Mark Zuckerberg announced that Meta would lay off 11,000 of its employees, or around 13% of its workforce, and that it would also take “a number of additional steps to become a leaner and more efficient company”.
In a message shared with Meta employees on Wednesday morning, Zuckerberg said he was making “some of the toughest changes we’ve made in Meta’s history.”
“We are also taking a number of additional steps to become a leaner, more efficient business by reducing discretionary spending and extending our hiring freeze through the first quarter,” Zuckerberg said. “I want to take responsibility for these decisions and how we got here. I know it’s difficult for everyone, and I’m especially sorry for those affected.”
Zuckerberg said Meta will now shift its resources to a “fewer number of high-priority growth areas” – which includes Meta’s AI discovery engine, its advertising and commerce platforms, and the long-term vision. much-discussed Zuckerberg for the development of the Metaverse.
“We’ve reduced costs across our business, including reducing budgets, reducing benefits, and reducing our real estate footprint,” Zuckerberg continued. “We are restructuring teams to increase our efficiency. But these measures alone will not bring our expenses in line with our revenue growth, so I have also made the difficult decision to let people go.”
Shares of Meta Platforms, the parent company of Facebook and Instagram, climbed about 4% on news in premarket trading on Wednesday.
The stock has been battered this year, trading below $100 per share this week, down more than 70% from its January high of $353.83 per share.
Zuckerberg took the opportunity to explain what drove Meta to this point and why the decision was made in his company-wide message.
“At the start of Covid, the world moved rapidly online and the rise of e-commerce led to outsized revenue growth. Many people predicted that it would be a permanent acceleration that would continue even after the end of the pandemic. Me too, so I made the decision to significantly increase our investments,” Zuckerberg said. “Unfortunately, it didn’t go as I expected. Not only has online commerce returned to earlier trends, but the macroeconomic downturn, increased competition, and loss of ad signal has caused our revenue to drop from what I expected. I was wrong, and I take responsibility for it.”
Meta has removed access to most of their internal systems for people who were laid off on Wednesday, but will keep email addresses active and functional until Wednesday “so everyone can say goodbye”.
“The teammates leaving us are talented and passionate, and have had a significant impact on our business and our community. Each of you has contributed to the success of Meta, and I am grateful for that. I am sure that you will continue to doing good work in other places,” Zuckerberg said. “It’s a sad moment, and there’s no getting around it. To those leaving, I want to thank you again for everything you put into this place. We wouldn’t be where we are today without your hard work, and I appreciate your contributions.”
Meta posted a second straight quarter of sales declines last month as the company faces a general decline in online ad spending and growing competition from TikTok.
Additionally, an Apple iOS privacy update last year that limits advertisers’ ability to target users continued to weigh on ad sales at the heart of Meta’s business.
Wednesday’s layoffs mark the latest in a series of challenges for Meta this year, including the announcement in June that COO Sheryl Sandberg would be leaving the company as well as difficulty generating revenue from her investment. billions of dollars in its metaverse project. .
The company has drawn criticism from some investors over its heavy investment in its metaverse project, which has yet to yield significant returns.
Brad Gerstner, whose fund Altimeter Capital holds hundreds of millions of dollars worth of Meta stock, sharply criticized the company’s strategy in an open letter last month.
“Meta has drifted into the land of excess – too many people, too many ideas, too little urgency,” Gerstner wrote. “That lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”
Gerstner called on the company to cut staffing costs by 20% and limit spending on its metaverse project to $5 billion a year. “Meta needs to get its mojo back,” he wrote.
This is a developing story. Please check for updates.