Key Takeaways
- Meta orchestrated a confidential initiative dubbed “Project OT” targeting workforce reductions of up to 60% in certain departments through dual phases, aiming to transition toward an “AI native” organizational model
- Just hours before implementing the first reduction phase on May 20, Zuckerberg cancelled the planned second wave following significant employee resistance
- The company’s AI agent systems underperformed expectations, resulting in a 40% surge in critical technical failures
- Following a 10% workforce reduction in May, Zuckerberg publicly committed to avoiding additional company-wide staff eliminations throughout the remainder of the year
- The social media giant intends to allocate a minimum of $130 billion toward AI infrastructure development in 2026, an amount that financial analysts project will fully deplete annual operating cash flow
Meta Platforms (META) attempted an aggressive workforce transformation centered on artificial intelligence. The initiative spectacularly backfired.
A Reuters investigation published Tuesday uncovered details of “Project OT,” an abbreviation for Organization Transformation, a comprehensive internal overhaul strategy conceived at Zuckerberg’s Hawaiian estate during January discussions. The initiative’s core objective was transforming Meta into an “AI native” enterprise, wherein AI-powered agents would assume responsibility for substantial portions of work currently performed by human employees.
During strategic planning sessions, leadership teams evaluated scenarios involving workforce reductions reaching 60% in specific divisions. The transformation blueprint outlined a two-phase implementation: initial staff reductions scheduled for May, followed by a subsequent round in November. An internal human resources executive estimated the combined cuts could match or exceed the 25% workforce contraction Meta executed three years earlier.
Collapse of the Initiative
During the evening of May 19, mere hours before the initial phase was scheduled to commence, Zuckerberg terminated plans for the November reductions. Meta proceeded with the May 20 staff eliminations, which reduced total headcount by 10%. However, the more extensive planned cuts were permanently shelved.
Internal resistance proved instrumental. Employees inundated Meta’s internal discussion forums with criticism and concerns. Company morale indicators plummeted from 74% positive sentiment to 55% in the biannual Pulse employee survey. Certain engineering divisions experienced headcount declines approaching 30% by May’s conclusion, Reuters reported.
The company additionally deployed monitoring software across U.S. employee workstations to record keyboard activity and cursor movements for AI algorithm training purposes. Numerous employees interpreted this as directly contributing to their eventual obsolescence. Efforts to organize labor representation accelerated.
The underlying technology also demonstrated significant shortcomings. While code generation volume surged 220% year-over-year, actual new features deployed to end users increased merely 36%. Critical technical and security failures jumped 40%, while employee hours devoted to incident resolution climbed 70%.
During early June, malicious actors compromised Meta’s AI-enhanced customer service chatbot, gaining unauthorized access to prominent Instagram accounts. Meta declined to provide commentary regarding the internal disruption metrics.
Zuckerberg’s Response
During an internal company meeting held in early July, Zuckerberg admitted the project timeline had fallen behind schedule. He explained that AI agent capabilities had not “accelerated” at the anticipated pace. He informed staff members that he anticipated meaningful progress within the subsequent three to six months.
Following the May staff reductions, Zuckerberg published an internal memorandum stating he did “not expect other company-wide layoffs this year.” Company executives 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 the Reuters disclosure, characterizing it as a year-long initiative concentrated on expense reduction, organizational redesign, and personnel reallocation toward strategic priorities. The company clarified that eliminating 60% of the entire workforce was never under consideration and that multiple major business units were excluded from the planning scenarios.
Meta’s artificial intelligence expenditures continue drawing investor attention. The organization intends to commit at least $130 billion toward AI processors and infrastructure throughout 2026. LSEG analysts calculate this investment will absorb Meta’s complete operating cash generation for that fiscal period.
META stock was trading near $714 at the time of reporting.
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