© Reuters. FILE PHOTO: Morning traffic passes the Meta sign outside the headquarters of Facebook’s parent company Meta Platforms Inc in Mountain View, California, U.S. November 9, 2022. REUTERS/Peter DaSilva/File Photo
By Paresh Dave
OAKLAND, Calif. (Reuters) – Facebook owner Meta Platforms told employees on Friday it would stop developing smart displays and smartwatches and that nearly half of the 11,000 jobs it cut this week as part of unprecedented cost reduction were technology roles.
Speaking at a public employee meeting heard by Reuters, Meta executives also said they were reorganizing parts of the business, combining a voice and video calling unit with other messaging teams and creating a new division, Family Foundations, focused on challenging engineering problems.
Executives said the first mass layoff in the social media company’s 18-year history affected employees at all levels and across all teams, including people with high performance ratings.
Overall, 54% of those laid off were in business roles and the rest were in technology roles, said Meta human resources chief Lori Goler. Meta’s recruiting team has been cut by nearly half, she said.
Executives said further rounds of job cuts were not expected. But other spending should be cut, they said, noting ongoing reviews of contractors, real estate, IT infrastructure and various products.
SMART DEVICES CUT
Chief technology officer Andrew Bosworth, who leads the metaverse-oriented Reality Labs division, told staffers that Meta would end its work on Portal smart display devices and its smartwatches.
Meta had decided earlier this year to stop marketing Portal devices, known for their video calling capabilities, to consumers and instead focus on enterprise sales, Bosworth said.
As the economy declined, leaders decided more recently to make “bigger changes”, he said.
“It was going to take so long and require so much investment to get into the enterprise segment that it seemed like the wrong way to invest your time and money,” Bosworth said.
The portal had not been a major revenue generator and raised privacy concerns from potential users. Meta had yet to unveil any smartwatches.
Bosworth 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.
On Friday, CEO Mark Zuckerberg reiterated his apology from Wednesday for having to cut the workforce by 13%, telling employees he hadn’t anticipated Meta’s first drop in revenue.
Meta has been hiring aggressively during the pandemic amid an increase in social media use by stuck-at-home consumers. But business has suffered this year as advertisers and consumers cut spending in the face of soaring costs and rapidly rising interest rates.
The company also faced increased competition from TikTok and lost access to the valuable user data that powered its ad targeting systems after Apple (NASDAQ:) made privacy-focused changes to its operating system.
“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.
Meta shares closed 1% higher at $113.02.
