Meta, formerly Facebook, reportedly laid off approximately 1,500 employees from its Reality Labs division last week, a move impacting about 10% of the unit's staff and leading to the closure of several VR game studios, according to The Wall Street Journal. This marks a significant pullback from the company's ambitious metaverse strategy, initiated in 2021 when Facebook rebranded itself as Meta.

The restructuring signals a shift in Meta's focus after years of heavy investment in virtual reality technologies. The company's initial vision centered on VR devices becoming the primary platform for social interaction, mirroring the popularity of online games among Gen Z users. The rebrand also aimed to distance the company from controversies surrounding the Facebook brand, including data privacy scandals like Cambridge Analytica, allegations of harmful effects on children and teens stemming from documents shared by whistleblower Frances Haugen, Congressional scrutiny over digital surveillance practices, and concerns about the spread of misinformation.

Meta's Reality Labs division was responsible for developing the company's VR and AR hardware and software, including the Meta Quest headsets and Horizon Worlds, its flagship metaverse platform. The division has faced challenges in attracting a large user base and generating substantial revenue. The layoffs suggest a reassessment of the company's metaverse roadmap and a potential shift in resource allocation towards other areas, such as artificial intelligence.

Industry analysts suggest that Meta's struggles in the metaverse reflect broader challenges in the VR market, including the high cost of hardware, limited content availability, and concerns about user experience. While VR technology has made significant advancements, it has yet to achieve mainstream adoption. The future of Meta's metaverse ambitions remains uncertain, but the recent layoffs indicate a more cautious approach. The company has not yet released an official statement regarding future plans for Reality Labs.