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Has The A.I Bubble Started to Burst? Meta Announces Layoffs in A.I Department

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Joshua Clear
October 22, 2025

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Meta Just Fired 600 AI Workers While Paying Others $300 Million

Yesterday, Meta cut 600 jobs from its AI division. The same week it closed a $27 billion data center deal. What the hell is going on?

Here's the thing: This isn't about money. Meta's dropping $114-118 billion on AI this year. Zuckerberg just told investors he'll spend "hundreds of billions" on compute. The man is not pinching pennies.

This is about something weirder—and more revealing about how the AI race actually works.

The Problem: Too Many Cooks, Not Enough Genius

Meta's AI unit got fat. After years of hiring sprees, teams were tripping over each other fighting for GPU time. When Zuckerberg recruited his dream team of "AI all-stars" mid-2025, they inherited this bloated mess.

And listen, that dream team cost a fortune. We're talking $100-300 million packages over four years. OpenAI's Sam Altman literally went on record complaining about Meta's "$100 million signing bonuses" poaching his people. One hire from Apple got $200 million. Another from a smaller lab? Potentially $1.5 billion over six years.

You don't pay people fuck-you money like that unless you're desperate.

Why Meta Was Desperate

April 2025: Meta releases Llama 4. It flops. Developers complain it sucks at coding and reasoning. Zuckerberg is reportedly pissed. The team scrambles.

They delay "Behemoth," the bigger Llama 4 model, because engineers can't make it good enough to justify launching. First from April to June, then to fall, then to "maybe never."

The head of Meta's famous FAIR research lab quits in April after eight years.

This is when Zuckerberg goes nuclear. He personally recruits elite AI researchers with those insane comp packages, acquires Scale AI's CEO as his Chief AI Officer for $14.3 billion, and creates "Superintelligence Labs"—a new structure built around a core team called TBD Lab.

The Reveal

Yesterday's 600 layoffs? They hit the old guard—FAIR researchers, infrastructure teams, product people. The new TBD Lab with all those $100 million hires? Completely untouched.

This is Zuckerberg making a bet: small elite teams beat large mediocre ones. He's trimming what Chief AI Officer Alexandr Wang called "organizational bloat" to make "each person more load-bearing."

It's brutal but clarifying. Meta looked at its AI division and decided most people weren't worth keeping—but a few dozen were worth more than entire departments.

What This Actually Means

Every AI lab is hitting the same wall. OpenAI pivoted from GPT-5 to GPT-4.5. Anthropic delayed Claude 3.5 Opus. The easy gains are gone. Throwing more compute at the problem isn't working like it used to.

So companies are making different bets. OpenAI bets on scale and consumer adoption (800 million weekly ChatGPT users). Google bets on integration. Meta's betting on open source—and now, on superstar talent over headcount.

The kicker? We'll know who's right by year-end when TBD Lab ships Llama 4.X. If it's good, Zuckerberg's consolidation play was genius. If it's not, he just fired 600 people while paying billions for researchers who couldn't deliver either.

That's a hell of a gamble.

Sources

Here are all the sources used in the research report:

Primary News Sources on the Layoffs

  1. Business Insider - "Meta's Alexandr Wang on why the AI team just laid off 600..." (October 22, 2025)

  2. RTE - "Meta cutting hundreds of roles in AI unit" (October 21, 2025)

  3. Hindustan Times - "Meta to lay off 600 employees in AI Superintelligence Labs. Here's why" (October 22, 2025)

  4. The Straits Times - "Meta cuts 600 jobs in 'bloated' AI unit so as to move faster" (October 22, 2025)

  5. CityNews Halifax - "Meta cutting 600 AI jobs even as it continues to hire more for its superintelligence lab" (October 21, 2025)

  6. The New York Times - "Meta Cuts 600 Jobs at A.I. Superintelligence Labs" (October 22, 2025)

  7. Calcalistech - "Meta lays off 600 in AI shakeup, unclear impact on FAIR..." (October 21, 2025)

  8. SF Chronicle - "Meta reported cuts 600 AI jobs but hiring spree continues" (October 22, 2025)

  9. Axios - "Exclusive: Meta slashes jobs in its AI operations" (October 22, 2025)

  10. Investopedia - "Meta Is Laying Off 600 Workers in Its AI Division—What You Need to Know" (October 22, 2025)

  11. Los Angeles Times - "Meta is cutting 600 jobs in its AI division" (October 22, 2025)

  12. AP News - "Meta cutting 600 AI jobs even as it continues to hire more..." (October 22, 2025)

Meta's Data Center Investment

  1. Yahoo Finance - "Meta in $27 billion financing deal with Blue Owl Capital for Louisiana data center" (October 21, 2025)

  2. Morningstar/MarketWatch - "Meta, Blue Owl and AI: Here are the details of Wall Street's biggest private capital deal ever" (October 21, 2025)

