The parent company for Messenger, Facebook, WhatsApp, and Instagram; Meta Platforms Inc., has completed a large scale layoff of up to thirteen (13) percent of its entire workforce.
Its Co Founder and Chief Executive Officer (CEO); Mark Zuckerberg made it known via a statement that, “I want to take accountability for these decisions and for how we got here.”
He added that, “I know this is tough for everyone, and I’m especially sorry to those impacted.”
The move is coming at a time when companies all over the world have announced huge staff lay offs in the past couple of months.
Cloud based software company; Salesforce laid off hundreds of it’s workers this week. Just last week Irish-American financial services and software as a service company, laid off fourteen (14) percent of its workforce. Popular microblogging and social networking service; Twitter also laid off around half of its total workforce.
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Although rumors about lay offs at Meta had already begun to circulate, nobody knew the exact number of staff that would be affected until now.
With the company’s worldwide workforce standing at 87,000, this means that 11,000 workers will be laid off.
The Co Founder and Chief Executive Officer (CEO) of Meta; Mark Zuckerberg stated that every employee who is affected and based in the United States (US), will be given sixteen (16) weeks of severance pay, as well as two (2) more weeks for every year at the company. This means that if an employee had worked for Meta for four (4) years said employee will get six (6) months pay.
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In addition all workers affected will be paid for all the remaining time off unused and also receive compensation that is stock based and vested through to the 15th of November 2022.
With regards to health insurance all affected employees as well as their families, will enjoy coverage for six (6) months.
For employees based outside of the United States (US), the Billionaire stated that the severance packages “will be similar” but specifically modified for each region or market.
Although the lay off decision by the company is not unlike decisions made by other companies in recent times, its sheer size has however made the move larger than life.
Since it became a Trillion dollar company during the peak of the Coronavirus pandemic Meta Platforms Inc., rebranded and shifted more of its focus towards the Metaverse. It begun to invest huge sums of money into its Metaverse pivot. Observers believe the singular decision led to its current predicament stating that the Metaverse is far from ready for mainstream adoption.
In the past couple of months the market cap for Meta has dropped from 1 trillion United States Dollars (USD) to around 250 billion United States Dollars (USD) which is around 30.5 trillion Kenyan Shillings. The last time the company was at that valuation was in 2015 when its rise to the top began to pick up speed.
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In June of 2022, it announced its first quarterly drop in revenue. It then went on to announce that it was halting any plans to hire more staff in a bid to cut costs on a larger scale.
Its revenue drop also occurred in the next quarter.
It is important to note that Meta’s Co Founder and Chief Executive Officer (CEO) did not make mention of the Metaverse in his open letter besides making it known that it, is a “long-term vision” that will continue to be one of its “high priority growth areas.”
Observers believe the Billionaire will contain to be at the helm of affairs at Meta Platforms Inc.
He added that the lay offs will affect employees at its “Family of Apps”; WhatsApp, Instagram and Facebook. Reality Labs which is Meta’s arm that produces virtual reality and augmented reality hardware and software, including virtual reality headsets such as Quest, and online platforms such as Horizon Worlds will also be impacted.
Although it remains unclear which particular divisions would be the most affected, Mark Zuckerberg made it known that, “some teams will be affected more than others.”
Meta Platforms Inc. in an unconnected Securities and Exchange Commission (SEC) filing revealed that it anticipates that the operating losses for Reality Labs in 2023 will “grow significantly year-over-year.” This shows that the technology conglomerate will most likely continue on with its Metaverse project(s) despite its 2023 capex plan that is as at now between 34 billion United States Dollars (USD) (which is around 4.15 trillion Kenyan Shillings) and 37 billion United States Dollars (USD) which is around 4.51 trillion Kenyan Shillings.
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It is believed that technology company; Apple’s App Tracking Transparency (ATT) framework which was launched towards the end of 2021, played a significant role in Meta’s current fortunes as it directly impacted its advertising revenue as predicted by Meta.
Interestingly the advertising arm of Apple benefited from the App Tracking Transparency (ATT) framework.
Competition from fast growing short-form video hosting service; TikTok, could also have played a role as more and more advertisers move to the service. Insider Intelligence projects that the social media platform will hit a total of 750 million monthly users. It is currently the third (3rd) largest social network in the world and part of the Big Five today; Facebook, Instagram, TikTok, Snapchat, and Twitter.
It’s quite possible that Meta’s massive growth during the pandemic resulted in it overextending itself. Especially with the current worldwide recession.
In the words of Mark Zuckerberg, “At the start of Covid, the world rapidly moved online and the surge of ecommerce led to outsized revenue growth.”
He added that, “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected. 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. I got this wrong, and I take responsibility for that.”
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Meta Platforms Inc., has revealed that it will be going over its current infrastructure expenditure in a bid to improve its capacity efficiency as it aims to “shrink its real estate footprint.” This could potentially mean desk sharing arrangements for employees who are only at the office from time to time. With regards to hiring new employees the current halt, will carry on until the early stages of 2023 with a “small number of exceptions.”
In the words of the Billionaire, “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.”
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He added that, “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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