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Meta plans layoffs in its Reality Labs unit

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  • Meta plans layoffs in Reality Labs, affecting the teams behind VR headsets and Horizon Worlds.
  • The restructuring follows major financial losses and a strategic shift toward AI.
  • Reality Labs faces uncertainty as Meta leadership emphasizes 2025 as a decisive year for the unit.

Meta is preparing layoffs in its Reality Labs division, according to three people familiar with the matter who spoke with Business Insider.

The teams working on the company’s virtual reality headsets and Horizon Worlds, its VR-based social network, will be disproportionately affected, two employees said.

Roughly 10% to 15% of Reality Labs’ 15,000 employees are expected to be laid off, with the cuts set to be announced this week, The New York Times reported.

Meta declined to comment.

The move comes as Meta CTO and Reality Labs chief Andrew Bosworth has called a key division-wide meeting for Wednesday, describing it as the “most important” of the year and urging employees to show up in person, Business Insider previously reported.

Reality Labs has been a costly bet for Meta, racking up more than $70 billion in losses since 2020. It has faced repeated rounds of cuts as Meta shifts its attention — and spending — toward AI.

In a memo obtained by Business Insider last year, Bosworth called 2025 “the most critical” year of his tenure and warned the outcome would determine whether Reality Labs is remembered as visionary work or “a legendary misadventure.”

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What is Manus, the Chinese-founded AI startup Meta is buying for over $2 billion?

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Manus is back in the spotlight.

The Chinese-founded artificial intelligence startup is being acquired by Meta in a deal reported to be worth more than $2 billion — one of the most high-profile instances of a US tech giant buying an Asian AI company.

Manus grabbed headlines in March when it unveiled an AI agent designed to autonomously execute tasks like résumé screening and stock analysis.

The startup was founded in China and moved its headquarters to Singapore in mid-2025.

What does Manus do?

Launched in March by the Chinese AI product studio Butterfly Effect, Manus has been pitched by its creators as the world’s first “general” AI agent — a system designed to carry out tasks independently.

Since its launch, the startup has continued to expand what the agent can do, rolling out features that allow users to use Manus for design work, slide creation, and completing tasks directly through a web browser.

Manus can independently execute complex tasks, such as market research, coding, and data analysis, Meta said when it announced the acquisition on Monday.

Business Insider tested the tool in its early stages in March and found it ambitious but uneven in execution, including instances where it hallucinated data.

Earlier this month, Manus said it had surpassed $100 million in annual recurring revenue, with its total revenue run rate — including usage-based fees and other income streams — exceeding $125 million.

The company in April raised $75 million in funding led by Benchmark, at a valuation of about $500 million, Bloomberg reported. Manus said in an update this month that it now employs about 105 people across Singapore, Tokyo, and San Francisco, and plans to open a Paris office soon.

Who are its founders?

Manus was founded by Xiao Hong, a Chinese entrepreneur and software engineer who is also the CEO of Butterfly Effect.

Known as “Red” in China’s tech circles, Xiao was born in 1992 and studied software engineering at Huazhong University of Science and Technology in central China.

After graduating, Xiao founded Nightingale Technology in 2015, where he developed enterprise productivity tools, including the Yi Ban assistant for WeChat, which gained millions of users in China.

In 2022, he launched Butterfly Effect and rolled out Monica, an AI-powered browser extension that aggregates multiple large language models. Following the acquisition, Xiao will take on a vice president role at Meta.

Xiao was joined at Manus by co-founder Ji Yichao, also known as “Peak Ji,” who was chief scientist at Butterfly Effect. Ji leads technical and infrastructure development at Manus.

The 32-year-old Ji was the public face of Manus at launch, introducing the AI agent in its debut video in March. Ji has a long track record of building consumer technology products, and was named to MIT Technology Review’s Innovators Under 35 list this year.

The founding team also includes Zhang Tao, who leads product at Manus. He was head of global product at ByteDance from 2022 to 2023 and has held multiple product roles, including serving as a product manager at Tencent, according to his LinkedIn profile.

Why did Meta buy Manus?

Meta said the acquisition is part of its effort to scale general-purpose AI agents across its apps and services.

The company said in its announcement on Monday that it plans to keep Manus running as a stand-alone product while integrating its technology into Meta’s wider AI offerings.

Manus said the deal would not be disruptive for its customers and that it would continue to sell and operate its subscription service. The company will also continue to operate from Singapore.

“Joining Meta allows us to build on a stronger, more sustainable foundation without changing how Manus works or how decisions are made,” said Xiao.

