Mark Zuckerberg, the chief executive officer of Meta Platforms Inc., announced that the firm will eliminate more than 11,000 positions in the first significant round of layoffs in the history of the social media behemoth.
The cuts, which account for around 13% of the workforce, were announced in a statement on Wednesday. Additionally, the corporation will continue its hiring ban until the first quarter.
Even while there will be layoffs throughout the organisation, the recruiting team will be disproportionately impacted, and the business teams will undergo "more substantial" restructuring, according to the corporation. In addition, Meta will assess its infrastructure costs, cut back on its real estate footprint, and move some staff to desk sharing. Additional cost-cutting initiatives are anticipated in the following months.
Following multiple quarters of underwhelming earnings and a decline in revenue, Meta, whose stock has lost 71% of its value this year, is taking steps to reduce costs. The company's most severe cutbacks since Facebook's founding in 2004 are the result of a sharp slowdown in the digital advertising market, a shaky economy on the verge of a recession, and Facebook founder Mark Zuckerberg's multibillion-dollar investment in the speculative metaverse virtual reality initiative.
Prior to the start of the New York stock market on Wednesday, shares increased by around 3.5%.
In the statement, Zuckerberg claimed that he had foreseen that the spike in online sales and web traffic that followed the start of the Covid-19 lockdowns would be a permanent acceleration.
"But the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than expected. I got this wrong."
Meta is the latest in a string of IT firms that have recently announced layoffs or hinted at a stop in hiring. While Apple Inc., Amazon.com Inc., and Alphabet Inc. have all halted or paused hiring, business software company Salesforce Inc. announced on Tuesday that it had removed hundreds of employees from sales teams. The parent company of the competing app Snapchat, Snap Inc., said in August that it will reduce its personnel by 20%.
About half of Twitter Inc.'s workforce was let go in a particularly tumultuous wave of layoffs last week, and many workers only learned they were fired after their access to Slack or email was suddenly turned off.
Zuckerberg said that at Meta former employees will have access to their emails so that they can bid their goodbyes to their colleagues though they've been cut off from more sensitive corporate systems. Additionally, US employees who were let go would get severance pay equal to 16 weeks of their base pay plus an additional two weeks for each year of employment. The organisation also provides career assistance, immigration support, and six months of health insurance coverage. According to local employment rules, packages will be comparable outside of the US, it said.
A warning was given to the employees at Meta in late September that Meta intended to slash expenses and restructure teams to adapt to a changing market. The hiring freeze was announced by the Menlo Park, California-based firm, which also owns Instagram and WhatsApp. At the time, the CEO stated that Meta anticipated having fewer employees in 2023 than it does now.
"This is obviously a different mode than we're used to operating in," Zuckerberg said in a Q&A session with employees in September. "For the first 18 years of the company, we basically grew quickly basically every year, and then more recently our revenue has been flat to slightly down for the first time. So we have to adjust."
In a second regulatory filing on Wednesday, Meta stated that it still anticipates losses in the Reality Labs segment, which houses the investments in the metaverse, to increase "substantially" year over year in 2023.
As he invests billions in his idea for the metaverse, a collection of virtual and augmented reality devices that allow access to virtual and digital worlds, Zuckerberg has been pleading with investors to be patient. The project necessitates a significant investment in hardware and research that might not show results for many years.
The main Facebook social network's growth is stagnant in the meantime. The business is experimenting with a more interest-based algorithm and short-form videos called Reels in an effort to speed things up and continue to draw people to the photo-sharing app Instagram.
Now, Zuckerberg must manage his significant company changes with fewer personnel.
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| Edited By: DNA Web Team |Source: DNA Web Desk |Updated: Nov 10, 2022, 06:38 AM IST
