Meta has announced that it is laying off a massive 13 per cent of its workforce globally in restructuring market uncertainty about the Metaverse vision.
Meta’s CEO, Mark Zuckerberg, announced the 11,000-employee layoff from Meta, the parent company of Facebook, Instagram, and WhatsApp, after Reality Labs, the division building the Metaverse, suffered £3.16bn losses between July and September this year (the largest loss the company has made). The previous quarter also showed disappointing results.
It should also be noted that Meta also spent around $15 billion last year on its re-brand, which, coupled with the lack of growth and the losses, may also have contributed to the need for restructuring and layoffs.
Mr Zuckerberg reportedly emailed staff about the layoffs, blaming his over-optimistic view of post-pandemic demand for e-commerce. Employees were informed that the releases would mean:
– There will be reductions in every organisation across Meta’s Apps and Reality Labs, and some teams will be affected more than others.
– Recruiting will be disproportionately affected because fewer people will be hired next year.
– The business is being restructured “more substantially.”
In the US, as well as being thanked for their “impact” on Meta’s business, those being laid-off were reportedly told in their emails that they would receive at least 16 weeks’ salary plus two weeks’ wages for each year served with the company.
The significant Meta layoffs are painfully similar to Twitter’s recent massive job cuts, with 50 per cent of the company’s global workforce (7,500 people) being given their marching orders. Elsewhere in the big tech company world, Amazon, Alphabet and Apple are reported to have hiring freezes in place.
Despite half a year’s poor financial results due to cash being shovelled into the slow-moving Metaverse vision, Mark Zuckerberg appears to be fully committed to it and ready to plough on. Also, despite little investor confidence betraying a lack of understanding of the Metaverse vision, some commentators have noted that society is moving more towards the virtual world daily. This could mean that Mark Zuckerberg is on the right track but may not be moving fast enough with it yet.
Meta, like other big tech companies, has faced challenges like a lack of growth and declining ad revenue since the pandemic, as well as stiff competition from the likes of TikTok. Meta, however, appears not to have been able to communicate to investors precisely what the Metaverse and its value are while at the same time appearing to plough a lot of money into a vision that is not delivering yet. This combination of the investors’ responses to a lack of certainty, tough times, plus outside competition has therefore led some people to speculate that big tech itself may be in trouble, and this has prompted Meta’s need to shed jobs to steady nerves.
