Meta, the parent company of Facebook, Instagram and WhatsApp, has confirmed that it is preparing to cut thousands of jobs, impacting 13% of its global workforce.
The news comes mere weeks after weak performances from Facebook and Instagram saw $80 billion wiped off Meta’s market value and its share price drop to less than a third of what it was at the start of the year.
On Wednesday, Meta confirmed earlier reports about the layoffs and announced it would be reducing its global workforce by 13%, leading to 11,000 employees losing their jobs. In a statement, Meta CEO Mark Zuckerburg said that the company has already sought to cut costs across the business, including scaling back budgets, reducing perks, shrinking our real estate footprint, and restructuring teams to increase our efficiency.
However, Zuckerburg conceded that “these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go." He added that the company would also be taking a number of additional steps to become a “leaner and more efficient company,” by cutting discretionary spending and extending our hiring freeze through the first quarter.
Meta’s poor third quarter 2022 results represent the second consecutive quarter of declining revenue for the company. Third quarter revenue fell to $27.71 billion, a decrease of 4% year-over-year, while net income dropped 52% to $4.4 billion.
Other tech companies have also been announcing layoffs in the wake of weak quarterly performances.
In Meta's case, some of the company’s biggest losses were recorded by Reality Labs, the division responsible for developing the Metaverse, which saw its revenue fall by almost half from a year earlier. In the third quarter alone, the division suffered a revenue loss of $3.7 billion, bringing its total yearly losses to $9.4 billion, with Meta anticipating these losses would “grow significantly year over year” in 2023.
In the summer of 2022, the global economic downturn saw a number of tech companies—including Oracle, Google, Microsoft and Apple—announce a hiring freeze in an attempt to reduce spending and steady their financial outlook.
Meta also hinted it would also be seeking to slim down operations, with CEO Mark Zuckerberg reportedly saying, “realistically, there are probably a bunch of people at the company who shouldn’t be here,” during a call with employees a month before Meta posted its second quarter results.
While speaking to investors after the company posted its third quarter results, Zuckerberg 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.”
He added that, “in aggregate” Meta expects to end 2023 as either roughly the same size, or even a slightly smaller organization than it currently is.
Cutting the workforce is often an “easy option”
Discussing the state of the hiring landscape back in August, Jack Kelly, founder and CEO of The Compliance Search Group and Wecruiter.io, told Computerworld that when businesses need to take steps to mitigate poor economic conditions, cutting costs within the workforce is often an easy go-to option.
“The sad part is companies almost always immediately look to cut costs of the working people,” he said. “It's never the CEO saying to the board of directors: ‘Hey, let's all take a big cut.’”
The expected job cuts at Meta come hot on the heels of Twitter’s new owner Elon Musk firing almost half of the social media platform’s workforce after his first week in charge.
On Friday November 4, some staff posted on Twitter that they’d found themselves locked out of their laptops and had access to the company's Gmail and Slack revoked. According to former staff members, the teams impacted the most by Musk’s cuts include product trust and safety, policy, communications, tweet curation, ethical AI, data science, research, machine learning, social good, accessibility, and certain core engineering teams.
Musk also fired Twitter’s senior leadership alongside a number of company leaders, including the vice president of consumer product engineering. He justified the job cuts by tweeting: “Regarding Twitter's reduction in force, unfortunately there is no choice when the company is losing over $4M/day.” The tweet has since been deleted.
(Note: This story has been updated with news that Meta has confirmed layoffs.)