Meta cuts 11,000 staff in largest cull in company’s history (From The Financial Times)
~ Thursday, November 10, 2022 Blog Post ~
By Cristina Criddle in London and Hannah Murphy in San Francisco, November 9, 2022
Source: The Financial Times — https://www.ft.com/content/348068b1-24d9-434b-9ae7-6599027bf84f
Breaking news: Meta has laid off more than 11,000 employees, reducing its headcount by around 13%, in the most dramatic cull in its history as the social media giant battles falling revenues and rising competition.
Mark Zuckerberg says pandemic revenue growth has not been sustained In addition to the job cuts; Meta says its ‘real estate footprint’ will be ‘shrunk’, suggesting a number of offices will be closed.
Meta has laid off more than 11,000 employees, reducing its headcount by about 13 per cent, in the most dramatic cull in its history as the social media giant battles falling revenues and rising competition.
Chief executive Mark Zuckerberg emailed employees on Wednesday morning informing them of the redundancies. “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,” he said.
Zuckerberg said revenue growth experienced during the pandemic had not been sustained, advertising performance was down and ecommerce had declined, all in an environment of economic downturn and increased competition. “[These factors] caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that,” he added.
Teams across the business are affected, with its recruitment division “disproportionately affected” as Meta extends its hiring freeze. US employees will receive a severance package of 16 weeks of base pay and two additional weeks of pay for every year of service, with no cap.
Packages will be similar for international employees and will be laid out soon, the email added. Affected staff will have access to Meta systems revoked on Wednesday, apart from access to email “so everyone can say farewell”, said Zuckerberg.
Meta shares rose more than 7 per cent in midday trading on Wednesday. Other cost-saving measures include reducing budgets and perks for staff, it added. The company’s “real estate footprint” will be “shrunk”, suggesting a number of offices will be closed. Staff who mostly work remotely will be asked to desk share. Zuckerberg said more changes will be announced in the coming months.
An economic slowdown including rising inflation and cost of capital has hammered Big Tech groups this year. Investors wiped more than $89 billion from the company’s market capitalisation in late October after Meta posted declining revenues, and Zuckerberg failed to convince investors that his costly bet on building a digital avatar-filled metaverse, which is not expected to be profitable for many years, was paying off.
But even staff working on Meta’s vision for the metaverse have been affected, with individuals working on Horizon Worlds, its social virtual reality experience, and Quest, its virtual reality headset, announcing departures.
Meta, which owns Facebook, Instagram and WhatsApp, has also acknowledged it faces increasing competition from rivals such as short-form video app TikTok and difficulties in targeting and measuring advertising because of changes Apple made to its privacy policy. Its share price has fallen 71.5 per cent in the year to date.
“Meta is amidst an identity crisis,” said Mike Proulx at technology research company Forrester. “The company has one foot in a risky long-term metaverse bet and another foot failing to compete with TikTok. Neither bodes well for Meta in the short term and more severe cost-cutting measures were inevitable as the company attempts to regroup heading into a bleak 2023.”
The restructuring comes just days after the new owner of Twitter, Elon Musk, fired half of the social media site’s 7,500-strong workforce in his attempt to overhaul the company’s business model, while a growing number of advertisers have pulled their spending from the platform entirely over concerns around his plans to relax content moderation.
Meanwhile, smaller rival Snap has also laid off about a fifth of its workforce, after posting its slowest growth. In September, Zuckerberg announced internally he was implementing a hiring freeze for most roles across the company and intended to minimise costs. Since then, directors had been asked to draft lists of 15 per cent of their team members to be put on performance review, meaning they would have to find alternative roles or leave within 30 days, three people said.
Two UK-based employees told the Financial Times that staff were waiting for formal notices of redundancies. Under UK law, job losses of more than 100 staff require 45 days of consultation until the first departure. “Unfortunately, your role is potentially impacted by this proposed redundancy programme and, therefore, we will now enter into a period of collective consultation,” an email to a UK staff member seen by the Financial Times said. Employees would be able to “seek clarification, ask questions, and consider potential alternate proposals”, it added.
Additional reporting by Ian Johnston in London
This article has been amended since first publication to remove a wrongly attributed quotation Copyright The Financial Times Limited 2022. All rights reserved.
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References:
https://www.facebook.com/cnbc/videos/644105923795895/
https://www.ft.com/content/348068b1-24d9-434b-9ae7-6599027bf84f
