Just one week after Elon Musk carried out a mass layoff at Twitter, letting go of around half of the company’s employees, Mark Zuckerberg’s Meta – Facebook’s parent company – has joined the wave of tech giants looking to scale back expenses and downsize.
A public letter composed by Zuckerberg, Meta’s chairman and CEO, states that this week 11,000 of the company’s employees, which equates to around 13% of the workforce, have been let go in efforts “to become a leaner and more efficient company.”
The employees who were left without a job received this news via email, and whilst generous severance packages of at least 16 weeks’ pay were doled out, the one day of notice that they were permitted to say their goodbyes has understandably left many feeling shell-shocked.
The CEO refers to these layoffs as “one of the most difficult changes made in Meta’s history,” and suggests that this decision was necessitated in large part by the shift in consumer trends post-pandemic.
Meta, like most other social media apps, enjoyed a financial boost during COVID-19, as the public spent much more time at home and online than prior. However, once the lockdowns ceased and people returned to their previous lifestyles, revenue began to falter.
Since Zuckerberg failed to predict this dip he chose to hire aggressively during the pandemic. He refers to this decision in his letter, stating “I got this wrong, and I take responsibility for that.”
BREAKING: Mark Zuckerberg's video of $META layoffs has been leaked.
Here it is below.
"I want to say, upfront, that I take full responsibility." pic.twitter.com/5cJL3eEudS
— unusual_whales (@unusual_whales) November 9, 2022
In addition to Zuckerberg’s choice to grow the company beyond what was sensible, a curtailed spending on digital ads can be held partly responsible for these layoffs.
This revenue, which for sites like Meta is vital, has been slashed recently as consumers can now use Apple’s privacy tools to disable app tracking. This consequently prohibits social media sites from filtering through peoples’ data and targeting the displayed ads accordingly.
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Should this revenue source continue on its downward trend, it looks likely that another round of layoffs will be inbound.
Forrester Research analyst J.P Gownder makes this prediction, stating that this week’s decisions are “only a stopgap.”
Gownder suggests that to protect the 75,000 employees who remain at Meta, Zuckerberg and his team should focus on “trying to solve some of their fundamental business problems,” rather than attempting to keep up with diminishing profits through swingeing cuts.
Facebook changed its name to Meta on this day one year ago.
Since then, the company’s market value has declined by $622 billion. pic.twitter.com/DsCc84ascI
— Jon Erlichman (@JonErlichman) October 28, 2022
Inextricably tied to Meta is the Metaverse, a vision that Zuckerberg has reportedly poured over $10 billion into just this year.
The Metaverse is self-defined as an “open source decentralised, interoperable platform for programmable digital assets and digital identities built on Substrate.” However, it can be much more comprehensibly described as “a virtual-reality space in which users can interact with a computer-generated environment and other users.”
Zuckerberg’s conviction in the promise of this hypothetical future of digital connection has until recently kept investors’ hopes high. However, this round of layoffs has sent the Metaverse shares plummeting by over 71%, leaving them now trading at the same level as in 2015.
The CEO hopes that these 11,000 layoffs combined with the hiring freeze now instated until March 2023, and the numerous other cutbacks detailed in his letter, will bring expenses down enough that “high priority growth areas” including the “long-term vision for the metaverse” can continue to receive the funding they are dependent on.
However, should the “macroeconomic downturn, increased competition, and ads signal loss” continue to diminish Meta’s revenue, the extent to which Zuckerberg is committed to his employees will be clarified by whether it is the workforce, or the Metaverse “mirage,” that he decides to shrink.
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — In the Featured Photo: Mark Zuckerberg 2018. Featured Photo Credit: Anthony Quintano.
