TLDR
- Meta’s secret “Project OT” planned to cut some teams by up to 60% in two waves to create an “AI native” workforce
- Zuckerberg called off the second wave of cuts just hours before the first layoff on May 20, after staff revolted
- AI agent technology failed to deliver expected productivity gains, with major incidents spiking 40%
- Meta eventually cut 10% of its workforce in May, with Zuckerberg promising no further company-wide layoffs this year
- Meta plans to spend at least $130 billion on AI infrastructure in 2026, which analysts say will consume its full operating cash flow
Meta Platforms (META) had a plan to gut its workforce in the name of AI. It didn’t go as expected.
Reuters revealed Tuesday that Meta quietly developed “Project OT,” short for Organization Transformation, a sweeping internal restructuring plan hatched at Zuckerberg’s Hawaii compound in January. The plan aimed to make Meta “AI native,” with AI agents handling much of the daily work currently done by humans.
In scenario planning, executives explored cutting some teams by as much as 60%. The restructuring was to happen in two waves: a first round of layoffs in May and a second in November. An internal HR executive projected the total cuts could be as large as or larger than the 25% workforce reduction Meta carried out three years ago.
The Plan Falls Apart
On the night of May 19, hours before the first wave was set to begin, Zuckerberg called off plans for the November cuts. Meta still went ahead with the May 20 layoffs, which reduced headcount by 10%. But the deeper cuts never came.
Employee pushback played a role. Workers flooded Meta’s internal communications platform with complaints. Internal sentiment scores dropped from 74% favorable to 55% favorable in the company’s half-year Pulse survey. Headcount in some engineering units dropped as much as 30% by end of May, according to Reuters.
Meta also mandated tracking software on U.S. employee devices to capture keystrokes and mouse clicks for AI training. Many workers believed they were training their own replacements. Labor organizing efforts gained momentum.
The technology itself was also underperforming. Code output rose 220% year-over-year, but new features reaching users only increased 36%. Major technical and security incidents spiked 40%, and the time employees spent dealing with those incidents rose 70%.
In early June, hackers exploited Meta’s AI-powered customer support bot to access high-profile Instagram accounts. Meta declined to comment on the internal disruption data.
What Zuckerberg Said
At an internal town hall in early July, Zuckerberg acknowledged the timeline had slipped. AI agent technology, he said, had not “accelerated” as fast as he anticipated. He told employees he expected improvements over the next three to six months.
After the May layoffs, Zuckerberg posted a memo saying he did “not expect other company-wide layoffs this year.” Executives followed up by pausing the mouse-tracking program, allowing some employees to transfer back to their original teams, and pledging better office perks.
Meta confirmed Project OT’s existence in response to the Reuters report, saying it was a year-long effort focused on cost cutting, team redesign, and shifting staff to priority areas. The company said it never intended to lay off 60% of its entire workforce and that several major units were not included in the scenarios.
Meta’s AI spending remains under investor scrutiny. The company plans to invest at least $130 billion in AI chips and infrastructure in 2026. Analysts at LSEG estimate that figure will consume Meta’s full operating cash for the year.
META stock was trading near $714 at the time of reporting.
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