I have no direct knowledge of anything that Magic Leap is doing so I can only speculate. My speculation is that they have raised too much money, and as a result they lost their edge. People are naturally more productive when a deadline is looming, especially if it is an existential one, and startups typically have a limited amount of cash before they have to raise more or die. But sometimes startups get enough money that they can operate for years before they die, and then their delivery deadlines seem to ooze out to years.
It can happen easily enough, if you have to deliver next year, and your schedule it tight, then you start narrowing the scope of your delivery. That naturally prunes the things that are less critical to your success from the delivery and focuses the team on the critical bits. If your delivery is in two years, there often is pressure for some "quick wins" which are features which are not critical to the product but easily completed to show progress. As a result you make lots of progress on things which are not part of the critical path. It can make an engineering team feel good ("Hey, look at all this stuff we got done!") but it pushes off the question of whether or not they can even do the critical bit.
One unexpected side effect of this I saw in a company I advised was that the group working on the critical bits were penalized in terms of recognition for not getting more done (even though their part of the problem was much harder) and some key members of the group left, putting the critical pieces in still more jeopardy.
What I'm trying to say is that taking a big funding round is exceptionally risky for people who haven't managed through the sorts of ups and downs a startup has to weather. Magic leap took in a lot of money early on. That sets the stage for disaster. Not that the problem will actualize; People go out sailing on the San Francisco Bay without enough life vests for the people on board every day and that situation only occasionally intersects with an event that results in the loss of life. But once you've left the dock without enough vests, you have just increased the importance of the competence and abilities of your crew without necessarily realizing it. So to with startups that take too much money, they increase the importance of having a management team with exceptionally good discipline.
We will get to see how it turns out for Magic Leap.