Meta has announced the layoffs of 11,000 employees. This is the largest internal restructuring in the history of the former Facebook Inc., the Menlo Park-based company founded in 2004 and renamed Meta last year. The name change is one of the symbols of the new direction of the giant led by Mark Zuckerberg, which in addition to social media, also includes Instagram, WhatsApp and Oculus. After the personal data violation scandals (the Cambridge Analytica case was the most striking, but not the only one) and the accusations by whistleblower Frances Haugen on prioritising profits over mental health, especially of younger users, Zuckerberg chose Meta to break with the past and prioritise the development of the Metaverse. Which right now represents the biggest hole in the corporate accounts.
The desire to develop the infrastructure for the virtual reality frontier of the future in which avatars will replicate our activities has created many problems within Meta. The ten-year plan with annual investments of over 10 billion must convince the shareholders or employees. Several US media outlets have seen internal documents in which Meta’s engineers spoke of the Metaverse as a “sad and empty world“. At the same time, investors such as Brad Gerstner, CEO of Altimeter Capital (which holds about 2 million Meta shares), sent a letter to Zuckerberg asking him to right the ship. With some targeted interventions, such as reducing the workforce and a less central role for the Metaverse, since ‘planning $100 billion investments in an unknown future is terrifying even by Silicon Valley standards.
With more than 60 per cent of its share value burned during 2022 and Facebook’s first historic drop in users last February, Meta decided to lay off 13 per cent of its workforce. Having grown by leaps and bounds during the pandemic, when the surge in e-commerce prompted Zuckerberg to expand the workforce to 87,000, the slimming down cure is the most obvious response to the economic uncertainty hanging over the entire tech sector. Meta’s cuts make more noise but follow layoffs announced by Twitter, Salesforce, Stripe and Lyft, while Amazon is considering a hiring freeze despite the upcoming Black Friday and holiday season.
“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, but we need to become leaner and more efficient,” Zuckerberg wrote in his letter to employees. They will receive 16 weeks’ salary, plus an additional two weeks for each year spent in Meta and health care coverage for the whole family for the next six months.
Staff cuts in all countries
Although the vast majority of the cuts are in the US offices, Meta is also progressively reducing its work teams in the rest of the world. For example, 22 redundancies have been announced in Italy out of 127 employees. While priority activities such as Reels, advertising for companies and algorithms remain untouchable, those who will leave their jobs are the recruiting, communication and marketing staff. The company plans to reach an agreement with the trade unions to try to find a relocation for those removed from their jobs.