The job cuts come just a week after widespread layoffs at Twitter under its new owner, billionaire Elon Musk. There have been many job cuts at other tech companies that have been hiring quickly during the pandemic. Zuckerberg also said he had made the decision to hire aggressively, anticipating rapid growth even after the pandemic ends. “Unfortunately, this didn’t turn out the way I expected,” Zuckerberg said in a prepared statement. “Not only has online commerce returned to previous trends, but the macroeconomic downturn, increased competition and loss of signal from advertising have caused our revenue to be much lower than I expected. I was wrong and I take responsibility for it. “
The company’s stock has fallen
Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown as more people stayed home and scrolled on their phones and computers. But as the lockdowns ended and people started going out again, revenue growth began to falter. An economic slowdown and a bleak outlook for online advertising — by far Meta’s biggest source of revenue — have contributed to Meta’s woes. 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, part of a chaotic overhaul as Musk took the helm. He tweeted that he had no choice but to cut jobs “when the company is losing over $4 million/day,” though he did not elaborate on the losses. Meta has alarmed investors by pouring more than US$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. Meta and its advertisers are preparing for a possible recession. There’s also the challenge of Apple’s privacy tools, which make it harder for social media platforms like Facebook, Instagram and Snap to track people without their consent and target ads to them.
Contest by TikTok
Competition from TikTok is also a growing threat as young people flock to the video-sharing app over Instagram, which is also owned by Meta. “We’ve cut costs across our business, including reducing budgets, reducing perks and shrinking our real estate footprint,” Zuckerberg said. “We are restructuring the teams to increase our efficiency. But these measures alone will not bring our expenses into line with our revenue growth, so I have also taken the difficult decision to let people go.” Zuckerberg told employees on Wednesday that they will receive an email letting them know if they are among those leaving. Access to most corporate systems will be cut off for people who lose their jobs, he said, because of the sensitive nature of that information. “We keep email addresses active throughout the day so everyone can say goodbye,” Zuckerberg said. Former employees will receive 16 weeks of base pay, plus two additional weeks for each year with the company, Zuckerberg said. Health insurance for these workers and their families will continue for six months.
