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Mark Zuckerberg announced that Meta would lay off 11,000 of its employees — about 13% of its workforce — and also take “a number of additional steps to become a leaner and more efficient company.”
In a message sent to Meta employees Wednesday morning, Zuckerberg said he was making “one of the most difficult changes we’ve made in Meta’s history.”
“We’re also taking a number of additional steps to become a leaner and more efficient company by reducing discretionary spending and extending our hiring freeze through the first quarter,” Zuckerberg said. “I want to take responsibility for these decisions and how we got here. I know it’s hard for everyone, and I’m especially sorry for those affected.”
Zuckerberg said Meta will now refocus its resources on “a smaller number of high-priority development areas,” including Meta’s AI discovery engine, its advertising and business platforms, and Zuckerberg’s much-discussed long-term vision for the development of the Metaverse. .
“We’ve cut costs across our entire business, including cutting budgets, cutting benefits and cutting our real estate footprint,” Zuckerberg continued. “We are restructuring the teams to increase efficiency. But these measures alone will not bring our costs in line with revenue growth, so I have also made the difficult decision to let people go.”
Facebook CEO Mark Zuckerberg testifies during a remote video hearing held by subcommittees of the U.S. House of Representatives on March 25, 2021.
Handout via Reuters
Shares of Meta Platforms, the parent company of Facebook and Instagram, rose about 4% after the news in premarket trading on Wednesday.
The stock has taken a hit this year, trading below $100 a share this week, down 70% from its January high of $353.83 a share.
Zuckerberg took the opportunity to explain what brought Meta to this point and why the decision was made in his message to the entire company.
“At the start of the COVID-19 pandemic, the world quickly moved online, and the surge in e-commerce led to tremendous revenue growth. Many people predicted that this would be a sustained acceleration that would continue even after the pandemic was over. I did too, so I made the decision to significantly increase our investment,” said Zuckerberg. “Unfortunately, it didn’t happen the way I expected. Not only has online sales returned to previous trends, but the macroeconomic downturn, increased competition, and the loss of ad signal meant that our revenue was much lower than I expected. I made a mistake, and I take responsibility for it.”
Meta revoked access to most of its internal systems for people who were fired on Wednesday, but will keep email addresses up and running until Wednesday “so everyone can say goodbye.”
“The teammates who will be leaving us are talented and passionate, and they have made an important impact on our company and community. Each and every one of you has helped make Meta a success, and I’m grateful for that. I’m sure you can continue to do great work in other places,” Zuckerberg said. “It’s a sad moment and there’s no getting around it. To those who are leaving, I want to thank you again for everything you’ve put into this place. Without your hard work, we would not be where we are today, and I am grateful for your contribution.”
Last month, Meta reported a second straight quarter of sales declines as the company grapples with a sharp drop in online ad spending and rising competition from TikTok.
In addition, Apple’s iOS privacy update last year, which limits advertisers’ ability to target users, continued to pressure ad sales at the core of Meta’s business.
Wednesday’s layoffs mark the latest in a series of problems for Meta this year, including the announcement in June that chief operating officer Sheryl Sandberg would leave the company, as well as difficulty generating a return on its multibillion-dollar investment in the metaverse project. .
The company has been criticized by some investors for investing heavily in a metaverse project that has yet to generate significant profits.
Brad Gerstner, whose Altimeter Capital fund owns hundreds of millions of dollars in Meta stock, sharply criticized the company’s strategy in an open letter last month.
“Meta has ushered in the land of excess—too many people, too many ideas, too little urgency,” Gerstner wrote. “This lack of focus and fitness is hidden when growth is easy, but deadly when growth slows and technology changes.”
Gerstner called for the company to cut personnel costs by 20% and cap the cost of the metauniverse project at $5 billion a year. “Meta needs to get its mojo back,” he wrote.
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