Meta Begins Slashing Jobs: Facebook’s CEO Mark Zuckerberg announced that the company will lay off more than 11,000 employees in its first major round of layoffs.
According to a statement released Wednesday, the reductions amount to about 13% of the workforce. Additionally, the company will extend its hiring freeze through the first quarter.
“I want to take responsibility for these decisions and how we arrived at this point,” Zuckerberg said. “I know this is difficult for everyone, and I am especially sorry for those who have been affected.”
The company said that while reductions will occur across the company, its recruiting team will be disproportionately affected and its business teams will be restructured “more substantially.” The company will also reduce its real estate footprint, review infrastructure expenditures, and transition some employees to desk sharing as part of its cost-cutting efforts.
After disappointing earnings and revenue declines for several quarters, Meta is taking steps to cut costs. In addition to the slowdown in the digital advertising market, an economy teetering on the brink of recession, and Zuckerberg’s multibillion-dollar investment in a speculative virtual-reality push known as the metaverse, this retrenchment is the most drastic since Facebook was founded in 2004.
Shares rose 3.5% in premarket trading on Wednesday.
Zuckerberg said he expected the surge in e-commerce and web traffic to continue in the future. Our revenue has been much lower than expected due to the macroeconomic downturn, increased competition, and loss of ad signals. I got that wrong.”
Zuckerberg warned employees earlier this year that Meta was reorganizing teams and cutting expenses. As a result of a hiring freeze implemented by Meta, which also owns Instagram and WhatsApp, Meta is expected to have fewer employees in 2023.
Zuckerberg said during a Q&A session in September that “this is a different mode than we’re used to.” For the first 18 years of our company, our revenue grew rapidly nearly every year, but more recently it has been flat to slightly down for the first time in a long time. We need to adjust.”
As Zuckerberg pours billions into his vision for the next big computing platform after mobile phones: the metaverse, a collection of digital worlds accessible through virtual and augmented reality, he is asking investors for patience. Hardware and research investments may not pay off for many years to come.
As a result, Facebook’s flagship social network is experiencing stagnant growth. Using a more interest-based algorithm and short-form videos called Reels, Instagram is experimenting with ways to accelerate this growth.
As a result of this strategy, Meta’s advertising business isn’t as established as Reels, costing potential revenue until the ads begin to succeed. With fewer people, Zuckerberg must carry out his major corporate transitions.
Meta’s reductions follow those at many other major technology companies. Apple Inc., Amazon.com Inc., and Alphabet Inc. have all slowed or paused hiring, according to Salesforce Inc.
The parent company of rival app Snapchat, Snap Inc., announced in August that it would cut 20% of its staff.
As a result of its sale to billionaire Elon Musk last week, Twitter Inc. cut approximately 50% of its workforce. Employees were suddenly cut off from Slack or email when they found out they had lost their jobs as a result of those layoffs. The moves were necessary to stem losses at the social network, Musk said. Later, he asked some fired workers to return.
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