Meta is laying off about 13 percent of its 87,000 employees after “overinvesting” during the covid pandemic boom in what appears to be the largest staff cuts to date at a major tech company.
The company faces a falling stock price which is down more than 70 percent this year and a sagging online ad market that is dragging down tech giants with it.
This follows layoffs at Twitter over the past week that reduced the company’s staff by about 50 percent after Tesla CEO Elon Musk bought the company for $44 million with a new vision to reduce content moderation.
Meta blames deteriorating macroeconomic trends, but investors worry about its spending and threats to its core social-media business including from other apps such as TikTok, Wall Street Journal reported. Zuckerberg has also cited Apple’s requirement that users opt-in to tracking of their devices, hurting Meta’s ability to target ads.
The layoffs affected some areas such as recruiting and business teams more than others. Engineers working on projects related to the metaverse, the immersive online world that CEO Mark Zuckerberg is betting on, have been mostly spared, people with knowledge of the matter told the New York Times.
Meta reported a 50 percent decline in third-quarter profits while spending increased 19 percent. The company has been spending billions of dollars on metaverse-related products such as artificial intelligence and virtual reality headsets with no guarantee that people will buy them.
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Reality Labs, the Meta department working on the metaverse, saw $3.67 billion in operating losses.
In a letter to Meta employees, Zuckerberg took responsibility for getting it wrong and overinvesting in digital shopping when covid lockdowns drove everyone online for everything.
“Unfortunately, this did not play out the way I expected,” Zuckerberg wrote. “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 expected. I got this wrong, and I take responsibility for that.”
Zuckerberg promised “a meaningful cultural shift in how we operate.” The company plans to hire fewer people in 2023 and said it is extended its hiring freeze through the first quarter of 2022 with some exceptions.
Laid-off employees are getting 16 weeks of severance plus two additional weeks for every year of service. The company will also pay remaining paid time off, and eligible employees will get their Nov. 15, 2022 vesting. Health insurance will be covered for six months.