Meta To Layoff Thousands of Employees
After the dramatic turn of events at Twitter last week, it is now Meta’s turn to conduct a large-scale layoff- by as early as Wednesday. According to The Wall Street Journal report, if Twitter is left aside, this could be the largest tech layoff in recent years.
It is learned that officials at Meta have asked employees not to plan any travel this week unless absolutely necessary. An announcement from Meta regarding the job cuts is likely going to take place on Wednesday. While the report does not reveal any specific number, “thousands” at Meta are going to lose their jobs in the coming days.
Meta To Focus on a Smaller Number of Areas
It seems that the expansion phase has now been paused by Meta chief Mark Zuckerberg. In a recent statement, he said that their focus would be on a “small number of high-priority growth areas.” He even hinted at the uneven growth of teams inside Meta. Some teams are going to lose importance and shrink significantly.
This news of job cuts at Meta is not surprising, however, considering its recent staffing reduction activities. Earlier in September, the company dissolved its Responsible Innovation team – the team that used to research how Meta’s products might have negative effects on users and society. Although the company said that the employees working within the team would be utilized elsewhere in the company, it also did not fail to mention that their jobs were not guaranteed.
Over-hiring during the Pandemic
Alex Heath of The Verge reported on Twitter that Meta had 48,000 employees before the pandemic. That number rose to 77,800 in the post-pandemic period. Just like other tech companies, Meta, too, over-hired during the pandemic to meet the growing demand for online services. Now, Zuckerberg plans to reduce the size of the company or at least arrest further expansion. “Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg told employees in June.
Deteriorating Business
Businesses of almost all social media companies have been deteriorating for the past few months. The stock of Meta was at 273.16 on 31st December 2020. As of writing this report, its stock hovered around 90. The company blamed macroeconomic trends for this slowdown in business. However, there are other reasons specific to Meta, because of which the stock has been nosediving for almost a year. On the one hand, there are the threats of TikTok’s growing influence and Apple’s strict anti-tracking measures, and on the other hand, Zuckerberg’s shifting away from the core social media business to the Metaverse has spooked investors.
Rising Costs
One of the primary purposes of job cuts at Meta is going to be a 10% (at least) reduction in costs. A part of this reduction is going to happen in the form of job cuts.
In 2021, Meta’s revenue stood at 29,010 million dollars. That figure has gone down by 4% in 2022 to 27,714 million dollars. On the other hand, its expenses have gone up by 19% from 18,587 million dollars in 2021 to 22,050 million dollars in 2022. This resulted in a 46% reduction in income from operations. Zuckerberg is under tremendous pressure to cut costs and arrest mounting losses.
Reality Labs, the division that oversees the Metaverse business and is responsible for the VR / AR headset arm, has been the most costly investment by Meta in recent years. It has spent around 15 billion dollars on Metaverse and on the development of AR headsets. Yet, the response from users has been lukewarm.
In this bleak situation, the company has no other choice but to walk the path of other tech giants and arrest its expansion by laying off employees. The actual figure for the layoffs is going to be revealed within a few days.