Facebook’s parent company, Meta, is laying off more than 11,000 employees and imposing a hiring freeze. Amidst the economic downturn and a slowdown in advertising revenue following the pause in spending by major advertisers, many tech companies are laying off employees to reduce capital outflow. The most high-profile example is Twitter, which recently laid off nearly 50 percent of its workforce following the chaotic takeover by Tesla and SpaceX CEO Elon Musk. Other major companies, including Microsoft, Intel, Netflix, Snap, Shopify and Lyft, have also started downsizing their workforce, laying off thousands of employees in recent weeks.
When Meta is not laying off employees, it is working on its virtual reality devices, including multiple Quest headsets. The company recently launched the Meta Quest Pro for a whopping $1,499 and confirmed that the Quest 3 will launch in 2023 at a more affordable price point. Meta is also continuing to bet big on the metaverse, having already invested a whopping $36 billion on the project, with billions more expected to be poured into it in the coming years. Investors are reportedly getting increasingly uneasy about the massive investment, especially because VR has failed to grab the attention of mainstream consumers the way Mark Zuckerberg originally envisaged.
In a letter to Meta employees on Wednesday, CEO and co-founder Zuckerberg said that the company has decided to cut its workforce by more than 11,000, or about 13 percent, “to become a leaner and more efficient company.” The letter, posted on the official Facebook website, added that the company will also take unspecified “additional steps” to cut discretionary spending and is extending its hiring freeze through Q1, 2023. Zuckerberg also apologized to the affected employees and said he is taking “accountability for these decisions and for how we got here.”
Meta Announces Massive Layoffs
According to reporting by The Wall Street Journal, Zuckerberg met with company executives on Tuesday to discuss the layoffs. He appeared “downcast” during the meeting and took full responsibility for the situation. Zuckerberg owned up to his missteps over the past couple of years, saying he highly overestimated how much money advertisers and the general public would be willing to spend online after the pandemic. Zuckerberg also said that recruiting will be disproportionately affected since the company plans to hire fewer people next year.
Unfortunately for Meta and other internet companies heavily invested in e-commerce and highly reliant on online advertising, online spending reduced drastically in recent months after a couple of bumper years during the pandemic, when much of global commerce shifted online. The changed scenario in the post-Covid era and the macroeconomic downturn made it difficult for Meta to justify the increased investments, resulting in massive layoffs. With the new cost-cutting measures in place, Zuckerberg said that the company is now focused on some of its “high priority growth areas — like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse.”
