Could Meta's New AI Model Cause a Company Restructure?

Meta is reportedly planning to execute its first round of layoffs on 20 May 2025, according to reports from Reuters.

This initial round could impact approximately 8,000 employees globally, with a second round of layoffs anticipated for later in 2026. In total, Meta could reduce its workforce by 20%, which would account for around 15,000 jobs lost.

These layoffs follow significant AI investments for Meta, with the company increasing its AI spend on infrastructure and prioritising the development of new AI models to position itself as a key player in the AI space. As Meta increases its AI spend, these layoffs could help offset some of its rising costs – a strategic move that reflects broader trends in how technology companies are balancing innovation investment with operational efficiency.

Meta has yet to comment on the potential job cuts.

The company has been making significant progress as it invests in AI development, which could reshape its business model and growth trajectory. In April 2025, the company announced that it was launching Muse Spark, developed by Meta Superintelligence Labs.

This AI model – the first product released by Meta Superintelligence Labs – is designed to see and understand the world of its user, with the ability to improve user health and troubleshoot home appliances.

Announcing its launch, Mark Zuckerberg, CEO of Meta, said on Threads: "Nine months ago, we founded Meta Superintelligence Labs with the goal of putting personal superintelligence in everyone's hands.

"We believe that empowering people to pursue their individual aspirations is how humanity has always made progress and we believe that will continue to be true in the future as well.

"Today we are sharing our first milestone: Muse, our new family of models. Spark, the first model in the Muse family, powers a new version of Meta AI that you can try today.

"It's a world-class assistant and particularly strong in areas related to personal superintelligence like visual understanding, health, social content, shopping, games and more."

Scaling infrastructure for competitive advantage

The company has also been making substantial investments in the development of AI infrastructure as part of its growth strategy.

At a 2025 White House dinner, Zuckerberg shared that the company was planning to invest "at least," US$600bn in US infrastructure over the next three years – which includes hundreds of billions of dollars on data centre construction.

This increased spend is likely to lead to higher costs for the company – with Meta warning investors that capex costs for 2026 could double its 2025 capex of US$72.2bn.

These investments represent a calculated business decision that could position Meta for long-term market leadership in AI capabilities, though they create short-term financial pressures that may necessitate workforce optimisation.

The tech sector has seen several AI-related layoffs in recent months, with Nikkei Asia reporting that nearly half of all layoffs in the sector have been attributed to AI.

Oracle reportedly laid off around 10,000 employees in April – with the company stating in a statement that the decision was made "after careful consideration of Oracle's current business needs," – while Snap announced plans to lay off 16% of its workforce following "rapid advancements in artificial intelligence," according to CEO Evan Spiegel in a company memo.

Questioning the AI narrative

Amrita Ahuja, CFO of Block, which decided to lay off 40% of its workforce in February, says that she believes this trend of layoffs is likely to continue.

Speaking at the WSJ CEO Council Summit, she said: "I think it's an inevitability. As a CFO, I think it's better to be a little bit early than to be too late here."

Despite this, some critics believe that AI is being unfairly blamed for layoffs – a process referred to as 'AI washing'.

Venture capitalist Marc Andreessen, for instance, shared in an interview on the 20VC podcast: "Essentially, every large company is overstaffed.

"It's at least overstaffed by 25%. I think most large companies are overstaffed by 50%. I think a lot of them are overstaffed by 75%. Now they all have the silver bullet excuse: Ah, it's AI."

This perspective suggests that workforce reductions could be driven by broader business efficiency goals rather than purely technological advancement, raising questions about how companies frame their restructuring strategies to stakeholders and markets.