TL;DR

Meta has begun laying off approximately 700 employees, with cuts concentrated in Reality Labs, social media, and recruitment. The reductions come as the company plans to spend up to $167 billion (around £133 billion) this year, with capital expenditure on AI infrastructure alone reaching up to $135 billion (£107 billion).

Flattening teams, stacking chips

The layoffs follow Meta CEO Mark Zuckerberg’s January statement about “flattening teams” and letting individual contributors handle work that previously required larger groups. A Meta spokesperson told The Register the cuts are about “streamlining the business to work more effectively with AI.”

These 700 cuts are modest compared with wider reports. Reuters has reported that Meta plans to reduce its workforce by 20%, which would mean roughly 15,000 roles eliminated from its 78,800-strong headcount — bringing staffing to levels not seen since 2021.

Where the money goes instead

Meta’s expenses rose 24% during 2025 to $118 billion (£94 billion), and the company expects to spend between $162 billion and $167 billion (£129-133 billion) this year. The bulk of that goes to datacenter buildouts and AI compute. The company is also developing its own MTIA chips for generative AI workloads, with models through to 2027 planned for inference and training.

Progress has not been smooth. Meta’s next reasoning model, codenamed Avocado, has reportedly been delayed after disappointing internal tests. Meanwhile, former chief AI scientist Yann LeCun clashed publicly with Alexander Wang, the Scale AI co-founder whom Zuckerberg tapped to lead Meta’s AI efforts after investing $14 billion (£11 billion) in Wang’s company.

Looking forward

Meta CFO Susan Li has been candid about the uncertain return on these investments, telling Morgan Stanley analysts the company cannot yet map out year-by-year ROI. For UK businesses that rely on Meta’s advertising platforms, the question is whether this AI spending eventually translates into better tools — or whether the cost pressures lead to further workforce reductions and service changes.