Buying Manus could give Meta an AI revenue boost and give it a distribution advantage, Business Insider’s Hugh Langley wrote.

What about Manus’ ties to China?

Manus’s links to China have drawn scrutiny.

In May, Sen. John Cornyn questioned US investment in Manus in a post on X. He asked whether American capital should back AI companies with ties to China as competition with Beijing intensifies.

In a statement to Business Insider on Tuesday, a Meta spokesperson said the deal would fully sever Manus’s remaining ties to China.

“There will be no continuing Chinese ownership interests in Manus AI following the transaction, and Manus AI will discontinue its services and operations in China,” the spokesperson told Business Insider. This includes shutting down the AI assistant, Monica, and relocating relevant employees.

Manus employees who join Meta will not have access to customer data, and Meta will continue to geo-block access to its AI models, the spokesperson added.




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3 reasons buying Manus could give Meta a much-needed AI boost

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AI dealmaking isn’t slowing down — and it’s Meta’s turn again.

The social media giant is buying Manus, a Singapore-based artificial intelligence startup, the companies announced on Monday.

Manus went viral in March when it previewed an AI agent that could autonomously perform tasks like screening résumés and stock analysis. Manus was created in China but relocated to Singapore in mid-2025. Meta paid more than $2 billion for Manus, the Wall Street Journal reported.

The deal is the latest in a flurry of red-hot AI investment and acquisitions this year, which includes Meta’s $14 billion investment in Scale AI in June. From providing an instant AI revenue source to giving it a leg up in AI agents, here’s why buying Manus could give Meta a much-needed boost in the AI race.

1. It’s an instant revenue generator

Manus said in December that it had processed more than 147 trillion tokens of text and said its users were in the “millions.” It also claimed to have crossed $100 million in annual recurring revenue, achieving both milestones eight months after launch.

Those numbers tell us Meta is getting a startup with a built-in audience of paying users. Meta’s business model to date has largely revolved around building free products and making money from collecting user data and targeted advertising. Manus offers a free tier for basic tasks, but charges users up to $200 a month for its pro tier.

“The purchase gives Meta a functioning business with paying customers, meaningful revenue and infrastructure already proven at scale,” said Murthy Grandhi, company profiles analyst at research firm GlobalData, in a note.

In its announcement, Meta said it plans to continue selling the Manus service separately while also integrating Manus’s technology into its existing platforms, which include Facebook, Instagram, and WhatsApp. Meta did not elaborate on which ones or how it might do so. Meta has poured billions into building up its internal AI teams and developing what is termed “superintelligence,” with so far little in terms of returns. Manus could be a way for Meta to start making money directly from AI while it continues to build out its internal efforts.

2. Manus is a big bet on agents

Meta has struggled to wow consumers and developers as much as OpenAI and Google when it comes to raw model power. However, as these models become increasingly commoditized, there is a growing need to show AI can actually be useful. One such way is AI agents, a type of software that can proactively make decisions and take actions, such as creating a marketing campaign or monitoring and fixing bugs in apps.

Buying Manus could prove a smart bet on the idea that the real value will lie in the programs that sit on top of the models. Manus primarily uses other companies’ AI models, like Anthropic’s Claude, as building blocks and layers its own software on top.

“People keep assuming a small update from OpenAI or Google will wipe out a lot of AI startups,” wrote Yuchen Jin, CEO of the AI startup Hyperbolic, in an X post about Meta’s Manus deal. “But in reality, the AI application layer should be where most of the opportunity is.”

A Meta spokesperson did not immediately respond to a question about which models Manus would support following the acquisition.

3. Meta can use its distribution advantage

One of Meta’s strengths is that its platforms are used by billions of people, which, like Google, gives it a distribution advantage. Its challenge is to find ways to keep them coming back.

Unlike Google with Gemini 3, Meta has yet to have a buzzy AI breakthrough moment with its own in-house models. Combining Manus’s “general-purpose agents” with Meta’s distribution channels gives the social media company another shot at that, particularly as CEO Mark Zuckerberg has acknowledged that Facebook has shifted from being a place for friends to view each other’s content to a “broad discovery and entertainment space.”

“Manus offers a ready-made, high-margin software layer that can be sold directly and integrated across Meta’s consumer and enterprise products,” said GlobalData’s Grandhi.




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Meta delays release of new mixed reality glasses code-named ‘Phoenix’ in order to ‘get the details right’

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Meta is delaying the release of new mixed reality glasses code-named “Phoenix.”

The company planned to release the new device in the second half of 2026, but it is pushing back its timeline to the first half of 2027, Maher Saba, VP of Reality Labs Foundation, wrote in a Thursday memo to employees, which was seen by Business Insider.

