Meta plans to lay off employees on Wednesday in the metaverse-oriented Reality Labs division unit focused on creating custom silicon, two sources familiar with the matter told Reuters on Tuesday. The affected team, known as FAST, has about 600 employees and was tasked with developing the chips that equip Meta’s devices. The company’s mixed reality headsets, Quest, and smart glasses designed with Ray-Ban maker EssilorLuxottica use the same hardware, including a Meta-designed artificial intelligence virtual assistant called Zoe.
The move is a fresh blow to Meta, suffering from the slowdown in digital advertising that has roiled much of the industry. The company’s stock has lost nearly half its value this year. Meta faces rising competition from short-form video apps like TikTok and other immersive worlds accessed through augmented and virtual reality. Its billion-dollar wager on the metaverse has yet to generate a profit. In the meantime, it’s been forced to cut jobs and reduce perks to rein in spending and address investor concerns about its financial outlook.
According to several people familiar with the situation, employees have been feeling anxious, especially since the news of more cuts surfaced this week. Some have already withdrawn from the company’s benefits program to save money. Others have voiced their discontent on social media, including the anonymous professional network Blind.
This latest round of cuts is part of a more significant effort at Meta to get more efficient. The company trimmed its workforce by 21,000 positions in November last year as it refocused on cost control amid declining revenue growth and investor concerns about the metaverse’s potential for profitability.
While the company aims to make its metaverse ambitions work, it has struggled to create chips that can compete with silicon from external providers. So, it turns to chipmaker Qualcomm for the devices it puts out on the market. A separate chip-making unit within Reality Labs focused on artificial intelligence has hit similar roadblocks, and its leader resigned last week.
The company’s remaining staff are expected to hear directly from CEO Mark Zuckerberg in a company Q&A scheduled for Thursday at 11 a.m. PT. The event will be live-streamed on Meta’s website.
Meta is one of many technology companies reassessing their budgets and staffing amid a global economic downturn and a renewed focus on privacy among consumers. Across Silicon Valley, the once-free-spending culture has shifted to belt-tightening and layoffs as investors demand more efficiency from their tech investments.
Meta declined to comment on the reports. It has previously said it would review its operations, particularly in its Reality Labs, which includes the metaverse business. The company has been cutting costs for years and has recently started to scale back on employee perks and travel to become more profitable. It’s a trend seen at almost every major tech firm, with many reducing or eliminating employee benefits and switching to a cash-only compensation model.