To put these job cuts into context, Twitter lost about 3,750 staff when it halved its headcount last week — meaning Meta's reduction is far more drastic.
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Meta has announced that it's cutting 11,000 jobs, in what Mark Zuckerberg has described as "some of the most difficult changes" made in the company's history.
The tech giant — which owns Facebook, Instagram and WhatsApp — is reducing its overall workforce by 13% and taking other steps to become "a leaner and more efficient company."
In a statement, Zuckerberg confirmed that jobs will be cut in its struggling metaverse division Reality Labs — as well as across the company's family of apps.
To put these job cuts into context, Twitter lost about 3,750 staff when it halved its headcount last week — meaning Meta's reduction is far more drastic in terms of the number of people affected.
Zuckerberg admitted that the onset of COVID had led many analysts to believe that a surge of e-commerce would be a "permanent acceleration" that would remain after the pandemic.
"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."
Meta has been confronted by multiple headwinds over recent months. Changes to Apple's privacy settings have hit the tech giant hard, with estimates suggesting that it is losing a whopping $10 billion per year as a result.
Meanwhile, younger consumers are flocking to newer alternatives such as TikTok — and Facebook's attempts to offer short-form videos have struggled to attract momentum.
But the 70% fall in Meta's share price so far this year is mainly linked to Zuckerberg's ambitions for the metaverse — with investors yet to be convinced in his belief that the company's future lies in virtual worlds. The company currently has a budget of $10 billion per year for this bold new frontier — and some prominent shareholders are calling for this to be slashed. Analysts are alarmed that these losses could get bigger this year, and the investment may only start to pay dividends in five to ten years.
Zuckerberg Remains Defiant
Unfortunately for those shareholders who remain dubious about the metaverse, Zuckerberg still struck a defiant tone about his strategy in an announcement posted on Meta's website.
While he said that the company does need to become more capital efficient, he spoke of shifting "more of our resources onto a smaller number of high-priority growth areas" — AI, ads, and its long-term vision for the metaverse among them.
"We've cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We're restructuring teams to increase our efficiency. But these measures alone won't bring our expenses in line with our revenue growth, so I've also made the hard decision to let people go."
Those affected by the layoffs are already unable to access internal systems — but they are set to receive 16 weeks of base pay, plus an additional two weeks for every year of service. They'll also get compensation for any paid time off they're yet to take, and health insurance for six months.
Meta's share price reacted fairly positively to news of the cutbacks. In intraday trading on Wednesday, it was up 7.45%.
