The large job cuts, 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.
Read Mark Zuckerberg’s message about the layoff of 11,000 Meta employees
The pandemic boom that drove tech companies and their valuations turned into failure this year in the face of decades-old high inflation and rapidly rising interest rates.
I got this wrong: Zuckerberg
“Unfortunately, this did not go as I expected,” Chief Executive Mark Zuckerberg said in a prepared statement.
“Not only has online commerce returned to previous trends, but the macroeconomic recession, increased competition and the loss of advertising signals meant that our revenue was much lower than I expected,” he said in a message. to employees.
“I was wrong, and I take responsibility for it.”
The Facebook founder said he knows the decision is tough for everyone. “I am particularly sorry for those who have been affected,” he said.
Zuckerberg stressed the need to become more capital-efficient and said the company will shift resources into “high-priority growth areas” such as its AI discovery engine, ads and business platforms, as well as its metaverse project.
Meta said it will pay 16 weeks of base pay plus two additional weeks for each year of service as part of the severance package and all remaining paid vacation.
According to the company, employees will receive the cost of health care for six months, and those affected will receive their vesting on November 15.
Meta said it also plans to cut discretionary spending and extend the hiring freeze throughout the first quarter.
The company’s shares, which have lost more than two-thirds of their value, are up about 3% in pre-market trading.
The troubles of Meta
Meta, like other social media companies, enjoyed a financial boost during the pandemic blockade era as more people stayed home and surfed on phones and computers. But when the lockdowns ran out and people started coming out again, revenue growth started to falter.
Explanation: Because Mark Zuckerberg’s Metaverse still leaves a lot to the imagination
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, Half recorded its first quarterly revenue decline in history, followed by another larger decline in the fall.
Some of the problems are company-specific, while others are related to broader economic and technological forces.
Last week, Twitter fired about half of its 7,500 employees, part of a chaotic overhaul when Musk took the helm. He tweeted that there was no choice but to cut jobs “when the company is losing over $ 4 million a day,” though he didn’t give details on the losses.
Meta has worried investors by pouring over $ 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 bracing for a potential 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 them with advertisements.
