Meta (Facebook) is set to lay off 11,000 employees given its new strategy focused on restructuring its business approach and cutting labour costs.
- Meta, the parent company of Facebook, is laying off 13% of its workers in an effort to restructure its operations and cut costs.
- This comes in the wake of other Tech companies, including Twitter and Snap, cutting down on their labour, citing various reasons.
- Zuckerberg, CEO of Meta (Facebook), has emphasized the need for the company to restructure its goals, prioritizing its metaverse project and a few others as it moves forward.
To cut costs in the wake of dismal profits and a decline in sales, Facebook’s parent company Meta announced that more than 11,000 staff would be laid off. The widespread employment losses come after layoffs at other prominent tech firms, including Microsoft and Twitter, recently acquired by Elon Musk.
In a blog post published Today, Mark Zuckerberg, CEO of Meta, stated, “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.”
In addition, Zuckerberg said, “We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.”
The CEO attributed the layoffs to a reversal in online retail patterns following Covid lockdowns, a broader macroeconomic slowdown, and increasing competition, all of which contributed to Meta’s revenue being significantly lower than anticipated.
“At the start of Covid, the world rapidly moved online, and the surge of e-commerce led to outsized revenue growth,” according to Zuckerberg.
He continued, “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”
Why Has Meta (Facebook) Faced a Slight Downturn?
A predicted US economic slowdown has weakened many tech firms’ momentum. Still, the company’s prospects have also been impacted by fierce rivalry from competitors and poor strategy.
A possible recession has Meta and its advertisers on high alert. Apple’s privacy measures present another obstacle since they make it harder for social media sites like Facebook, Instagram, and Snap to monitor users without permission and target ads at them.
TikTok’s competition is also becoming increasingly concerning as younger users prefer the video-sharing app to Instagram, which Meta also owns.
The stock price of Meta has plummeted as bad news has accumulated. In the last several weeks, it has lost $700 billion in market value, and its stock price has fallen by more than 70% this year. But after Zuckerberg disclosed the job layoffs, the company’s stock price increased by more than 4% in trading before the market opened.
Zuckerberg emphasized the need for the company to become more capital-efficient in his message and stated that the company would transfer resources to “high priority growth areas”, including its ads and business platforms, AI discovery engine, and also its metaverse project.
Other IT companies are announcing widespread layoffs alongside Meta. Snap announced in August that it wanted to reduce its employment by 20%, while Twitter has let go of thousands of people under the direction of its new owner, Elon Musk. Salesforce acknowledged this week that it has laid off hundreds of employees.
It is obvious that big tech companies are facing a significant downturn in this period caused by several overlaying factors. It is only expected that the layoffs will be a way to recover amidst this downturn and boost these companies’ revenue generation.
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