Meta Layoffs Will Likely Hit Mark Zuckerberg’s Beloved Metaverse Unit

• Facebook employees have been told for weeks to expect layoffs, as Insider previously reported.
• As cuts draw near, some organizations are expected to be hit harder than others.
• Even Reality Labs is expected to be impacted, despite it building out Zuckerberg’s metaverse vision.

Facebook is prepping for layoffs and few departments are expected to be spared from cuts as the company responds to slowing growth and a rebellion by shareholders.

Even Reality Labs, the division responsible for the company’s metaverse efforts including augmented and virtual reality products and hardware like Oculus headsets and avatars, is expected to see some employees lose their jobs, two people familiar with the company told Insider. 

Staff have been anticipating widespread layoffs for months, since founder and CEO Mark Zuckerberg’s pivot to building the metaverse has proven extremely costly, confusing and slow to progress. The Wall Street Journal reported on Sunday that the company was planning to enact cuts on Wednesday.

Overall, the reduction in headcount across the company, which last year renamed itself Meta, is expected to be around 10%, as Insider previously reported. Although that number could be higher for certain divisions.

Employees are expected to find out by email first thing Wednesday morning if they are among those being laid off, according to a person familiar with the plans and a post to an employee-only group on Fishbowl, a work-focused platform similar to Blind.

The Facebook app, still the company’s largest user base and driver of revenue, is expected to be reorganized, and the business functions division, which includes marketing, partnerships and HR, “will be harder hit than others,” according to the Fishbowl post. “In some cases even entire departments will be deprioritized,” the post added. It also said company directors were informed Tuesday by executive leadership of specific plans for the layoffs. 

Engineering, which includes the bulk of the company’s now more than 87,000 employees and the main source of dramatic headcount growth over the last two years, is expected to be particularly impacted, both of the people familiar said. They asked not to be identified discussing internal company matters. A company spokesperson did not respond to a request for comment.  

‘Investors are demanding more action’

One of the people said Reality Labs is “Mark’s baby” and could be somewhat insulated from cuts, compared with other divisions. However, the amount of money the metaverse unit is losing and the reaction of investors and Wall Street after the company’s most recent earnings has been undeniably negative.

The company’s stock fell precipitously two weeks ago after Zuckerberg doubled down on plans for building the metaverse, which he sees as “the future” of the internet and his company. Facebook disclosed it has already this year lost more than $9 billion on Reality Labs, including nearly $4 billion in the third quarter alone. The division lost $10 billion over the whole of 2021, yet the company said spending on Reality Labs is only going to keep growing.

The day after the third quarter call with investors, Zuckerberg held his weekly internal Q&A, wherein he answered a few preselected employee questions, a person who heard the call said. Asked about the company’s stock, which had just fallen below $100, the CEO admitted “investors are demanding more action” by the company, without specifying what that action was.

Zuckerberg’s comments did not comfort employees, one of the people familiar said. It led many to ask managers about “voluntary separation agreements,” which have been offered to some employees during the company’s recent performance review period, driven by a new mandate of “increased intensity,” as Insider previously reported. Such agreements would allow workers to leave the company with severance before a layoff action, the person added.

Most people at the company decided to wait it out and see what happened as a widespread reorganization got underway, as Insider previously reported, despite disheartening guidance from managers telling them to “give 200%” but still prepare to be laid off. 

Some more experienced workers at Facebook, like those who went through the Great Recession and the earlier dot-com crash, are “much more prepared” for what may come this week, one employee said. Meanwhile, younger workers who have known nothing but the Bull market of the last decade are “stressed” about impending layoffs and “panicking a little” about their future, another employee added.

“This is extremely not fun,” the person said.

Are you a Meta/Facebook employee or someone else with insight to share? Contact Kali Hays at khays@insider.com, on the secure-messaging app Signal at 949-280-0267, or through Twitter DM at @hayskali. Reach out using a nonwork device.