November 9, 2022
Meta Platforms is planning to begin large-scale layoffs this week, according to people familiar with the matter, in what could be the largest round in a recent spate of tech job cuts after the industry’s rapid growth during the pandemic, reports The Wall Street Journal.
The layoffs are expected to affect many thousands of employees and an announcement is planned to come as soon as Wednesday, November 9. Meta reported more than 87,000 employees at the end of September. Company officials already told employees to cancel nonessential travel beginning this week, insiders said.
The planned layoffs would be the first broad head-count reductions to occur in the company’s 18-year history. While smaller on a percentage basis than the cuts at Twitter this past week—which hit about half of that company’s staff—the number of Meta employees expected to lose their jobs could be the largest to date at a major technology corporation in a year that has seen a tech-industry retrenchment.
A spokesman for Meta declined to comment, referring to CEO Mark Zuckerberg’s recent statement that the company would “focus our investments on a small number of high-priority growth areas.
“So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year,” he said on the company’s third-quarter earnings call on October. 26. “In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”
The Wall Street Journal reported in September that Meta was planning to cut expenses by at least 10% in the coming months, in part through staff reductions.
The cuts expected to be announced this week follow several months of more targeted staffing reductions in which employees were managed out or saw their roles eliminated.
Meta, like other tech giants, went on a hiring spree during the pandemic as life and business shifted more online. It added more than 27,000 employees in 2020 and 2021 combined; and added a further 15,344 in the first nine months of this year—about one-fourth of that during the most recent quarter.
Meta’s stock has fallen more than 70% this year. The company has highlighted deteriorating macroeconomic trends, but investors also have been spooked by its spending and threats to the company’s core social-media business. Growth for that business in many markets has stalled amid stiff competition from TikTok; and Apple’s requirement that users opt in to the tracking of their devices has curtailed the ability of social-media platforms to target ads.
Last month, investment firm Altimeter Capital said in an open letter to Zuckerberg that Meta should slash staff and pare back its metaverse ambitions, reflecting the rising discontent among shareholders.
Much of Meta’s ballooning costs stem from Zuckerberg’s commitment to Reality Labs; a division of the company responsible for virtual- and augmented-reality headsets, as well as the creation of the metaverse. Zuckerberg has billed the metaverse as a constellation of interlocking virtual worlds in which people will eventually work, play, live, and shop.
The effort has cost the company $15 billion since the beginning of last year. But despite investing heavily in promoting its virtual-reality platform, Horizon Worlds, users have been largely unimpressed. Last month, the Journal reported that visitors to Horizon Worlds had fallen over the course of the year to well under 200,000 users, about the size of Sioux Falls, South Dakota.
“I get that a lot of people might disagree with this investment,” Zuckerberg told analysts on the company’s earnings call last month before reaffirming his commitment. “I think people are going to look back on decades from now and talk about the importance of the work that was done here.”
Research contact: @WSJ