Meta (the group that owns Facebook, Instagram and WhatsApp) announced this Wednesday that it will cut 11,000 jobs, 13% of its workforce, in the first large round of mass layoffs in the company’s 18-year history. The measure, which has been communicated by Mark Zuckerberg in a message to workers, will affect all the business units of the group, which has been severely affected by the decline in revenue from advertising and the drop in the stock market value (more than 70% since January). “I want to take responsibility for these decisions and for how we got here”, recognized the president of Meta.
Zuckerberg acknowledges that he was wrong to assume that the growth of the business would continue at the rate reached during the pandemic, two years in which the big technology companies increased their income like foam: “At the beginning of covid, the increase in electronic commerce led to tremendous growth in revenue. Many people predicted that this permanent acceleration would continue even after the pandemic was over. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not go as expected.” Not only has e-commerce returned to pre-pandemic levels, but “the macroeconomic downturn, increased competition, and falling ads” have seen Meta’s revenue much lower than it expected. “I was wrong and I take responsibility for it,” he admitted.
The cuts, which come days after Twitter’s biggest job cut, will also affect the workspace and some employees will have to share a table. Also, there will be no hiring until at least past the first quarter of 2023. The pandemic boom that buoyed tech companies and their valuations has turned into a bust this year due, in part, to rapidly rising interest rates. .
The results of the company had already set off all the alarms at the end of October. The group’s profit contracted 52% in the third quarter of 2022, to 4,395 million dollars. These numbers represented the second quarterly drop in revenue in its history. Although the turnover amounted to 27,714, 4% less than in the same period of the previous year, the accounts caused a stock market crash, triggering the loss of a quarter of its value on the Stock Market, falling by 24.56%. And that meant losing about 89,000 million dollars in a single day.
Investment efforts are focused on the metaverse, that virtual world that Zuckerberg believes will star in the future of the Internet. Last year it announced the change of name of Facebook, which began to call you Meta to reinforce the message that this division is a priority, and announced investments of 11,000 million in 2022. At the moment, it is a sunk investment: some have been sold 15 million Quest 2 glasses and Beat Saber, the most successful video game on the platform, has reaped 100 million dollars. Still insignificant figures compared to the tens of billions dedicated to the project and that have resulted in criticism of the company for dedicating so many resources to the metaverse while revenues already showed signs of weakness months ago.
In this Wednesday’s message, Zuckerberg renews his commitment to the metaverse. “We’re going to focus our resources on a smaller number of priority growth areas,” including artificial intelligence, advertising and business platforms, and his “long-term vision” for the metaverse. Thus, Meta will cut costs by reducing budgets, labor benefits and office costs, in addition to layoffs.
The company offers those laid off, who will receive an email throughout the day with information both in the United States and in the rest of the world, compensation equivalent to 16 weeks’ salary, plus two additional weeks for each year on the workforce, without bumpers. It will also pay for pending vacations and pay for six months of health insurance for employees and their families, among other measures.
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