Facebook, Instagram, and WhatsApp’s parent company Meta has confirmed a huge round of layoffs, amounting to 13% of its workforce.
“I want to take accountability for these decisions and for how we got here,” CEO and cofounder Mark Zuckerberg wrote in a statement. “I know this is tough for everyone, and I’m especially sorry to those impacted.”
The news comes as companies across the technological spectrum have announced huge swathes of redundancies in recent weeks, with Twitter laying off some half of its 7,500 workforce in the wake of Elon Musk’s arrival at the helm, while Stripe last week revealed plans to cut its headcount by 14%, or 1,120 employees. And just yesterday, Salesforce confirmed it had laid off “hundreds” of workers.
Meta’s round of layoffs was widely rumored and expected, but we now know the full extent of the company’s plans, and what this will mean for those impacted.
Meta’s headcount equates to around 87,000, meaning that 11,000 people will be leaving Meta globally. According to Zuckerberg, each employee will receive 16 weeks of severance pay, plus two extra weeks for each year of service. So for example, someone who has worked at Meta for four years will effectively get six months pay.
On top of that, Meta said that workers will also be paid for all remaining unused time off; it will honor stock-based compensation that was vesting through November 15; and pay health insurance for employees and their families for six months.
Meta-morphic
Meta’s path to where it finds itself today is a familiar one shared by countless other companies over the past year, though the tech titan’s effects are amplified somewhat by its sheer size. After becoming one of the few companies ever to hit a trillion-dollar market capitalization — right in the middle of the pandemic — the company sought a new direction in the form of the metaverse, rebranding from Facebook to Meta in the process.
While it would be unfair to apportion blame for Meta’s current predicament to this pivot, the company has been throwing a lot of money at a project that is clearly nowhere near ready for prime time, with critics arguing that it was losing focus of its core business in pursuit of something that is a long way off from happening, if it ever happens.
Meta’s market cap has plummeted over the past year to around $250 billion today, a figure the company last experienced in 2015 when it was on a major ascendency. The company also posted its first every quarterly decline back in June, and later confirmed it was freezing its hiring plans as part of broader cost-cutting measures, with its revenue dip continuing into the following quarter too.
In truth, a combination of factors have contributed to Meta’s decline. Apple’s App Tracking Transparency (ATT) framework, which rolled out last year, has hit Meta’s advertising revenue as the company predicted it would, with Apple’s own ads business benefiting as a result. And the rise of relative newcomers such as TikTok has also impacted where advertisers choose to spend their money.
But the elephant in the room here is the impact of the so-called Great Reset, a phenomenon we’ve seen in countless other places where companies that went in way too deep off the back of a pandemic-driven surge in revenues were brought back down to Earth with a jolt when the boom reversed course. And this is precisely where Mark Zuckerberg says Meta went wrong too, compounded by the broader economic downturn.
“At the start of Covid, the world rapidly moved online and the surge of ecommerce led to outsized revenue growth,” Zuckerberg wrote. “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. 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.”
