Meta has laid off 11,000 workers, which is approximately 13% of its workforce, as it deals with profit decline amidst greater tech industry problems.
The labour downsizing came just a week after extensive layoffs at Twitter under its new billionaire owner, Elon Musk. There have been several job cuts at other tech firms that hired rapidly during the pandemic.
CEO of Meta, Mark Zuckerberg, remarked that he had made the decision to hire aggressively with the anticipation of immense growth even after the pandemic lockdowns ended. However, things didn’t go as planned.
“Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”Mark Zuckerberg, CEO Meta
Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown era because more people stayed home and scrolled on their phones and computers. But when the lockdowns ended, people started going outside again and revenue growth began to fluctuate.
An economic slowdown and a grim outlook for online advertising which is Meta’s biggest source of revenue have contributed to Meta’s profit reduction as well. This summer, the company posted its first quarterly revenue downturn in history, followed by another deeper cut in revenue in the fall.
A part of this economic challenge is company-specific, while some are tied to general economic and technological situations.
Last week, Twitter fired about half of its 7,500 employees, as part of its restructuring as Elon Musk took over the reins of the company. He tweeted that there was no choice but to cut the jobs “when the company is losing over $4M per day,” though did not provide details about the losses. Snap, the owner of Snapchat, also recently terminated the employment contract of 1,000 workers.
Although Meta has been affected by greater economic trends that have decreased spending on digital ads, the company’s challenges have been aggravated by the rise of TikTok.
Meta’s additional cost cutting measures
Zuckerberg stated that Meta is cutting costs across its business. In addition to the layoffs, a hiring freeze at the company will be extended through the first quarter of 2023. The company has also reduced its real estate footprint and with numerous employees working outside of the office, the company will transition to desk sharing for those that remain.
More cost reductions at Meta will be rolled out in coming months. Zuckerberg informed employees on Wednesday 9th November, 2022 that they will receive an email letting them know if they are among those being fired.
Former employees will receive 16 weeks of base pay, plus two additional weeks for every year with the company. Health insurance for those employees and their families will continue for six months.
Even with Wednesday’s reductions, Meta still has more than 75,000 workers around the globe. In fact, the company had 71,970 workers at the end of 2021, and less than 59,000 at the end of 2020.