Meta, the owner of Facebook, Instagram, and WhatsApp, has stated it will reduce its workforce by 13 percent.
The first mass layoffs in the company’s history will result in the termination of 11,000 employees out of a total workforce of 87,000.
Mark Zuckerberg, chief executive officer of Meta, described the layoffs as “the most challenging changes in Meta’s history.”
The news follows massive layoffs at Twitter, which eliminated over half of its workforce, and other Internet companies.
“I know this is difficult for everyone, but I’m especially sorry for those affected,” he added.
Mr. Zuckerberg attributed tremendous long-term growth prospects to the company’s revenue growth during the pandemic.
“Many people projected that this acceleration would be permanent,” he wrote. “I agreed, therefore I decided to dramatically expand our investments.”
Instead, he stated that the “macroeconomic slump” and “increasing competitiveness” led to significantly lower income than anticipated.
“I made a mistake, and I accept responsibility for it,” he added.
The news of layoffs was widely anticipated.
Tuesday, Mr. Zuckerberg informed hundreds of Meta executives of the intentions, according to the Wall Street Journal.
Priorities
Mr. Zuckerberg stated that the firm will prioritize development areas such as artificial intelligence, advertising, and “our long-term ambition for the metaverse.”
Meta will also reduce expenses in other areas, such as by spending less on buildings and offices and expanding desk-sharing.
Soon, affected Meta employees will receive an email with an opportunity to ask questions, he said.
Employees in the United States will earn 16 weeks of salary plus an additional week for each year of service. Among the additional perks will be the continuation of family health insurance for six months.
Support outside the United States will be comparable, but there will be a distinct redundancy procedure to accommodate local employment regulations.
UK and Irish
According to local estimates, Meta’s European headquarters are located in Dublin, where the company employs 3,000 direct employees and many more contractors.
According to a report with Companies House, Meta employs around 5,000 workers in the United Kingdom as of December 2021.
However, Meta has not yet disclosed the number of layoffs that would occur in any country.
Kevin Poulter, an employment attorney at Freeths, stated that Meta needed to adhere to UK redundancy legislation.
Within a week, he said, confidence in the tech job market and the ability to move freely and easily between established and start-up organizations “had been reduced, if not completely undercut.”
Others are likely to follow Twitter and Meta’s cautious approach to the future, he cautioned, if the two companies’ leaders continue to be cautious.
It’s the second set of major tech layoffs in a week, but the tone of Meta’s statement was significantly different from Elon Musk’s upbeat defense of his decision to fire off half of Twitter’s workers on Friday.
Mark Zuckerberg’s apology was quite apologetic, however, Elon Musk tweeted that the company had no choice because it was losing millions each day. He accepted responsibility and expressed regret, he said.
If you know Mr. Zuckerberg, you know that this is out of character; he is not known as a “people person” and his focus is typically on work. Sheryl Sandberg, his former chief operating officer, is no longer by his side to help smooth the waters.
He is gambling his life savings and those of his firm on the establishment of the Metaverse, a virtual world in which he believes we will all spend our future work and leisure time.
It could take five to ten years for this to materialize. If he maintains his composure and is correct, Meta will recover and, he thinks, become the king of the new internet generation.
Wider recession
Planned layoffs are a result of issues throughout the IT sector as the industry fights sluggish global economic growth.
Stripe and Lyft have just announced large-scale layoffs, while Amazon has imposed a hiring freeze for its corporate offices.
The majority of Meta’s $27.7bn (£24.3bn) revenue comes from advertising, yet in these terrible economic times, many companies are reducing their advertising budgets.
Veteran Silicon Valley-based tech journalist Michael Malone told the BBC that the business was facing the “triple trifecta” of a slowing economy, inflation, and the end of pandemic-driven growth.
In the past few years, “no one has developed a truly innovative and excellent product,” he stated.
“The potential would have been Facebook’s Metaverse. However, it is not gaining traction and is costing a significant amount of money.
I believe that Facebook’s future is uncertain.
Mr. Malone expressed confidence that this was not the end for Silicon Valley.
In my thirty years of reporting, I’ve pronounced Silicon Valley dead approximately ten times.
Nevertheless, he said, “I’m not ready to write off Silicon Valley just yet, as the start-up scene remains robust.”