  3. Precedence Research - "Meta Raises $27B for Largest AI Data Center Project" (October 21, 2025)

  4. CNBC - "Meta, Blue Owl Capital partner on $27 billion AI data center project" (October 21, 2025)

AI Talent War & Compensation

  1. Fortune - "Mark Zuckerberg is determined to build an AI superteam..." (July 10, 2025)

  2. Wired - "Here's What Mark Zuckerberg Is Offering Top AI Talent" (July 1, 2025)

  3. Economic Times - "Mark Zuckerberg drops another $1.5 billion pay package for top AI researcher" (October 16, 2025)

  4. Forbes - "Meta And OpenAI's Talent Wars: How AI Mints Elites But Displaces Others" (July 12, 2025)

  5. Reuters - "OpenAI, Google and xAI battle for superstar AI talent, shelling out millions" (May 21, 2025)

FAIR & Meta's AI Research History

  1. Fortune - "Meta's AI research lab is 'dying a slow death,' some researchers say" (April 9, 2025)

  2. Business Insider - "Meta chief AI scientist Yann LeCun clarifies his role after the company hired a new chief scientist" (July 25, 2025)

Llama 4 & Behemoth Model

  1. SiliconANGLE - "Meta to postpone release of Llama 4 Behemoth model, report claims" (May 14, 2025)

  2. Business Insider - "Meta Races to Launch Latest Llama AI Model by Year-End" (August 28, 2025)

  3. Inbenta - "Meta's AI Ambitions Hit a Wall as Behemoth Model Stalls" (May 15, 2025)

  4. Reuters - "Meta delays release of its 'Behemoth' AI model, WSJ reports" (May 15, 2025)

  5. Aragon Research - "Meta's Behemoth Delay: A Sign of AI's Toughest Frontier?" (May 15, 2025)

  6. ZDNET - "Meta delays 'Behemoth' AI model, handing OpenAI and Google even more of a head start" (May 16, 2025)

Alexandr Wang & Scale AI

  1. Clay - "Who is the CEO of Scale AI? Alexandr Wang's Bio" (May 15, 2025)

  2. Economic Times - "From MIT dropout to AI billionaire: Who is Scale AI's Alexandr Wang" (September 25, 2025)

  3. Entrepreneur - "Who Is Alexandr Wang, the Founder of Scale AI Joining Meta" (October 7, 2025)

TBD Lab & Superintelligence Labs

  1. ConnectCX - "Meta's TBD Lab Building the Next Frontier of AI Superintelligence" (August 24, 2025)

  2. Wikipedia - "Meta Superintelligence Labs" (July 1, 2025)

Joelle Pineau Departure

  1. Maginative - "Joelle Pineau, Head of Meta's AI Research, Announces Departure" (April 2, 2025)

  2. Reuters - "Meta's head of AI research to depart in May" (April 1, 2025)

  3. CNBC - "Meta's head of AI research announces departure" (April 1, 2025)

Shengjia Zhao Appointment

  1. NDTV - "All You Need To Know About Chief Scientist Shengjia Zhao" (July 27, 2025)

  2. Reuters - "Meta names ChatGPT co-creator as chief scientist of superintelligence lab" (July 25, 2025)

  3. CNBC - "Shengjia Zhao to lead Meta's AI Superintelligence Lab" (July 25, 2025)

  4. EduEarnHub - "Who is Shengjia Zhao? Meta's New Chief Scientist Takes Charge" (July 26, 2025)

Meta's Efficiency Drive & Previous Layoffs

  1. Yahoo Finance - "Meta's 'permanent' efficiency layoffs affected about 100 employees" (October 17, 2024)

  2. Fortune - "Meta's quest for 'efficiency' sparks new wave of layoffs" (October 16, 2024)

  3. Fortune - "Mark Zuckerberg warns Meta staff of 'intense year' as he announces low performers will be cut" (January 14, 2025)

  4. DW - "Meta to lay off 5% of employees in efficiency drive" (January 15, 2025)

  5. Fast Company - "Meta Platforms layoffs: Zuck's 'year' of efficiency is multi-year" (October 17, 2024)

Severance & Employee Impact

  1. SF Gate - "In memo, Alexandr Wang explains 600-worker layoff at Meta" (October 22, 2025)

  2. TechBuzz - "Meta cuts 600 AI jobs despite $14.3B Scale AI investment" (October 21, 2025)

  3. ST Lawyers - "Meta Slashing 600 AI Jobs, Some Staffers Placed on 'Non-Working Notice'" (October 21, 2025)

  4. Fired.fyi - "Meta's 2025 Layoffs: What to Expect from Severance Packages" (January 14, 2025)

  5. CNBC - "Meta AI layoffs sign hottest tech career may be more risk than reward" (October 22, 2025)

AI Competition Context

  1. HereAndNowAI - "OpenAI vs Google vs Meta: Leading the AI Race in 2025" (June 15, 2025)

  2. NWAI - "The AI Arms Race Explained: OpenAI vs Google vs Meta Competition" (October 16, 2025)

  3. Semafor - "OpenAI's greatest AI challenge is Google" (October 7, 2025)

  4. Assist Software - "Meta, OpenAI, Google: Who Will Win the AGI Race?" (October 19, 2025)

Additional Context

  1. TokenRing - "Meta Realigns AI Ambitions: 600 Workers Cut in Strategic Overhaul for Global AI Race" (October 21, 2025)

  2. GV Wire - "Meta Plans to Cut 600 Jobs at AI Superintelligence Labs" (October 21, 2025)

  3. TechNext24 - "Meta to cut 600 AI jobs in massive restructuring push" (October 21, 2025)

  4. CNBC - "Meta lays off 600 employees within AI unit" (October 22, 2025)

  5. HCAMAG - "Meta restructures AI division, cuts 600 jobs" (October 22, 2025)

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