Facebook parent Meta is laying off 11,000 people, about 13% of its workforce, as it grapples with falling revenue and broader tech industry woes, CEO Mark Zuckerberg said in a letter to Facebook. employees on Wednesday.
The job cuts come just a week after widespread layoffs at Twitter under its new owner, billionaire Elon Musk. There have been numerous job cuts at other tech companies that have been hiring rapidly during the pandemic.
Zuckerberg also said he had made the decision to hire aggressively, anticipating rapid growth even after the pandemic was over.
“Unfortunately, this did not turn out the way I had hoped,” Zuckerberg said in a prepared statement. “Not only has online trading returned to previous trends, but the macroeconomic downturn, increased competition and loss of advertising signs have caused our revenue to be much lower than I expected. I was wrong and I take responsibility for it.”
Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown era as more people stayed home and moved around on their phones and computers. But as the lockdowns ended and people started going out again, revenue growth began to falter.
Get away from social media
Of particular concern to investors, Meta is pouring more than $10 billion a year into the “metaverse” as it shifts its focus away from social media. Zuckerberg predicts that the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology.
Scared investors have sent the company’s shares down more than 71% since the start of the year and shares are now trading at levels last seen in 2015.
An economic slowdown and a bleak outlook for online advertising, by far Meta’s biggest source of revenue, have also contributed to Meta’s troubles. This summer, Meta posted its first quarterly revenue decline in history, followed by another larger decline in the fall.
Some of the pain is company-specific, while some is tied to broader economic and technological forces.
Last week, Twitter laid off about half of its 7,500 employees as part of a chaotic review when Musk took over. He tweeted that there was no choice but to cut the jobs “when the company is losing over $4 million a day,” though he did not provide details on the losses.
Meta and its advertisers are preparing for a possible recession. There’s also the challenge of Apple’s privacy tools, which make it difficult for social media platforms like Facebook, Instagram and Snap to track people without their consent and target them with ads.
TikTok Competition
Competition from TikTok is also a growing threat as young people flock to the video-sharing app Instagram, which is also owned by Meta.
“We’ve cut costs across our business, including cutting budgets, cutting benefits and reducing our real estate footprint,” Zuckerberg said. “We are restructuring teams to increase our efficiency. But these measures alone will not reduce our expenses. in line with our revenue growth, so I also made the difficult decision to let people go.”
The hiring freeze at the company will extend through the first quarter of 2023, Zuckerberg said. The company has also reduced its presence in real estate and said that with so many employees working outside the office, the company will transition to shared desking for those who stay.
More cost cuts will be implemented at Meta in the coming months, Zuckerberg said.
Employee severance packages
Zuckerberg told employees Wednesday that they will receive an email letting them know if they are among those to be laid off. Access to most company systems will be cut off for people who lose their jobs, he said, because of the sensitive nature of that information.
“We will keep email addresses active throughout the day so everyone can say goodbye,” Zuckerberg said.
Former employees will receive 16 weeks of base pay, plus an additional two weeks for each year with the company, Zuckerberg said. Health insurance for those employees and their families will continue for six months.
Shares of Meta Platforms Inc. were up almost 5% before the opening bell on Wednesday.