Facebook’s parent company Meta recently announced the cut of 11,000 jobs, or about 13% of its workforce, as it grapples with falling revenue and broader issues in the tech industry. Meta, like other social media companies, got a financial boost during the pandemic lockdown as people stayed home and scrolled through their phones and computers. But as the shutdowns ended and people started going out again, revenue growth began to falter. Spooked investors have sent shares of the company down more than 71% year-to-date and shares are now trading at levels last seen in 2015. The job cuts were announced by the CEO Mark Zuckerberg in a letter to employees, which was later also posted on the company’s website. The layoffs come just a week after Twitter nearly halved its workforce under new owner Elon Musk. There have been many other job cuts at tech companies, including Intel, Snap and Microsoft, which have been hiring quickly during the pandemic. Speaking at a town hall meeting heard by Reuters, CEO Mark Zuckerberg and other Meta executives made key announcements. Here are the details:
CEO Mark Zuckerberg apologizes again
CEO Mark Zuckerberg reiterated his apology for having to cut 13% of the workforce, telling employees he hadn’t anticipated Meta’s first drop in revenue. “Revenue trends are much lower than I predicted. Again, I was wrong. This was a big planning mistake for the business. I take responsibility for that,” Zuckerberg said. Going forward, he added, he did not plan to “massively” increase the headcount of the Reality Labs unit. The unit has been under scanner as the company has lost billions of dollars there over the past few years.
Facebook will stop making smart displays and smartwatches
Chief technology officer Andrew Bosworth, who leads the metaverse-oriented Reality Labs division, told employees that Meta would end its work on smart display devices and Portal smartwatches. Meta decided earlier this year to stop marketing Portal devices, known for their video calling capabilities, to consumers and instead focus on enterprise sales. Now the company is shutting down the smart display business completely. The portal had not been a major revenue generator and raised privacy concerns from potential users. Meta has yet to unveil any smartwatches. The company is said to be working on smartwatches which were to be launched in 2023.
Smartwatch unit to focus on AR glasses, company-wide restructuring underway
Meta CTO said the smartwatch unit will instead focus on augmented reality glasses. More than half of the total investment in Reality Labs went to augmented reality, he added. He further said that several parts of the business will undergo major restructuring, including combining a voice and video calling unit with other messaging teams and creating a new division, Family Foundations, focused on difficult engineering problems.
Jobs are cuts through levels; many sales and HR jobs halved
Meta human resources chief Lori Goler said nearly half of the 11,000 jobs Facebook cut this week were in technology positions. Overall, 54% of those laid off were in sales roles and the rest were in technology roles. The size of the company’s recruiting team has also been reduced by nearly half. She said the employees affected are from all levels and teams, including people with high performance ratings.
More job cuts, but cost cutting continues
At town hall, Meta executives said further rounds of job cuts were not expected. But other spending is expected to be reduced, noting ongoing reviews of contractors, IT infrastructure and various products. A hiring freeze at the company will be extended through the first quarter of 2023, CEO Zuckerberg said. The company has also reduced its real estate footprint and the company will transition to office sharing for those remaining.
“Meta’s Three Biggest Problems”
Brad Gerstner, CEO of Meta shareholder Altimeter Capital, wrote an open letter to Zuckerberg last month urging him to tighten Meta’s belt. “Meta has three huge problems to overcome: it’s no longer an innovative pioneer; its grip on market dominance is waning; and the promise of the metaverse, the centerpiece of Zuckerberg’s vision for the future of his company. , has been diminished by a combination of consumer apathy, corporate skepticism and the realities of a declining global economy,” Gerstner wrote.