Facebook Mother Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg said the company will cut more than 11,000 jobs.
Facebook Mother Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg said the company will cut more than 11,000 jobs in the first major layoff in the social media giant’s history.
The reductions, equivalent to about 13% of the workforce, were announced in a statement on Wednesday. The company also extends the hiring freeze until the first quarter.
“I want to take responsibility for these decisions and for how we got here,” Zuckerberg said in the statement sent to Meta employees and posted on the company’s website. “I know this is hard for everyone, and I’m especially sorry for those affected.”
The company said that while there will be reductions across the company, the recruiting team will be disproportionately affected and its corporate teams will be restructured “substantially”. Meta will also reduce its real estate footprint, review its infrastructure spending and transition some employees to desk sharing, with more announcements about cost savings in the coming months.
Meta, whose stock is down 71% this year, is taking steps to cut costs after several quarters of disappointing earnings and revenue decline. The cut, the company’s most sweeping since Facebook’s inception in 2004, reflects a sharp slowdown in the digital advertising market, an economy teetering on the brink of recession, and Zuckerberg’s multi-billion dollar investment in a speculative virtual reality push that is becoming the metaverse. named.
Shares were up about 5% in New York when markets opened on Wednesday.
Zuckerberg said in the statement that he had expected the increase in e-commerce and web traffic from the start of the Covid-19 lockdowns to be part of a permanent acceleration. “But due to the macroeconomic downturn, increased competition and the loss of advertising signal, our revenues have been much lower than expected. I misunderstood.”
Meta joins a wave of tech companies that have cut jobs or said they plan to suspend hiring in recent weeks. Business software maker Salesforce Inc. said Tuesday it has laid off hundreds of employees from sales teams, while Apple Inc., Amazon. com Inc. and Alphabet Inc. all have delayed or paused hiring. Snap Inc., the parent company of rival app Snapchat, is also scaling back, saying in August it would eliminate 20% of its workforce.
In a particularly chaotic layoff, Twitter Inc. cut about half of its workforce last week, with many employees finding they lost their jobs when they suddenly lost access to Slack or email.
At Meta, employees will continue to have access to their emails so they can say goodbye to colleagues, even though they’re cut off from more sensitive business systems, Zuckerberg said. U.S. employees who were laid off will also receive 16 weeks of their base salary as severance pay, plus two weeks for each year they have worked with the company. The company also provides six months of coverage for health care, career services and immigration support. The packages will be comparable outside the US, in accordance with local labor laws, it said.
Zuckerberg had warned employees in late September that Meta planned to cut costs and restructure teams to adapt to a changing market. The Menlo Park, California-based company, which also owns Instagram and WhatsApp, implemented a staff freeze, and the CEO said at the time that Meta expected the workforce to be smaller in 2023 than this year.
“This is clearly a different mode than we’re used to working,” Zuckerberg said in a question-and-answer session with employees in September. “For the first 18 years of the business, we actually grew rapidly every year, and more recently our sales have fallen flat to slightly for the first time. So we have to adapt.”
Even with the cuts, Meta continues to expect losses in the Reality Labs division, which houses the metaverse investments, to grow “significantly” year over year in 2023, the company said in a separate regulatory filing on Wednesday.
Zuckerberg has asked investors for patience as he pours billions into his vision for the next great computing platform after mobile phones: the metaverse, a collection of digital worlds accessible through virtual and augmented reality devices. The effort requires intensive investments in hardware and research that will not pay off in many years.
Meanwhile, the growth of the flagship social network Facebook is stagnating. The company is working to speed it up and add users to the photo-sharing app Instagram, by experimenting with a more interest-based algorithm and short videos called Reels.
Now Zuckerberg must complete his major business transitions with fewer people.