Meta Halts Second Round of Layoffs as AI Productivity Falls Short

Meta has halted its planned second round of layoffs originally scheduled for November 2026, as AI has failed to demonstrate the expected level of productivity. The company's organization transformation driven by AI has not progressed as hoped.

In January 2026, CEO Mark Zuckerberg and executives discussed Project OT (Organization Transformation), which envisioned restructuring teams around AI, cutting product development teams from 10-20 people to 3-5, with some teams facing up to 60% layoffs. The plan would replace traditional engineering, design, and product manager roles with a unified "Builder" role. To accelerate AI adoption, Meta asked employees in April 2026 to install tracking software that records keyboard input and mouse clicks to train AI agents to mimic human computer usage.

However, these efforts have not produced the expected results. Meta's CTO said that after large-scale AI adoption, code changes on internal software platforms and infrastructure increased 220% year-over-year, but user-visible new features or upgrades increased only 36%. During the same period, major technical and safety incidents rose 40%, and employee time spent on incident handling increased 70%.

Zuckerberg admitted during an internal all-hands meeting that the timing of the organizational adjustment was miscalculated and that agent technology had not advanced as quickly as anticipated. The company also paused its mouse-tracking project, significantly reduced spending on Claude, and allowed some employees who had been moved to AI engineering teams to return to their original roles.

An internal survey showed that positive employee sentiment dropped from 74% to 55%, following widespread complaints on Meta's internal forums.