Meta, the parent company of Facebook, announced Wednesday that it will lay off 11,000 employees. This is the largest job loss in the history of the tech giant.
Meta faces a variety of challenges and has to make a costly and uncertain bet on its metaverse pivot. This is why the job cuts are coming. This comes amid a string of layoffs at other tech companies in recent months, as the high-flying industry reacts to rising interest rates, high inflation, and fears of a recession.
CEO Mark Zuckerberg posted in a blog to employees that he shared “Today, I’m sharing the most difficult changes We’ve Made in Meta’s History.” “I have decided to reduce our team size by approximately 13% and let more than 11,000 of our highly skilled employees go.”
Many areas of the company will be affected by the job cuts, but Meta’s recruitment team will be particularly hit as “we plan to hire fewer people next year,” Zuckerberg stated in the post. He also stated that the hiring freeze would be extended to the first quarter with very few exceptions.
According to a September SEC filing, Meta had more than 87,000 employees in September.
Meta’s core business in ad sales has been affected by Apple privacy changes, tightening budgets by advertisers, and increased competition from rivals like TikTok. Meta has spent billions of dollars to create a new internet called the metaverse. Likely, this version will not be widely accepted for many years.
The company reported its second-quarter revenue decline last month and stated that its profit had fallen by half compared to the previous year. Meta’s market value is now around $250 billion after it was once valued at over $1 trillion.
Zuckerberg posted Wednesday that he wanted to be accountable for his decisions and how he got there. “I understand this is hard for everyone and I’m particularly sorry to those who have been affected.”
Following the announcement, Meta shares rose by 5% on Wednesday.
Meta isn’t the only one feeling the effects of a market decline. Inflation, rising interest rates, and other macroeconomic headwinds have caused a shocking shift in spending. This was even though tech has become more important as people move more of their lives online since the pandemic.
Zuckerberg wrote Wednesday, “At Covid’s inception, the world moved quickly online and the surge in e-commerce led a tremendous revenue growth.” Many predicted that this would lead to a steady acceleration, which would continue long after the pandemic was over. I believed the same, so I decided to increase our investments. This did not go as I had hoped.
He said, “I made this mistake and I accept responsibility for it.”
Meta had nearly twice as many employees in September than it had in March 2020 when the pandemic began.
A few tech companies have announced job cuts or hiring freezes in recent months. This is often after experiencing rapid growth during the pandemic. Lyft, a ride-sharing company, announced last week that it would be laying off 13% of its employees, and Stripe, a payment-processing company, said that it would cut 14%. Amazon, an e-commerce giant, announced that it would pause corporate hiring.
Last week, Twitter, the Facebook rival, announced mass layoffs that would affect all positions within the company when Elon Musk, its new owner, took over.
Zuckerberg stated that the company will “roll out further cost-cutting changes” over the next few months in addition to the layoffs. Meta, like many tech giants, is well-known for its large, perk-filled office buildings. Zuckerberg said that Meta is now rethinking its real property needs and will “transition to desk sharing for those who spend most of their time outside of the office.”
He stated, “Overall, this will lead to a significant cultural shift in the way we operate.”