Meta, the parent company of Facebook, Instagram and WhatsApp, has confirmed that it is preparing to cut thousands of jobs, which will affect 13% of its global workforce.
The news comes just weeks after underperforming Facebook and Instagram caused Meta's market value to be lost by €80bn and its share price plummeted to less than a third of what it was. at the beginning of the year.
On Wednesday, Meta confirmed earlier reports of layoffs and announced it would cut its global workforce by 13%, resulting in the loss of 11.000 employees. In a statement, Meta CEO Mark Zuckerburg said the company has already sought to reduce costs across the business, including cutting budgets, reducing profits, reducing our real estate footprint and restructuring teams. to increase our efficiency.
However, Zuckerburg conceded that "these measures alone will not align our spending with our revenue growth, so I also made the difficult decision to let people go." He added that the company would also take a number of additional steps. steps to become a "more lean and efficient business," by reducing discretionary spending and extending our hiring freeze through the first quarter.
Meta's poor third quarter 2022 results represent the company's second consecutive quarter of revenue decline. Third-quarter revenue fell to €27,71 billion, down 4% year-over-year, while net profit fell 52% to €4,4 billion.
Some of the company's biggest losses were recorded by Reality Labs, the division responsible for the development of Metaverse, which saw its revenue fall by almost half from the previous year. In the third quarter alone, the division suffered a revenue loss of $3700 billion, bringing its total annual losses to $9400 billion, with Meta forecasting these losses would "increase significantly year-over-year" in 2023.
In the summer of 2022, the global economic downturn saw several tech companies, including Oracle, Google, Microsoft, and Apple, announce hiring freezes in an effort to cut spending and stabilize their financial outlook.
Meta also hinted that it would also look to scale back its operations, with CEO Mark Zuckerberg reportedly saying "realistically speaking, there's probably a group of people at the company that shouldn't be here" during an interview. month before Meta released its second-quarter results.
Speaking to investors after the company released its third-quarter results, Zuckerberg said: "In 2023, we will focus our investments on a small number of high-priority growth areas," he said. "That means some teams will grow significantly, but most other teams will be flat or shrink over the next year."
He added that "in general," Meta expects to end 2023 about the same size, or even a slightly smaller organization, than it is now.
Downsizing is often an 'easy option'
Speaking about the state of the hiring landscape in August, Jack Kelly, founder and CEO of The Compliance Search Group and Wecruiter.io, told Computerworld that when companies need to take action to mitigate poor economic conditions, cutting labor costs is often be an easy task. usage option.
“The saddest thing is that companies are almost always looking to cut costs for workers right away,” he said. "It's never the CEO who says to the board, 'Hey, we're going to get a big cut.'"
The expected job cuts at Meta come on the heels of new Twitter owner Elon Musk laying off nearly half of the social media platform's workforce after his first week in charge.
On Friday, November 4, some staff members posted on Twitter that they had been blocked from accessing their laptops and that access to company Gmail and Slack had been revoked. The teams most affected by Musk's cuts include product trust and safety, policy, communications, tweet curation, ethical AI, data science, research, machine learning, social good, accessibility, and some core engineering teams.
Musk also fired Twitter's senior management along with several CEOs, including the vice president of consumer product engineering. He justified the job cuts by tweeting: "When it comes to reducing the strength of Twitter, unfortunately there is no other option when the company is losing over €4 million a day." The tweet has since been deleted.
(Note: This story has been updated with news that Meta has confirmed layoffs.)
Copyright © 2022 IDG Communications, Inc.