The parent company of Facebook, Instagram, and WhatsApp, Meta, disclosed a significant round of layoffs that affected 13% of its staff.
The announcement comes at a time when businesses across the technological spectrum have made sizable waves of layoffs in recent months.
For example, Twitter laid off roughly half of its 7,500 employees after Elon Musk assumed leadership, and Stripe announced last week that it would reduce its workforce by 14%. Salesforce has admitted that the company had fired “hundreds” of employees.
Considering that Meta employed 87,000 people globally, 11,000 of those employees will be quitting the company.
Each U.S employee will receive 16 weeks of severance compensation, plus an additional two weeks for each year of employment, according to Zuckerberg. So, for instance, a four-year Meta employee would essentially receive six months’ compensation.
“I want to take accountability for these decisions and for how we got here,” CEO and co-founder Mark Zuckerberg wrote in a statement. “I know this is tough for everyone, and I’m especially sorry to those impacted.”
According to Meta, employees will get payment for all unused vacation time and stock-based compensation that was vesting through November 15. Additionally, employees will have access to health insurance for six months along with their families.
Meta declining market cap
In the midst of the pandemic, the company sought a new path in the form of the metaverse and changed its name from Facebook to Meta. This made it one of the few businesses to ever reach a trillion-dollar market cap.
It would not be fair to blame this pivot for Meta’s current situation, the company has been investing a lot of money in a project that is far from finished, leading some to claim that it was losing focus on its primary business in order to pursue something that is unlikely to ever materialise.
As of right now, Meta’s market valuation is somewhere around $250 billion, down significantly from the company’s peak in 2015 when it was on a strong upswing.
In June, the company announced its first-ever quarterly decline. Later, it announced that it was halting its hiring plans as part of broader cost-cutting efforts. The company’s revenue decline carried over to the subsequent quarter as well.
Factors contributing to Facebook decline
In actuality, a number of elements have led to Meta’s deterioration. Apple’s App Tracking Transparency (ATT) framework, which was implemented last year, has had the expected impact on Meta’s advertising revenue while helping Apple’s own ad business.
Additionally, the growth of relatively new companies like TikTok has had an impact on where advertisers decide to spend their money.
In addition to announcing layoffs, Meta also stated that it is examining its infrastructure spending to maximise capacity efficiency and “shrink its real estate footprint,” which will involve more desk-sharing for those who only visit an office occasionally. Moreover, its current hiring freeze will extend into early 2023, with only a “small number of exceptions.”
“I’m going to watch our business performance, operational efficiency, and other macroeconomic factors to determine whether and how much we should resume hiring at that point,” Zuckerberg wrote.
“This will give us the ability to control our cost structure in the event of a continued economic downturn. It will also put us on a path to achieve a more efficient cost structure than we outlined to investors recently.”
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