The company formerly known as Facebook is getting rid of 11,000 people as its boss admits to getting carried away.
Meta boss Mark Zuckerberg published an email he sent to the whole company, which started as follows: “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.”
To be fair to Zuck he shouldered the blame for this drastic step, albeit with the caveat of having to deal with some exceptional macroeconomic events. The long and short of it is that internet companies did exceptionally well during the Covid pandemic because everyone was imprisoned in their own homes and thus able to do little more than muck about online.
It seems Zuck and many of his contemporaries figured people liked this state of affairs so much that they would be reluctant to leave the house even when their governments were kind enough to permit it. So they embarked on an investment frenzy modeled on this new normal existing in perpetuity which, in hindsight, was somewhat wishful thinking.
“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,” lamented Zuckerberg. “I got this wrong, and I take responsibility for that.” Well, not to the extent of resigning, of course.
Facebook, Stripe, Shopify and others did massive layoffs because “we thought the e-commerce surge early in the pandemic was a permanent shift. Oops!”
If I was one of the let go employees I would be pissed. How could they misread the market so bad? pic.twitter.com/DLWjW9xotc
— Juozas Kaziukėnas (@juokaz) November 9, 2022
He went on to detail all the other ways he has looked to reduce overheads before resorting to decimating his workforce, such as getting rid of some buildings, but deftly sidestepped the elephant in the room that is the metaverse. When Meta announced another set of poor earnings a couple of weeks ago, investors seemed especially dismayed at Zuck’s determination to double down on the metaverse by throwing money at the Reality Labs division.
It’s all very well flogging an office or two but when one of your divisions is losing over $10 billion per year that’s just a drop in the ocean. If the tweet below (screenshot used because that account was apparently deleted as we were writing) is anything to go by, that division hasn’t been entirely ring-fenced from this corporate austerity. But only two weeks ago Meta forecast increased operating losses from that division so, again, its hard to see how they can significantly address that while still perusing their metaverse cunning plan.
The news comes hot on the heels of new Twitter owner Elon Musk reportedly getting rid of around half of its albeit much smaller workforce in a bid to make it profitable. While the whole internet sector seems to suffered from similar post-pandemic delusions, social media has been especially hard hit, with TikTok slashing its revenue outlook and Snap starting its cull months ago.
Zuck and Meta deserve some credit for offering more of a mea culpa than most, but this wave of job cuts across the US tech sector is still alarming. Light Reading has a table that shows the extent of the recent hiring frenzy. If 2023 brings the global recession many are predicting we anticipate a plenty more such announcements as CEOs seek to protect themselves from the consequences of their own hubris.