Meta announces 11,000 jobs cut
Mark Zuckerberg apologizes for ‘getting it wrong’ as Meta announces 11,000 jobs cut – around 13% of its workforce – in one of the biggest US layoffs this year after shares lost two thirds of their value
- Meta will let go of 13 per cent of its workforce, more than 11,000 employees
- One of biggest tech layoffs this year as Facebook parent battles soaring costs
- The broad job cuts follow thousands of layoffs at other major tech companies
Facebook and Whatsapp owner Meta has announced massive lay offs amid soaring costs and a weak advertising market for the tech company.
Mark Zuckerberg apologized for ‘getting it wrong’ as Meta announced 11,000 jobs were cut.
The job cuts account for around 13 per cent of Meta’s workforce, which are the first in Meta’s 18-year history, follow thousands of layoffs at other major tech companies including Elon Musk-owned Twitter and Microsoft Corp.
The pandemic boom that boosted tech companies and their valuations has turned into a bust this year in the face of decades-high inflation and rapidly rising interest rates.
Zuckerberg delivered the grim news about job cuts on a call with hundreds of Meta executives
The Facebook founder was reportedly downcast during the announcement and also accepted responsibility for some of the company’s missteps, saying his optimism led to overstaffing
Meta’s share price has tumbled 71.5 percent since the beginning of the year and the company has also lost billions through its ‘Metaverse’ project, which includes virtual worlds for users
‘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,’ Chief Executive Officer Mark Zuckerberg said in a message to employees.
‘I got this wrong, and I take responsibility for that.’
Zuckerberg stressed on the need to become more capital efficient and said the company would shift resources to ‘high priority growth areas’ such as its AI discovery engine, ads and business platforms, as well as its metaverse project.
Meta said it would pay 16 weeks of base pay plus two additional weeks for every year of service as a part of the severance package and all remaining paid time off.
Employees will get cost of healthcare for six months and those impacted will receive their Nov. 15 vesting, according to the company.
Meta said it also plans to cut discretionary spending and extend its hiring freeze through the first quarter.
The company’s shares, which have lost more than two-thirds of their value, were up about 3 per cent in pre market trading.
The job losses follow growing speculation that Meta was poised to announce massive cuts to its headcount by up to 10 percent.
Details of Meta’s plans come after Twitter’s new chief, Elon Musk, brutally released half of its staff, about 3,750 employees, last week – becoming the latest tech firm to wield the axe.
Meta, which owns Facebook, Instagram and WhatsApp, has around 87,000 employees – so cuts of 10 percent would amount to more than double the headcount lost by Twitter.
Many Twitter employees learned their positions had been terminated after their access to company systems, like Slack and email, were abruptly cut off.
The controversial move from Twitter was followed by a sudden U-turn after management came to understand that dozens of the fired employees might be necessary to build the new features for the short form online platform that Musk wants.
The company still has about 3,700 employees. Those remaining are being pushed by Musk to work quickly to develop and implement new features.
According to posts in the Meta employee-only group on Fishbowl, a work-focus media platform, the companies app department is expected to be reorganized.
Meta’s marketing division, partnership department and HR team ‘will be harder hit than others,’ sources knowledgeable about the Fishbowl page told Insider.
Zuckerberg said on the last earnings call in late October: ‘In 2023, we’re going to focus our investments on a small number of high priority growth areas.
Zuckerberg will want to avoid the backlash faced by Elon Musk over his brutal Twitter layoffs
About half of Twitter’s employees, roughly 3,750 people, were axed after Elon Musk’s takeover
‘So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year.’
Zuckerberg said in October that he expected to end 2023 ‘roughly the same size’ signaling that some jobs could be recouped following the layoffs.
It is thought that Meta could launch another hiring drive next year which focuses on its Reality Labs arm, the department which takes the lead on the Metaverse.
Meta recently forecast a weak holiday quarter and significantly more costs next year wiping about $67 billion off Meta’s stock market value, adding to the more than half a trillion dollars in value already lost this year.
The disappointing outlook comes as Meta is contending with slowing global economic growth, competition from TikTok, privacy changes from Apple, concerns about massive spending on the metaverse and the ever-present threat of regulation.
Meta has placed a big bet on its Metaverse being the next big frontier of the technology industry, with CEO Mark Zuckerberg funneling more than $36 billion into the project that many consider – so far at least – to be failing.
The CEO has subsequently seen more than $30 billion of those funds evaporate in a matter of months, while his net worth – which is largely tied up to his company’s valuation – was reported to have lost $88 billion.
According to documents seen by the WSJ, the company planned to hit 500,000 users of its virtual reality platform, Horizon Worlds, by the end of 2022.
The number at the time of writing is less than 200,000, still well below a revised goal of 280,000 by the end of 2022. The documents also revealed that the majority of those 200,000 users, don’t come back after entering the system once with many complaining most of the areas are bereft of other users.
Meanwhile, Meta’s Reality Labs business unit, which oversees its VR and AR activities, has already lost $9.4 billion so far in 2022, according to CNBC.
Those losses, Meta has said, will ‘grow significantly year-over-year’. ‘Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run,’ Meta said last month
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