Facebook’s parent company, whose shares have lost more than two-thirds of their value, said it also plans to cut discretionary spending and extend its hiring freeze through the first quarter. Meta Platforms Inc said on Wednesday it will cut 13 percent of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year, as Facebook’s parent company battles rising costs and a weak advertising market. The broad job cuts, the first in Meta’s 18-year history, follow thousands of layoffs at other top tech companies including Twitter and Elon Musk’s Microsoft Corp. The pandemic boom that boosted tech companies and their valuations has turned into a bust this year in the face of decades-high inflation and soaring interest rates. Meta, whose shares have lost more than two-thirds of their value, said it also plans to cut discretionary spending and extend its hiring freeze through the first quarter. “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” company founder Mark Zuckerberg said in a message to employees announcing the layoffs. “I want to take responsibility for these decisions and how we got here. I know this is difficult for everyone and I am especially sorry for those affected.”
Possible recession
An economic slowdown and a bleak outlook for online advertising – by far Meta’s biggest source of revenue – have contributed to the company’s woes. This summer, Meta posted its first quarterly revenue decline in history, followed by another, larger decline in the fall. Some of the pain is company-specific, while some is tied to broader economic and technological forces. Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic overhaul as Musk took the helm. He tweeted that he had no choice but to cut jobs “when the company is losing more than $4 million a day,” though he did not elaborate on the losses. Meta has alarmed investors by pouring more than $10 billion a year into the metaverse as it shifts its focus away from social media. Zuckerberg predicts that the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology. Meta and its advertisers are preparing for a possible recession. There’s also the challenge of Apple’s privacy tools, which make it harder for social media platforms like Facebook, Instagram and Snap to track people without their consent and show them tailored ads. Competition from TikTok is also a growing threat as younger people flock to the video-sharing app over Instagram, which Meta also owns. Meta’s profits fell to $4.4 billion in the latest quarter, down 52% year over year. “Basically, we’re making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we’re operating efficiently,” Zuckerberg wrote.
