Meta is slated to layoff around 10 percent of staff at its Reality Labs XR division, a New York Times report maintains, as the company appears to be shifting focus to AI and smart glasses.

The News

According to three people with knowledge of internal discussions, cuts could come as early as today, and could affect more than 10 percent of the 15,000-person XR division.

Layoffs are said to affect those working on VR headsets and “a V.R.-based social network,” the report maintains, suggesting cuts to staff developing Horizon Worlds.

This follows a recent report that Meta CTO Andrew Bosworth called an in-person all-hands meeting for Wednesday, January 14th, which is said to be the division’s “most important” of the year.

In addition to ramping up development on its next-gen AI, the report maintains Meta plans to reallocate some of the money from VR products to its wearables division, responsible for Ray-Ban Meta smart glasses and Meta Ray-Ban Display glasses.

This comes as Meta has markedly reduced spending on VR over the past two years; the company has pulled back from funding eye-catching Quest exclusives in addition to reducing staff across its various XR studios, including its Oculus Studios publishing arm and the team behind VR workout app Supernatural.

Additionally, the company shuttered game studios Ready at Dawn (Lone Echo, Echo Arena) in 2024 and Downpour Interactive (Onward) in 2025.

My Take

An all-hands meeting scheduled for Wednesday by Reality Labs chief and company CTO Andrew Bosworth can really only mean a few things: info on how the company is restructuring, and probably a good helping of morale boosting platitudes on how Meta isn’t really abandoning anything, just making things more efficient and serving the greater goal of connecting people through technology. I hope to learn more soon from resultant leaks, blog posts, etc.

And if Boz doesn’t say this, I will: Meta’s VR and more recent metaverse ambitions haven’t ever turned a meaningful profit after having cost the company multi-billion dollar figures in quarterly operational budgets over the better part of a decade. And the company’s smart glasses have. Investors can’t stomach that forever.

Comparatively speaking, smart glasses represent a massive return on investment for Meta. Unlike with VR headsets, the company doesn’t need to seed studios with developer tools, organize big conventions to teach third-parties how to create content, buy studios, fund exclusive content. Meta’s smart glasses don’t even have an app store yet—everything is first-party, and it probably won’t for a while.

In fact, even before the mere mention of an app store, Ray-Ban creator EssilorLuxottica is ramping up production capacity to 10 million annual units by the end of 2026—dwarfing the already 2 million units sold since Ray-Ban Meta’s initial release in 2023.

Granted, the lack of an app store is temporary for its smart glasses; its forthcoming AR glasses will most certainly need one when it arrive as early as next year. But in the meantime, Meta has become a class leader in smart glasses, making it seem almost unconscionable to investors to throw so much gas on VR when smart and AR glasses are nearly set to spontaneously combust.

XREAL, the Beijing-based AR glasses maker, announced it has raised $100 million in a recent funding round.

The News

Xreal co-founder and CEO Chi Xu broke the news on Bloomberg Television, noting the company secured funding from “supply chain partners” in addition to other backers, which Xu declined to disclose.

According to Crunchbase data, the company has raised a total of $433 million in outside funding since its founding in 2017.

Its second most recent funding round came in May 2025 when Xreal secured ¥200 million RMB (~$28.6 million USD), led by Pudong Venture Capital. The startup is now said to be valued at $1 billion.

This follows the unveiling of ROG XREAL R1, a pair of 240Hz “gaming glasses” built in collaboration with Asus Republic of Gamers, and the announcement that Google is extending its partnership with Xreal, positioning it as a lead hardware partner for the Android XR ecosystem.

Xu told Bloomberg Television that its current Android XR glasses, Project Aura, is on schedule for release this year.

My Take

I’ve never been particularly enthused with the sort of optics Xreal relies on in all of its AR specs, mostly because when I think of AR glasses of the near future, I think of something indistinguishable from regular glasses. To me, Xreal’s existence hinges on an interesting technological byway, and doesn’t really offer the answer to the actual problem.

That said, Xreal’s birdbath and newer flat prism optics (seen on XREAL One Pro and detailed by Karl Guttag) provide good clarity, okay brightness, and a comparatively wide field of view (FOV)—wider than most waveguide optics can. All of that at a per-unit price that is much cheaper than waveguides at comparable specs—the reason it can even sell AR consumer glasses this early in the first place.

That, and the company clearly isn’t struggling either, considering it’s existed for nearly a decade now, and has clearly shown it can attract outside funding on the regular in addition to closing partnerships with Google and Asus.

Still, birdbath and its newer flat prim optics make for a bulkier overall package, which is why you won’t often see marketing material focusing on the thing’s side profile with an actual person—they sit a few centimeters farther from where typical glasses might.

Additionally, both style of optics typically involve thick beam splitters and mirrors sitting in front of your eyes, which means noticeable light loss not only from the device’s display, but also ambient light sources, making for dimmer pictures than you might expect and a dimmer physical environment overall. I really want to see Project Aura before judging, but I have my doubts it will make a great pair of all-day AR glasses simply based on that alone.

With Xreal very much the now of AR, it will be interesting to see how the company eventually makes the leap to the future of AR. The usual cadre of hardware competitors will eventually release their first salvos onto the market—rumored to kick off somewhere between next year and 2030—and you can bet they’ll be aiming for thin, stylish and packed with apps just itching to replace your smartphone.