In a separate memo, also viewed by Business Insider, metaverse leaders Gabriel Aul and Ryan Cairns said moving the release date back is “going to give us a lot more breathing room to get the details right.”

They added, “There’s a lot coming in hot with tight bring-up schedules and big changes to our core UX, and we won’t compromise on landing a fully polished and reliable experience.”

Meta declined to comment.

The “Phoenix” mixed reality glasses, which were previously reported on by The Information, have a goggle-like form factor and are connected to a puck to help power them, according to two employees who have seen the device and spoke anonymously as they are not authorized to talk to the press.

The two employees said the model looks similar to Apple’s mixed reality glasses Vision Pro. There was some skepticism among leaders about the puck, but they chose to keep it to help keep the glasses lighter and more comfortable, and to prevent it from overheating, they said.

Saba said in the memo that at a recent meeting with CEO Mark Zuckerberg, Reality Labs (RL) leaders received feedback on their plans for 2026, which he said “focused on making the business sustainable and taking extra time to deliver our experiences with higher quality.”

“Based on that, many teams in RL will need to adjust their plans and timelines,” he added. “Extending timelines is not an opportunity for us to add more features or take on additional work.”

Meta also plans to release a new “limited edition” wearable device code-named “Malibu 2” in 2026, according to Saba.

Meta is starting work on its next-generation Quest device, a product that Aul and Cairns wrote will be focused on immersive gaming, and represent a “large upgrade” in capabilities from its existing devices, and “significantly improve unit economics.”

In October, Meta reorganized its metaverse unit and tapped Aul, who led products for Meta Horizon, and Cairns, who was previously in charge of virtual reality hardware, to co-lead its efforts, Business Insider previously reported. The company is now considering budget cuts of up to 30% within its Reality Labs division, which could impact employees working on its virtual spaces platform, Horizon Worlds.

The company has also expanded its AI hardware push by acquiring Limitless, a startup that makes AI-powered pendant devices, the company announced Friday.

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Meta hires longtime Apple design leader Alan Dye to run a new Reality Labs creative studio

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Meta has hired longtime Apple design leader Alan Dye to run a new creative studio inside its Reality Labs division, CEO Mark Zuckerberg announced in a series of posts on Threads on Tuesday.

“Today we’re establishing a new creative studio in Reality Labs led by Alan Dye, who has spent nearly 20 years leading design at Apple,” Zuckerberg wrote on Threads, saying the group will help define “the next generation of our products and experiences.”

Zuckerberg said the studio will bring together “design, fashion, and technology” and that Meta wants to “treat intelligence as a new design material and imagine what becomes possible when it is abundant, capable, and human-centered.”

The goal, he added, is to “elevate design within Meta” by assembling a team with “craft, creative vision, systems thinking, and deep experience building iconic products that bridge hardware and software.”

Dye will work alongside several high-profile design leaders. He will report to Meta’s chief technology officer and Reality Labs head Andrew Bosworth.

Dye is one of the most prominent figures in Apple’s modern design history. He has led Apple’s design studio since 2015 and has played a key role in shaping the company’s software and the look and feel of many of its devices, including the interfaces for products such as the Apple Watch, iPhone X, and Vision Pro headset.

Most recently, Dye was responsible for Liquid Glass, Apple’s new design across its devices that makes elements of the user interface look transparent.

His team has also worked on a slate of new smart home hardware, according to Bloomberg, which first reported his move to Meta.

Zuckerberg said that Dye will be joined by “another acclaimed design lead from Apple,” Billy Sorrentino, as well as Joshua To, who leads interface design across Reality Labs; industrial design lead Pete Bristol; and metaverse design and art teams led by Jason Rubin.

The CEO framed the move as part of Meta’s push into AI-powered devices such as smart glasses.

“We’re entering a new era where AI glasses and other devices will change how we connect with technology and each other,” Zuckerberg wrote.

While the potential is “enormous,” he said the new studio will focus on making every interaction “thoughtful, intuitive, and built to serve people.”

Earlier this year, Meta hired another Apple engineer, Ruoming Pang, to its new Superintelligence Labs organization. Pang led Apple’s AI models team.

Apple did not respond to a request for comment from Business Insider. A Meta spokesperson pointed to Zuckerberg’s posts on Threads.

Have a tip? Contact Pranav Dixit via email at pranavdixit@protonmail.com or Signal at 1-408-905-9124. Use a personal email address, a nonwork WiFi network, and a nonwork device; here’s our guide to sharing information securely.




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