Meta reportedly laid off approximately 1,500 employees from its Reality Labs division and shuttered several VR game studios last week, according to The Wall Street Journal, signaling a significant pullback from its ambitious metaverse endeavors. The move impacted about 10% of the Reality Labs staff, the division responsible for developing virtual reality hardware and software.

The layoffs represent a considerable reversal for Meta, which in 2021 rebranded itself from Facebook, staking its future on the metaverse and virtual reality technology. The company envisioned a future where users would interact, work, and play in immersive digital environments accessed through VR headsets and related technologies. This strategic shift was partly motivated by a desire to appeal to younger demographics, particularly Gen Z, who increasingly favor online gaming platforms like Fortnite and Roblox for social interaction, rather than traditional social media.

Furthermore, the rebrand aimed to distance the company from the growing criticism and controversies surrounding the Facebook brand. These included data privacy scandals such as the Cambridge Analytica affair, reports from whistleblower Frances Haugen detailing Facebook's awareness of its negative impacts on children and teens, Congressional hearings addressing digital surveillance concerns, the platform's role in spreading misinformation, and allegations of monopolistic practices.

Reality Labs, the division bearing the brunt of the layoffs, is responsible for developing key metaverse technologies, including the Quest line of VR headsets and the Horizon Worlds virtual reality platform. The Quest headsets, such as the Meta Quest 2 and the newer Meta Quest 3, are standalone VR devices that allow users to experience immersive virtual environments without the need for a separate computer. Horizon Worlds is a social VR platform where users can create avatars, build virtual spaces, and interact with others.

The decision to scale back metaverse investments raises questions about the future of Meta's VR strategy. While the company has not completely abandoned its metaverse ambitions, the layoffs suggest a more cautious and measured approach. It remains to be seen how Meta will balance its metaverse aspirations with its other business priorities, including its core social media platforms and its investments in artificial intelligence. The company has not yet released an official statement beyond the initial reporting by The Wall Street Journal.