Meta To Axe More Than 11,000 Staff

Mark Zuckerberg has on Wednesday delivered bad news for the platform’s workforce in the lead up to Christmas, after he confirmed reports of large-scale job losses at Meta.

In an open letter to staff on Wednesday, Zuckerberg said that the job losses was “some of the most difficult changes we’ve made in Meta’s history.”

He confirmed that Meta will reduce its workforce “by about 13 percent and let more than 11,000 of our talented employees go.”

Job losses

At the end of September, Meta had a total global workforce of over 87,000 employees.

“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” Zuckerberg said in the letter. “I’ve decided to reduce the size of our team by about 13 percent and let more than 11,000 of our talented employees go.”

“We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1,” added Zuckerberg.

“I want to take accountability for these decisions and for how we got here,” he wrote. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

Zuckerberg admitted that he believed the surge of e-commerce and revenue growth seen at the start of the Covid pandemic, would be “a permanent acceleration that would continue even after the pandemic ended.”

He therefore “made the decision to significantly increase our investments,” he wrote.

“Unfortunately, this did not play out the way I expected,” he wrote. “Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”

Zuckerberg said that in this new environment, Meta needs to become more capital efficient as it focuses on a smaller number of high priority growth areas such as Meta’s AI discovery engine, its ads and business platforms, and its long-term vision for the metaverse.

“We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint,” wrote Zuckerberg. “We’re restructuring teams to increase our efficiency. 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.”

System access

Zuckerberg admitted there was no good way to do a layoff, but the firm hope to get all the relevant information to staff as quickly as possible and then do whatever it can to support impacted workers.

“Everyone will get an email soon letting you know what this layoff means for you,” wrote Zuckerberg. “After that, every affected employee will have the opportunity to speak with someone to get their questions answered and join information sessions.”

For US workers being let go, they will receive 16 weeks (four months) of base pay, plus two additional weeks for every year of service, with no cap.

Meta will also cover the cost of healthcare for people and their families for six months, and offer immigration advice to those employees on a work visa in the US.

Outside the US, support will be similar, said Zuckerberg.

“We made the decision to remove access to most Meta systems for people leaving today given the amount of access to sensitive information,” wrote Zuckerberg. “But we’re keeping email addresses active throughout the day so everyone can say farewell.”

He also noted that while Meta is making reductions in every organisation across both Family of Apps and Reality Labs, some teams will be affected more than others.

Hiring freeze

He added that recruiting will be disproportionately affected, since Meta is planning to hire fewer people next year.

“The teammates who will be leaving us are talented and passionate, and have made an important impact on our company and community,” wrote Zuckerberg. “ Each of you have helped make Meta a success, and I’m grateful for it. I’m sure you’ll go on to do great work at other places.”

He admitted that he views layoffs as a last resort, but Meta has also decided to rein in other sources of cost before letting teammates go.

“Overall, this will add up to a meaningful cultural shift in how we operate,” he wrote. “For example, as we shrink our real estate footprint, we’re transitioning to desk sharing for people who already spend most of their time outside the office. We’ll roll out more cost-cutting changes like this in the coming months.”

The hiring freeze at Meta that was implemented in September, will be extended through Q1 with a small number of exceptions.

Metaverse spending?

And there is a chance Zuckerberg could scale down Meta’s heavy spending on the Metaverse, after investor pushback.

“I’m currently in the middle of a thorough review of our infrastructure spending,” he wrote. “As we build our AI infrastructure, we’re focused on becoming even more efficient with our capacity. Our infrastructure will continue to be an important advantage for Meta, and I believe we can achieve this while spending less.”

This admission comes after shareholder Altimeter Capital Management in an open letter last month urged Meta to streamline operations by cutting jobs.

Altimeter also urged Zuckerberg to reduce capital expenditure, and warned him that Meta had lost investor confidence with its increased spending and its focus on relatively little-used metaverse technology.

In its third quarter results last month Meta share price had plummeted after it forecast that it would lose $10bn in ad revenue over full-year 2022 due to privacy changes by Apple that allow iPhone users to opt out of ad tracking across apps.

Meta’s share price had already fallen over 61 percent in 2022.

The Meta job losses comes after another social networking giant, Twitter, initiated mass layoffs that are expected to affect about half of its workforce.