Social media giant Meta (previously known as Facebook) announced it will fire around 11,000 employees in a bid to reduce costs following a drop in revenue.
The job cuts come just a week after widespread layoffs at Twitter under its new owner, billionaire Elon Musk.
Meta Chief Executive Officer (CEO) Mark Zukerberg announced in his latest blog on Wednesday about the decision and termed it a difficult one.
“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,” Mark’s blog post 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,” Zuckerberg added.
According to Meta, the fired employees will receive 16 weeks of base pay along with two additional weeks for every year of service. Employees will get the cost of healthcare for six months.
Zuckerberg as well said that he had made the decision to hire aggressively, anticipating rapid growth even after the pandemic ended. Unfortunately, this did not play out the way I expected, he said in a prepared statement.
Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.
Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown era because more people stayed home and scrolled on their phones and computers.
But as the lockdowns ended and people started going outside again, revenue growth began to falter.
An economic slowdown and a grim outlook for online advertising by far Meta’s biggest revenue source have contributed to Meta’s woes.
This summer, Meta posted its first quarterly revenue decline in history, followed by another, bigger decline in the fall.
Some of the pain is company-specific, while some is tied to broader economic and technological forces.
Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic overhaul as Musk took the helm.
He tweeted that there was no choice but to cut the jobs when the company is losing over 4M/day,” though did not provide details about the losses.
Meta has worried investors by pouring over 10 billion a year into the metaverse as it shifts its focus away from social media.
Zuckerberg predicts the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology.
Meta and its advertisers are bracing for a potential recession.
There’s also the challenge of Apple’s privacy tools, which make it more difficult for social media platforms like Facebook, Instagram and Snap to track people without their consent and target ads to them.
Competition from TikTok is also a growing threat as younger people flock to the video-sharing app over Instagram, which Meta also owns.
