Meta Platforms Inc. has announced to lay off 13% of its workforce as Facebook parent battles soaring costs and a weak advertising market
In one of the biggest layoffs by a tech enterprise, Meta Platforms Inc. has announced to lay off 13% of its workforce or more than 11,000 employees, as Facebook parent battles soaring costs and a weak advertising market.
This is the first time in the 18 years history of Meta that they have to lay off employees. The pandemic boom that boosted tech companies and their valuations has turned into a bust this year in the face of decades-high inflation and rapidly rising interest rates.
Meta, whose shares have lost more than 2/3rd of their value, said it also plans to cut discretionary spending and extend its hiring freeze through the first quarter.
In a message to its employees, the Chairman of Meta and Founder of Facebook – Mark Zuckerberg said, “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history.”
He further said, “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.”
Online advertising is one of the biggest sources of revenue for Meta. An economic slowdown and a grim outlook for online advertising have contributed to the company’s woes. This summer, Meta posted its first quarterly revenue decline in history, followed by another, bigger decline in the next quarter. Meta’s profits fell to U.S. $ 4.4 billion in the last quarter, a 52% decrease Year-on-Year.
While some of the factors are internal, the others are tied to broader economic and technological forces. Meta has worried investors by pouring more than U.S. $ 10 billion a year into the metaverse as it shifts its focus away from social media.
“Fundamentally, we’re making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we’re operating efficiently,” wrote Zuckerberg.
Meta and its advertisers are bracing for a potential recession. There is also the challenge of Apple’s privacy tools, which make it more difficult for social media platforms such as Facebook, Instagram and Snap to track people without their consent and show them specially tailored advertisements.
Meta is also facing competition from TikTok which is a growing threat as younger people flock to the video sharing app as compared to Meta owned – Instagram.
Prior to this, tech firms like now Elon Musk-owned Twitter and Microsoft have also announced to lay off employees. Twitter has recently laid off about half of its 7,500 employees, part of a chaotic overhaul after Musk took the charge. He said that there is no choice but to cut the jobs as the company is losing more than the U.S. $ 4 Million per day.
