Why is Meta laying off workers again?

Social media giant Meta announced it is laying off more than 1,000 employees and closing several content studios as it focuses its efforts on wearable devices powered by artificial intelligence, such as smart glasses.

The cuts concern Meta’s Reality Labs division, where employees work on the Metaverse, digital spaces where people socialize, work, learn and engage in other activities online.

Game development studios Armature, Sanzaru and Twisted Pixel are closing, Meta has confirmed.

“We said last month that we were moving a portion of our investments from the Metaverse to Wearables,” a company spokesperson said in a statement Wednesday. “This is part of that effort, and we plan to reinvest the savings to support the growth of wearables this year.”

The job cuts highlight how tech companies are responding to the frenzy surrounding AI, which can generate text, images and other types of content.

The growing popularity of AI means companies are also competing to sell new hardware beyond smartphones and trying to quickly release more AI-based tools.

ChatGPT creator OpenAI has teamed up with former Apple designer Jony Ive to create new AI-powered devices. The AI ​​company has also partnered with Mattel to create AI toys.

Companies have tried to lure top talent with lucrative deals, but even employees working in the field of AI have not been spared from job cuts.

Menlo Park-based Meta has been hit by several rounds of layoffs, including in a division that works on AI that exceeds human intelligence.

In October, Alexandr Wang, Meta’s chief AI officer, told his employees that reducing team size meant “fewer conversations will be required to make a decision, and each person will carry more weight and have more reach and impact.”

Last year, the company also cut 3,600 jobs. Meta said that at the time the company focused on eliminating lower-performing employees, although some laid-off employees disputed that characterization.

In September, Meta had 78,450 workers, an increase of 8% compared to the same period last year.

In the third quarter, Meta reported revenue of $51.2 billion. But Meta’s Reality Labs also posted a $4.4 billion loss in the third quarter. And Meta’s net income fell 83% that quarter from the year-ago period due to a one-time tax charge of $15.93 billion.

Meta owns the popular social media platforms Facebook and Instagram as well as the messaging apps WhatsApp and Messenger. But it has focused heavily on smart glasses, taking on Google, Apple, Snap and other tech companies.

In partnership with Ray-Ban and Oakley, Meta sells smart glasses equipped with AI features that allow people to take photos, call and ask questions without taking out their smartphone. One of his glasses pairs with a bracelet that allows people to send texts using subtle finger movements.

Meta has also made big bets on the metaverse, investing heavily in the development of virtual reality headsets where people can immerse themselves in digital worlds, play games and watch movies. The company, formerly known as Facebook, bought virtual reality headset maker Oculus for more than $2 billion in 2014 and has also acquired studios that create VR content.

Tamara Sciamanna, head of Oculus Studios, told employees in a memo that the company still plans to focus on video games, Bloomberg reported.

“Gaming remains the cornerstone of our ecosystem. With this change, we are shifting our investments to focus on our third-party developers and partners to ensure long-term sustainability,” the memo said.

CNBC reported that jobs were also being cut at studios such as Ouro Interactive, which makes games for Meta’s Horizon Worlds where people sufficiently interact with each other through digital avatars. Oura did not immediately respond to a request for comment.

Even though VR headsets haven’t gone mainstream, Meta’s smart glasses are selling better than expected.

Meta’s website says its display glasses with a neural bracelet may not be available for purchase or may be sold out due to “high demand.” Last year, the company opened a new flagship store in West Hollywood to sell its AI wearable devices.