TLDR
- Meta’s secret “Project OT” planned to cut teams by up to 60% across two waves, replacing workers with AI agents
- Zuckerberg pulled back hours before the second wave, limiting cuts to 10% of staff (~8,000 jobs)
- AI code output rose 220% year-over-year, but user-facing feature improvements were only up 36%
- A separate lawsuit claims Meta used AI tools to target employees on medical leave for layoffs
- Meta plans to spend at least $130 billion on AI infrastructure in 2026, expected to consume its full operating cash flow
Meta (META) stock rose 1.21% as the company found itself at the center of a major story about its internal AI transformation plans, a workforce lawsuit, and questions about whether its AI spending is actually paying off.
Reuters published a detailed report on August 26, based on internal documents and more than 20 interviews, revealing the full scope of what Meta had been planning behind closed doors.
The plan was called Project OT, short for Organization Transformation. It was hatched at Zuckerberg’s Hawaii compound in January during Meta’s annual leadership retreat. The vision: make Meta “AI native,” with AI agents doing much of the work currently done by human employees.
In scenario planning, executives explored cutting some teams by as much as 60%. The restructuring was set to roll out in two waves, with the first beginning May 20 and a second wave targeting more roles in November.
Meta had around 79,000 employees at the time. A 20% cut would have eliminated roughly 16,000 jobs.
The Plan Unravels
On the night of May 19, hours before the first layoffs were set to begin, Zuckerberg pulled back. Meta went ahead with the 10% cut the next morning, roughly 8,000 jobs, but canceled the November wave entirely.
Zuckerberg later told employees he did “not expect other company-wide layoffs this year.”
The reversal came as internal data raised doubts about whether the AI strategy was actually working. Code output using AI tools jumped 220% year-over-year. But changes that resulted in new or improved features that users could actually see rose just 36%.
Security and technical incidents, including service disruptions and possible data leaks, spiked 40% from the prior year. Time spent by staff dealing with those problems rose 70%.
Employees were also in open revolt. Meta had installed tracking software on U.S. employees’ devices to capture keystrokes and mouse clicks, aiming to train AI agents to replicate human workflows. Many workers believed they were training their own replacements.
Internal employee sentiment dropped from 74% favorable to 55% favorable in Meta’s half-year Pulse survey.
The Lawsuit
A separate lawsuit filed in July claims Meta used AI-powered tools to identify and lay off employees who were on medical leave or taking time off to care for family members.
Meta denied the claims, stating that “workforce management and organizational decisions were and are made by people, not AI.”
Employment lawyers quoted in Forbes said the case could hinge on whether Meta’s selection criteria disproportionately affected employees on leave, and noted that California and New York, where employees are located, both have strong employment protections.
Where Things Stand
Meta confirmed the existence of Project OT, describing it as a cost-cutting and restructuring effort. The company said it never intended to cut 60% of its entire workforce, and that several major units were not part of the plan.
At an internal town hall in early July, Zuckerberg acknowledged that AI agent technology had not “accelerated” as fast as he had expected, but said he expected improvements in the next three to six months.
Meta plans to invest at least $130 billion in AI chips and infrastructure in 2026. Analysts expect that spending to consume all of the company’s operating cash for the year.
META stock was trading up 1.21% at the time of the report.
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