Meta CEO Mark Zuckerberg’s ambitious plan to remake the company’s workforce around artificial intelligence has faltered, with the social-media giant abandoning a planned second wave of layoffs after employee resistance and disappointing AI productivity results.
According to a Reuters investigation based on internal documents, posts, recordings and interviews with more than 20 people familiar with Meta’s operations, executives developed Project OT, short for Organization Transformation, as part of a plan to build an “AI native” company.
The plan, developed during an executive retreat at Zuckerberg’s Hawaii compound in January, envisioned AI taking over much of the routine work performed by thousands of employees, with smaller teams of highly skilled workers supervising AI-powered operations.
Internal scenario-planning exercises considered reducing the size of some Meta teams by as much as 60%. The restructuring was planned in two waves, with layoffs beginning in May and another round scheduled for November.
However, hours before the first round of cuts on May 19, Zuckerberg abandoned plans for the second wave, according to an internal document reviewed by Reuters.
Meta ultimately laid off about 10% of its workforce the following day.
The reversal came as employees increasingly believed that the company’s AI transformation was partly intended to replace them. At the same time, internal data reportedly showed that autonomous AI “agents” at the centre of the strategy were not producing the expected productivity gains.
Meta confirmed the existence of Project OT in response to the Reuters investigation, describing it as a year-long initiative focused on cost reduction, restructuring teams and moving employees into priority areas, including the production of training data for AI models.
The company acknowledged that some scenarios involved reducing individual teams by up to 60%, but stressed that this did not mean it planned to cut 60% of its entire workforce.
“As part of our company restructuring earlier this year, we asked some teams to conduct a scenario planning exercise looking at the potential impact of redeployments, open role closures and cuts,” Meta said.
“This ultimately resulted in moving thousands of employees to do priority work on several newly-established teams, as has been publicly reported. Ultimately, we didn’t move forward with every scenario from the exercise – and it was never assumed we would.”
Reuters said it was unable to establish what specifically prompted Zuckerberg to abandon the November cuts. Meta also declined to make Zuckerberg available for comment.
The AI-Native Strategy
Meta’s workforce transformation was driven by the growing influence of generative AI and the emergence of so-called AI agents capable of performing tasks autonomously rather than simply responding to prompts.
One Project OT document outlined the company’s vision: “AI-ready tools and agents interact, workflows are automated, new builds are AI-first.”
Meta executives also studied AI-focused startups and organisational models in Asia as the company explored how to redesign teams around artificial intelligence.
The approach included smaller teams known as “tech pods”, with employees equipped with AI tools and tasked with developing products through shorter development cycles.
In an internal post announcing an early pilot, Meta Vice President of Product Management Ime Archibong compared the approach to basketball.
“In basketball, embracing the fast break lets you take more shots – and better ones. We expect the same with AI tools: they allow us to explore more ideas with less cost and higher fidelity,” Archibong wrote.
He added: “This isn’t just more fun – in an AI-first era, we believe it’s the winning strategy.”
One of the pilots involved five small tech pods, each made up of two or three engineers and a designer. Rather than following traditional six-month product planning cycles, the teams were expected to develop prototypes in four-week sprints.
By October, an internal “AI-Native Playbook” encouraged other teams to adopt the model, with traditional product designer and engineering roles potentially replaced by a broader “builder” role and layers of middle management removed.
By June, at least 11 Meta units, including engineering and research teams, had introduced versions of the smaller-pod structure.
Meta also introduced what one internal announcement called a “village approach” to managing employees, with senior unit heads overseeing larger groups while pod leaders handled day-to-day work.
The company, however, rejected any suggestion that AI was making decisions about employee performance.
“Performance rating and promotion decisions were and are made by people, not AI,” Meta said.
The company also created a human-resources initiative to identify “Irreplaceable Talent”, reflecting Meta’s effort to retain highly skilled employees as AI increasingly changes the value placed on individual workers.
Employee Backlash
The AI-driven restructuring faced growing resistance inside Meta after reports emerged in March that the company was considering layoffs affecting 20% or more of its workforce.
Meta had already eliminated around 25% of its workforce between late 2022 and early 2023.
Employees subsequently became increasingly concerned that the company’s AI strategy would accelerate job losses, while investors questioned whether Meta’s huge AI investments were producing sufficient returns.
The result was a rapid reversal of the more aggressive restructuring plan.
While Meta proceeded with the May layoffs and continued moving employees into AI-related roles, it abandoned the planned November wave before determining how many additional workers would have lost their jobs.
Reuters
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