Meta (Facebook’s parent company) announced that they will cut a whopping 11,000 employees, corresponding to approximately 13 percent of their entire workforce. The cut is one of the largest in the US this year. Close to half the cuts are expected to be technology roles, with Meta stating they will stop developing their own smart displays and smartwatches. The remaining 54% were in business positions, with the recruiting team cut nearly in half.
According to a quarterly report from the end of September this year, there are over 87,000 employees in Meta, meaning the layoffs affect some 13% of the company’s workforce. A downsizing has been expected lately after dismal quarterly figures for the company. The company’s net income in the third quarter of 2022 was US$4.4 billion – less than half the US$9.2 billion it made in the same period in 2021. Since the company’s name changed from Facebook to Meta a year ago, its stock price has fallen more than 70 percent, from US$345 to US$101.
CEO Zuckerberg was quoted as saying “Revenue trends are just a lot lower than what I predicted. Again, I got this wrong. It was a big mistake in planning for the company. I take responsibility for it.” Zuckerberg is also doubling down on his Metaverse bet, during the third-quarter earnings call CFO Dave Wehner said metaverse spending will increase even more in 2023. In 2021, Meta spent $10 billion on its Reality Labs division, which builds out the firm’s metaverse hardware and software. So far this year, the company already spent more than $9 billion on the project.
It remains to be seen if the bet pays off, we are somewhat divided here at the office, but like my colleague August I strongly believe the Metaverse will end up as a massive failure and money drain. Microsoft’s (and Xbox’s) CEO of gaming, Phil Spencer, has described the Metaverse as “a poorly built video game”. CEO of Snap, Evan Spiegel, said it was like “living inside a computer”, following up with “The last thing I want to do when I get home from work at the end of a long day is live inside a computer.”
Of course, thanks to CEO Zuckerberg’s “golden shares” he will remain in charge no matter what happens. (Cue the theme from Titanic.)
Meta is obviously also facing fierce competition from TikTok, and seems to have lost touch with young users. A survey by Pew Research Center this August found that just 32% of teens use the Facebook app, while 62% say they are using Instagram. TikTok, however, is being used by 67% of teens.
Those of us old enough to remember being befriended by Tom are generally old enough to know we’re no longer cool, yet Zuckerberg keeps trying hard to make his childhood dream (and other’s nightmares) come true – throwing billions upon billions at it.
Good for you, my old “friend” Tom, cashing in half a billion just as Facebook was entering the game! Mark might have something to learn from you…