meta: 8 reasons why Meta has fired 11,000 employees
In a rather unprecedented move, one of the biggest tech companies in the world has laid off 13% of its staff. Meta, the parent company of Facebook, announced that 11,000 employees across the world have been asked to leave. In a blog post, Meta CEO Mark Zuckerberg said that these have been “some of the most difficult changes we’ve made in Meta’s history.” Zuckerberg went in detail on why the company had fired a chunk of its employees and these are the eight main reasons:
18
Increased investments in e-commerce
Zuckerberg said that at the start of the pandemic, “the world rapidly moved online and the surge of e-commerce led to outsized revenue growth.” Meta and Zuckerberg thought that it would be a “permanent” acceleration. “I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected,” and the company ended up losing revenue.
28
The downturn in the economy
The Meta CEO mentioned that the macroeconomic downturn caused the revenue to be “much lower” than he expected. Meta’s quarterly results didn’t paint a healthy picture and the forecast for next quarter isn’t too optimistic either.
38
TikTok, Apple and more
The CEO of Meta also said that the other reasons for loss of revenue were “increased competition” and “ads signal loss” — which implies that Apple’s App Tracking Transparency really dealt a severe blow to Meta. The company had earlier said that ever since Apple got App Tracking Transparency — a feature that gives users the option to not allow apps to track them — it had suffered a loss of $10 billion. Increased competition could very well by TikTok’s dominance in social media in the last few years.
48
Rising costs and expenses
In the last quarterly results, Meta revealed that its cost and expenses year over year had gone up by 19%. In the third quarter, Meta’s expenses stood at $22.1 billion — so cutting costs clearly has led to employees losing jobs.
58
Decline in sales and income
During the third quarter, Meta revealed that overall sales had declined 4% and its operating income fell 46% to $5.66 billion.
68
The need to become more “capital efficient”
In his blog post, Zuckerberg said that Meta had decided to become more capital efficient. In other words, more of the company resources will go into “smaller number of high priority growth areas.” The company had shrunk its real estate footprint, reduced perks but wasn’t enough. “But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go,” said Zuckerberg.
78
Reality Labs expected to suffer losses
Even though Zuckerberg remains optimistic about metaverse, the division responsible for it — Reality Labs — has been bleeding money. “We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,” Zuckerberg said last month during the company’s earnings call.
88
Metaverse lost billions of dollars
It was revealed that Reality Labs lost close to $9.4 billion in 2022 but Zuckerberg and the company still have ambitious plans for it. “We’re leading in developing the technology to define the future of social connection and the next computing platform,” he said in the blog post informing employees about the layoffs.
In a rather unprecedented move, one of the biggest tech companies in the world has laid off 13% of its staff. Meta, the parent company of Facebook, announced that 11,000 employees across the world have been asked to leave. In a blog post, Meta CEO Mark Zuckerberg said that these have been “some of the most difficult changes we’ve made in Meta’s history.” Zuckerberg went in detail on why the company had fired a chunk of its employees and these are the eight main reasons:
18
Increased investments in e-commerce
Zuckerberg said that at the start of the pandemic, “the world rapidly moved online and the surge of e-commerce led to outsized revenue growth.” Meta and Zuckerberg thought that it would be a “permanent” acceleration. “I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected,” and the company ended up losing revenue.
28
The downturn in the economy
The Meta CEO mentioned that the macroeconomic downturn caused the revenue to be “much lower” than he expected. Meta’s quarterly results didn’t paint a healthy picture and the forecast for next quarter isn’t too optimistic either.
38
TikTok, Apple and more
The CEO of Meta also said that the other reasons for loss of revenue were “increased competition” and “ads signal loss” — which implies that Apple’s App Tracking Transparency really dealt a severe blow to Meta. The company had earlier said that ever since Apple got App Tracking Transparency — a feature that gives users the option to not allow apps to track them — it had suffered a loss of $10 billion. Increased competition could very well by TikTok’s dominance in social media in the last few years.
48
Rising costs and expenses
In the last quarterly results, Meta revealed that its cost and expenses year over year had gone up by 19%. In the third quarter, Meta’s expenses stood at $22.1 billion — so cutting costs clearly has led to employees losing jobs.
58
Decline in sales and income
During the third quarter, Meta revealed that overall sales had declined 4% and its operating income fell 46% to $5.66 billion.
68
The need to become more “capital efficient”
In his blog post, Zuckerberg said that Meta had decided to become more capital efficient. In other words, more of the company resources will go into “smaller number of high priority growth areas.” The company had shrunk its real estate footprint, reduced perks but wasn’t enough. “But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go,” said Zuckerberg.
78
Reality Labs expected to suffer losses
Even though Zuckerberg remains optimistic about metaverse, the division responsible for it — Reality Labs — has been bleeding money. “We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,” Zuckerberg said last month during the company’s earnings call.
88
Metaverse lost billions of dollars
It was revealed that Reality Labs lost close to $9.4 billion in 2022 but Zuckerberg and the company still have ambitious plans for it. “We’re leading in developing the technology to define the future of social connection and the next computing platform,” he said in the blog post informing employees about the layoffs.
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