of the division's workforce and signal a decisive pivot toward AI-powered wearables and mobile integration.

Workforce Reduction Details

The layoffs impact approximately 10% of Reality Labs' total workforce, affecting over 1,000 of the division's 15,000 employees. A company spokesperson explained the strategic rationale behind the decision, stating that the move is part of broader efforts to reallocate resources.

"This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year," the spokesperson told Bloomberg, adding that the company had previously indicated this strategic shift in December.

Strategic Pivot from VR to Wearables

The restructuring marks a significant departure from Meta's metaverse-first approach that gained prominence during the pandemic and led to the company's rebranding from Facebook to Meta in October 2021. Reality Labs, created around the same time as the rebrand, has accumulated losses exceeding $70.00 billion since its inception.

According to an internal memo from CTO Andrew Bosworth, Meta aims to become "more sustainable" by pivoting its metaverse investments toward mobile devices while reducing virtual reality expenditures. The company previously announced in December its intention to shift investment focus from metaverse development toward wearables technology.

Gaming Operations Severely Impacted

The restructuring has particularly affected Meta's gaming ambitions, resulting in immediate closures of several VR game studios. The shuttered studios include:

• Armature
• Sanzaru
• Twisted Pixel

While VR fitness app Supernatural will continue supporting its current offering, development of new content and features has been placed on hold. Despite these closures, Tamara Sciamanna, director of Oculus Studios, emphasized gaming's continued importance in an internal memo.

"Gaming remains the cornerstone of our ecosystem. With this change we are shifting our investment to focus on our third-party developers and partners to ensure long-term sustainability," she reportedly wrote.

Previous Workforce Adjustments

This marks the latest in a series of workforce reductions within Reality Labs. In April 2025, the company previously laid off employees working on VR fitness game Supernatural, though specific numbers were not disclosed at that time.

The current restructuring represents Meta's most significant retreat from its ambitious metaverse vision, as the company seeks to balance innovation with financial sustainability while positioning itself in the emerging AI wearables market.