Facebook parent company Meta announced plans to cut over 11,000 jobs, or 13 percent of the company, as the social media giant seeks to cut back on expenses and transform its business model in a more competitive digital advertising market.
“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,” Meta CEO Mark Zuckerberg said in a Wednesday statement, adding that the layoffs were “some of the most difficult changes we’ve made in Meta’s history.”
Zuckerberg added that everyone in the company will soon get an email “letting you know what this layoff means for you.”
The company was set to begin laying off thousands of workers this week in an attempt to rein in costs and refocus its existing workforce on the company’s priorities, according to a person familiar with the matter who spoke on the condition of anonymity to discuss the company’s strategy.
The layoffs mark a tumultuous new period in Silicon Valley, as tech giants long known as bastions of economic power and recession-proof have shed huge workers in recent weeks. For years, the companies have grown rapidly and hired at ravenous speeds. Facebook alone increased staff by 28 percent year-over-year to 87,314 employees by the end of September, according to regulatory filings.
One of the biggest cullings happened at Twitter last week, where new owner Elon Musk cut roughly half of the company’s 7,500-member staff – to the point that over the weekend, some workers were getting called and asked to come back.
On Tuesday, media reports surfaced of hundreds of layoffs at tech giant Salesforce, which sells business software programs. Ride-hailing app Lyft, financial services platform Stripe and digital real estate marketplace Zillow have also cut staff, according to company statements and media reports.
The layoffs at Meta – which changed its name from Facebook a little over a year ago – are happening while the company is taking a big gamble on building the metaverse. Part of the hiring boom over the past few years has been focused on building immersive digital realms accessed through virtual reality, which chief executive Mark Zuckerberg says will be the next great computing platform after mobile phones and replace some in-person communication.
The company is heavily investing in virtual reality headsets and other technology to try to corner the market. Meta has said it expects operating losses for Reality Labs, the division working on its hardware offerings, to grow even bigger in 2023.
Last month, the company unveiled its new $1,500 VR headset that it says will transform the ability of workers to collaborate with the colleagues and conduct their jobs.
But so far, that vision has been slow to materialize, in part, because the company is still developing the underlying technology and wider range of applications that would make it appealing to mainstream audiences. While the company currently dominates the VR headset market, Meta is likely to face significant competition in the space from Apple.
Meta operates social media platforms Facebook and Instagram and the messaging app WhatsApp, among other initiatives. The more traditional business model for its blue app, which relies on advertising, has been hit particularly hard by larger economic challenges, including some digital advertisers who pulled back on spending as rising inflation and Russia’s invasion of Ukraine created market instability.
The company is also increasingly fending off competition for marketing dollars and users from upstart rivals such as TikTok, the short-form video platform that has taken off among younger generations. This year, the company reported that Facebook lost daily users for the first time in its 18-year history, though user growth later recovered. Last month, Meta reported that its second quarterly revenue decline in a row.
And Meta has estimated that it will have lost $10 billion this year after Apple introduced privacy restrictions that forced app makers such as Facebook to explicitly ask users if they could collect data about their activity on the internet, hurting the social media company’s ability to facilitate targeted advertising campaigns. Facebook argued at the time that the new privacy rules would hurt small businesses who need granular information about users to find probable customers.
In the face of those challenges, Meta executives have been increasingly warning employees that the company was entering a new era of higher performance expectations and more focus on its biggest goals.
During a recent call with investors, Zuckerberg touted the company’s decision to mimic the same strategy that has made TikTok so popular: showing users entertaining content from strangers over posts from their friends and family. The company is also heavily promoting its short-form video product, Reels, on Instagram and Facebook as well as business messaging.
During the same call, Facebook said it plans to slow hiring dramatically and hold its head count next year to be roughly the same as it is now.
More than a month ago, Meta said it would stop making new offers to job candidates, sourcing candidates and approving internal transfers while the company reevaluated how best to prioritize its staffing resources, according to a memo posted to the company’s internal message board viewed by The Washington Post.
This past summer, Lori Goler, the company’s top HR director, advised managers to implement the “rigorous performance management” practices that Meta relied on before the pandemic, such as giving critical feedback to struggling employees.
In July, Meta’s head of engineering, Maher Saba, instructed engineering managers in an internal memo to identify and weed out their lowest-performing employees.
“If a direct report is coasting or is a low performer, they are not who we need; they are failing this company,” Saba wrote. “As a manager, you cannot allow someone to be net neutral or negative for Meta.”
Such messages from company executives created a wave of anxiety and resentment among Facebook’s workforce. Some have worried they could lose their jobs or see their annual bonuses reduced. Others are concerned that an already rigorous corporate environment will grow even more competitive as employees jockey for fewer coveted positions, The Post has reported.