Key Takeaways
- A confidential initiative dubbed “Project OT” envisioned eliminating up to 60% of certain departments across two phases to build an “AI native” organization
- Hours before initiating the first round of terminations on May 20, Zuckerberg abandoned plans for the second wave following internal resistance
- The company’s AI agent systems underperformed expectations, contributing to a 40% surge in critical incidents
- The social media giant ultimately reduced its workforce by 10% in May, with leadership pledging no additional broad-scale reductions through year-end
- Analysts project Meta’s planned $130 billion AI infrastructure investment for 2026 could absorb the company’s entire operational cash generation
Meta Platforms (META) embarked on an ambitious strategy to dramatically reshape its workforce around artificial intelligence. The outcome fell far short of expectations.
A Reuters investigation published this week uncovered details of “Project OT” — an abbreviation for Organization Transformation — a comprehensive restructuring blueprint conceived during meetings at Zuckerberg’s Hawaiian estate in January. The initiative sought to transform Meta into an “AI native” enterprise, with intelligent agents managing substantial portions of work traditionally performed by human employees.
During strategic planning sessions, company leadership examined scenarios involving personnel reductions reaching 60% in select departments. The transformation strategy involved a dual-phase approach: initial terminations scheduled for May followed by a second round in November. An internal human resources leader estimated the combined cuts might rival or exceed the 25% workforce contraction Meta executed three years earlier.
The Strategy Unravels
On the evening of May 19, mere hours before launching the initial phase, Zuckerberg reversed course on the planned November reductions. Meta proceeded with the May 20 terminations, which eliminated 10% of staff positions. However, the more aggressive subsequent cuts were permanently shelved.
Internal opposition proved significant. Employees saturated Meta’s workplace communication channels with grievances. The company’s biannual Pulse survey revealed internal approval ratings plummeting from 74% to 55%. Reuters reported that certain engineering divisions experienced headcount declines approaching 30% by late May.
Meta additionally deployed monitoring software on American employees’ computers to record keystrokes and cursor movements for artificial intelligence model training. Numerous workers concluded they were essentially developing the systems intended to replace them. Labor organizing initiatives gained traction.
The underlying technology also failed to meet performance benchmarks. While code generation increased 220% year-over-year, new functionality deployed to end users grew by merely 36%. Critical technical and security problems jumped 40%, while employee time dedicated to incident resolution climbed 70%.
During early June, cybercriminals exploited vulnerabilities in Meta’s AI-driven customer service chatbot to compromise prominent Instagram profiles. Meta declined to address questions regarding the internal performance metrics.
Zuckerberg’s Response
During an internal company meeting in early July, Zuckerberg conceded the implementation schedule had been delayed. The AI agent capabilities, he admitted, had not “accelerated” at the pace he had projected. He informed staff members he anticipated meaningful progress within the following three to six months.
Following May’s workforce reduction, Zuckerberg distributed an internal communication stating he did “not expect other company-wide layoffs this year.” Leadership subsequently suspended the keystroke monitoring initiative, permitted certain employees to return to their previous assignments, and committed to enhanced workplace amenities.
Meta acknowledged Project OT’s existence when responding to Reuters’ reporting, characterizing it as a year-long initiative centered on expense reduction, organizational redesign, and resource reallocation toward strategic priorities. The company emphasized it never contemplated eliminating 60% of total headcount and that numerous major divisions were excluded from the planning scenarios.
Meta’s artificial intelligence expenditures continue attracting investor attention. The corporation intends to allocate a minimum of $130 billion toward AI processors and infrastructure during 2026. LSEG analysts calculate this investment level will absorb Meta’s complete operating cash generation for that fiscal year.
META stock was trading near $714 at the time of reporting.
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