The social media company Meta has fired over 11,000 employees or 13% of its workforce on Wednesday, after weak quarterly earnings and a competitive advertising market. This is the first and the largest layoff in the social media company’s history of 18 years. Meta has also decided to extend the hiring freeze through the first quarter. As of November 8, the company, which owns social media apps WhatsApp, Facebook and Instagram, had 87,000 employees globally.
While taking complete responsibility for the layoffs, Mark Zuckerberg, the chief executive officer of Meta in a blog post said, “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. 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.”
“I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted,” he added.
The development comes months after Zuckerberg told employees that the workforce of Meta will be smaller in 2023. Zuckerberg said that the company will pay 16 weeks of base salary, plus two additional weeks for every year of service, with no cap, to the sacked employees. In the US, the company will pay for the remaining PTO and health insurance of the impacted employees for the next three months. The company will also provide three months of career support with an external vendor, including early access to unpublished job leads to the impacted employees. For its employees in other countries, the company is working with local employment laws.
“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,” Zuckerberg said.
Notably, over the past few months, Meta has undergone a financial crunch. In the third quarter of FY23, the company’s profit more than halved to $4.4 billion as compared to $9.2 billion in the same period year-ago. The company also witnessed a contraction of its sales by 4% in the July to September quarter this year. However, Meta's revenue from operations stood at ₹27.7 billion. Meta's shares have plummeted 73% so far this year. Weighed down by weak September quarter earnings, the stock has lost $80 billion in market valuation.
The Meta workforce in India is also likely to have a significant impact following the layoffs, as the company has the largest customer base of more than 200 million users in the country.
Zuckerberg said the company is in need to become more capital efficient and has shifted the focus to high-priority growth areas like AI discovery engine, advertisements, business platforms and metaverse. “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,” Zuckerberg said.
Over the past few months, the global tech landscape has witnessed massive layoffs and a hiring freeze amidst a looming global recession. Last week, the social media platform Twitter, which was recently acquired by Tesla CEO Elon Musk, sacked 50% of its workforce. In October, while the software major Microsoft fired as many as 1,000 employees, or 1%, in the third round of downsizing. Snap, which is the parent company of social media platform Snapchat, sacked 20% of its workforce to restructure its business.
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