After Elon Musk’s Twitter, another major technology company is set to fire its employees.
Who's cutting jobs? Mark Zuckerberg’s Meta, parent company of Facebook and Instagram, is planning to cut thousands of jobs.
How do we know? On Sunday, a Wall Street Journal report said that the planned layoffs will affect thousands of Meta’s 87,000 global employees and would be the first set of broad reductions in the company’s 18-year history.
How many possible lay-off? While the exact number of layoffs remains unknown, they could be the “largest to date at a major technology corporation in a year," according to the Wall Street Journal.
Why? The possible layoffs have been triggered for two reasons – Meta’s growth stagnancy in its core social media business, and a lack of returns in its “metaverse” technology, focussing on augmented reality (AR).
Meta hired 42,000 employees between 2020 and September 2022, leading to increased spending. They account for half of Meta’s workforce.
The company’s push on the “metaverse” has resulted in a steep rise in expenses. The “metaverse” has been pitched as a virtual environment accessed by different people through AR.
The Hitch: Investors have expressed displeasure with increased spending on the “metaverse” through the company’s Reality Labs, which made a $3.7 billion loss over the last three months. Losses are set to “grow significantly year over year” in 2023.
Meta had spent over $15 billion on the project since the start of 2021, but has been seeing a drastic drop in users.
Tanking Stocks: After Meta’s third quarter saw profits fall by 52 percent to $4.4 billion, their stock took a significant hit, dropping 25 percent in one day. Over the last year, their market value is down to $600 billion.
What did Meta say?
While Meta declined to comment on the issue, the spokesperson referred to Mark Zuckerberg’s recent comments that the company would “focus our investments on a small number of high priority growth areas.”
What had Zuck said?
“In 2023, we’re going to focus our investments on a small number of high-priority growth areas,” he said.
“So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year.
“In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”
Previous Moves: Meta’s comments were in line with their move to disband the Responsible Innovation team in September.
The team, formed of engineers, ethics professionals who worked with privacy specialists, helped identify the possible downsides to Meta products.
Silicon Valley Drops the Axe
On Friday, Elon Musk’s freshly acquired Twitter abruptly fired 3700 employees, almost half of its workforce.
On Thursday, Silicon Valley firms Stripe and Lyft announced massive layoffs, while Amazon said that it would freeze hiring in corporate offices.
(With inputs from The Wall Street Journal)