28 August 2026

Meta planned AI-driven layoffs, then scaled back the project

First reported

Ars Technica ran this on 26 August, 2 days before the next source picked it up.

Meta created Project OT in January to explore replacing thousands of employees with AI agents overseen by small human teams, potentially cutting 25 percent or more of headcount.
The company conducted a May round of layoffs based on the plan but canceled a planned November round after AI agents caused problems: a 40 percent jump in major technical and security incidents.
Meta CEO Mark Zuckerberg acknowledged in July that AI agent development had not accelerated as expected, and internal data showed AI productivity gains were uneven: code changes up 220 percent but actual new features only up 36 percent.
Clara Shih, who led Meta's business AI group, left the company and now runs a nonprofit providing free tools to workers displaced by automation, citing the gap between optimistic automation rhetoric and actual worker outcomes.

How it was covered

Clara Shih, who led Meta's business AI group, witnessed AI agents collapse multi-step product development processes into work for one or two people, which radicalized her into leaving the company. She now runs the New Work Foundation nonprofit providing free tools and mentoring to entry-level workers facing AI displacement, arguing that the optimistic narrative about automation freeing workers for higher-order tasks has primarily not come true.

Reported by Ars Technica