Meta, Facebook’s owner, loses 11,000 staff (13%)

Meta, Facebook’s owner, loses 11,000 staff (13%)

CEO Mark Zuckerberg announced in a letter to workers on Wednesday that Facebook’s parent company, Meta, will lay off 11,000 employees, or approximately 13% of its workforce, as a result of declining sales and broader digital sector troubles.

Just one week has passed since Twitter’s new owner, billionaire Elon Musk, implemented widespread layoffs. There have been a significant number of layoffs at other tech firms that hired fast during the pandemic.

Zuckerberg stated that he had made a mistake by hiring aggressively in the past, anticipating substantial development long after the pandemic had finished.

Zuckerberg stated in a prepared statement, “Unfortunately, this did not turn out as I anticipated.” “Not only has internet shopping returned to previous tendencies, but the financial slump, increasing competition, and advertisements signal loss have resulted in significantly lower revenue than I had anticipated. This error was my fault, and I accept responsibility for it.”

Similar to other social media sites, Meta’s revenue increased during the pandemic lockdown because more individuals stayed home and scrolled on their smartphones and computers. But once the lockdowns were lifted and people returned to the streets, income growth began to slow.

The “train crash” of Meta

A sluggish economy and a bleak prognosis for online advertising — by far Meta’s largest source of revenue — have contributed to the company’s difficulties. This summer, Meta’s quarterly sales declined for the first time in its history, followed by a second, larger decline in the fall.

Meta shares have decreased by more than 70% this year, compared to a decline of 32% for the tech-heavy Nasdaq Composite index. Late in October, Meta’s market value had decreased by over $700 billion, prompting a Wall Street expert to refer to it as a “train disaster.”

Some of the difficulties are company-specific, while others are attributable to broader economic and technical pressures.

Last week, Twitter lay off over half of its 7,500 employees, as part of a tumultuous restructuring initiated by Musk upon assuming the company’s leadership. He stated that the corporation had no choice but to eliminate the positions “when the company is losing over $4M per day,” however he did not specify the amount of the daily losses.

Other prominent technology businesses, like Amazon, Google’s parent company Alphabet, ride-hailing service Lyft, and payment processor Stripe, have either announced layoffs or halted hiring due to fears of a potential recession in the next year.

Analyst Adam Crisafulli of Vital Knowledge said in a report to investors, “The Meta cutbacks are among the largest to date of any firm (not just in IT), and we believe it portends future layoffs across Corporate America.”

Twitter requests the return of dozens of former employees days after major layoffs. 06:11

As it switches its focus away from social media, Meta has alarmed investors by investing over $10 billion per year on the “metaverse.” Zuckerberg expects that the metaverse, an immersive digital realm, will someday replace cellphones as the primary method through which people interact with technology.

Meta and its sponsors are preparing for a possible economic downturn. There is also the issue of Apple’s privacy tools, which make it more difficult for social media platforms such as Facebook, Instagram, and Snap to monitor users without their agreement and provide them targeted advertisements.

TikTok poses a rising threat to Meta as more and more young people choose the video-sharing app over Instagram, which Meta also controls.