What happened now? Meta CEO Mark Zuckerberg announced that the company is laying off 13% of its workforce, or about 11,000 employees worldwide, confirming rumors of huge layoffs coming this week.
In a letter sent to Meta employees today, Zuckerberg wrote, “Today, I’m sharing some of the most difficult changes we’ve made in Meta’s history.” In addition to laying off more than 11,000 employees, the CEO outlined additional steps to become a more lean and efficient company, including extending the hiring moratorium during the first quarter of the fiscal year and cutting discretionary spending. Meta’s hiring division is expected to be the hardest hit by the move.
“I want to take responsibility for these decisions and how we got here. I know it’s hard for everyone and I’m especially sorry for those who have been hurt.” Zuckerberg said.
Meta’s value has fallen by about half a trillion dollars over the past 12 months. Third-quarter net income fell 52% to $4.4 billion, below analysts’ estimate of $5 billion, while revenue fell 4% to $27.71 billion. Investors have watched with concern as the social media giant pours billions into Reality Labs, the division responsible for its metaverse ambitions, leading to rumors of massive job cuts.
A slew of tech companies are laying off employees this year as they grapple with the global economic downturn and advertisers cap their spending. Lyft, Microsoft, Snap, Tesla, and Robinhood are just some of the big names that have recently laid off employees. Twitter also cut its headcount in half, although it was at Elon Musk’s behest, and the lack of notice led to yet another lawsuit over the employment of the world’s richest man.
Meta provides 16 weeks of severance pay to its laid off employees in the US, plus two extra weeks per year of service (unlimited). The company will also cover their health insurance for six months and offer RSU, career services, remaining paid leave and immigration support for employees with visas. Zuckerberg added that those affected will be immediately denied access to the system, “given the amount of access to sensitive information.”
Zuckerberg takes most of the blame for the decision, noting that the pandemic-driven tech boom didn’t last as he expected. “At the start of Covid, the world quickly moved online and the surge in e-commerce has led to excessive revenue growth. Many people have predicted that this will be a constant acceleration that will continue even after the end of the pandemic. Me too, which is why I made the decision to significantly increase our investment,” he wrote.
“Unfortunately, things didn’t turn out the way I expected. Not only has e-commerce rebounded, but the macroeconomic downturn, increased competition, and the loss of advertising signals have resulted in our revenues being much lower than I expected. I made a mistake and I take responsibility for it.”