CALIFORNIA – Meta Platforms said on Wednesday it will let go of 13 per cent of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs in 2022 as the Facebook parent battles soaring costs and a weak advertising market.
The broad job cuts are the first in Metas 18-year history.
They follow thousands of layoffs at other major tech companies, including Elon Musk-owned Twitter and Microsoft Corp.
Meta employed more than 87,000 people as at Sept 30, according to media company Insider.
The reductions were disclosed on Wednesday in a statement. The company will also extend its hiring freeze through the first quarter.
I want to take accountability for these decisions and for how we got here, Meta Platforms chief executive officer Mark Zuckerberg said in the statement. I know this is tough for everyone, and Im especially sorry to those impacted.
Meta said that while reductions will happen across the company, its recruiting team will be disproportionately affected and its business teams would be restructured more substantially.
Meta will also reduce its real estate footprint, review its infrastructure spending and transition some employees to desk sharing with more cost-cutting announcements expected in the coming months.
The pandemic boom that boosted tech companies and their valuations has turned into a bust in 2022 in the face of decades-high inflation and rapidly rising interest rates.
Meta, whose stock has plunged 71 per cent in 2022, is taking steps to pare costs following several quarters of disappointing earnings and a slide in revenue. Its profits fell to US$4.4 billion (S$6.2 billion) in the last quarter, a 52 per cent decrease year on year.
The retrenchment, the companys most drastic since the founding of Facebook in 2004, reflects a sharp slowdown in the digital advertising market, an economy wobbling on the brink of recession and Mr Zuckerbergs multibillion-dollar investment in a speculative virtual-reality push called the metaverse.
Mr Zuckerberg said in the statement that he had anticipated that the surge in e-commerce and Web traffic from the beginning of the Covid-19 lockdowns would be part of a permanent acceleration. But the macroeconomic downturn, increased competition and ads signal loss have caused our revenue to be much lower than expected. I got this wrong.
Mr Zuckerberg had warned employees in late September that Meta intended to slash expenses and restructure teams to adapt to a changing market.
The Menlo Park, California-based company, which also owns Instagram and WhatsApp, implemented a hiring freeze, and the CEO said at the time that Meta expected headcount to be smaller in 2023 than it is this year.
Meta is joining a spate of technology companies that have announced job cuts in recent weeks or said they planned to pause hiring. Apple, Amazon.com and Googles parent company Alphabet have all slowed or paused hiring.
In a particularly chaotic round of dismissals, Twitter cut roughly half of its workforce last week with many employees finding out they had lost their jobs when they were suddenly cut off from Slack or e-mail.
At Meta, employees will continue to have access to their e-mails so that they can say goodbye to colleagues, though they have been cut off from more sensitive corporate systems, Mr Zuckerberg said.
US workers who were cut will also get 16 weeks of their base salary as severance, plus two weeks for every year they worked at the company. The company is also offering six months of healthcare coverage and career services and immigration support. Packages will be similar outside the US, in keeping with local employment laws, Mr Zuckerberg said. More On This Topic Pace of tech job cuts is reaching early pandemic levels Twitters Spore office hit by layoffs amid wider job cuts The following is Mr Zuckerbergs full message to Meta employees:
Today Im sharing some of the most difficult changes weve made in Metas history. Ive decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.
I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and Im especially sorry to those impacted.
How did we get here?
At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. 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 Id expected. I got this wrong, and I take responsibility for that.
In this new environment, we need to become more capital efficient. Weve shifted more of our resources onto a smaller number of high priority growth areas like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse. Weve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. Were restructuring teams to increase our efficiency. But these measures alone wont bring our expenses in line with our revenue growth, so Ive also made the hard decision to let people go.
How will this work?
There is no good way to do a layoff, but we hope to get all the relevant information to you as quickly as possible and then do whatever we can to support you through this.
Everyone will get an email soon letting you know what this layoff means for you. After that, every affected employee will have the opportunity to speak with someone to get their questions answered and join information sessions.
Some of the details in the US include:
Severance. We will pay 16 weeks of base pay plus two additional weeks for every year of service, with no cap.
PTO. Well pay for all remaining PTO time.
RSU vesting. Everyone impacted will receive their November 15, 2022 vesting.
Health insurance. Well cover the cost of healthcare for people and their families for six months.
Career services. Well provide three months of career support with an external vendor, including early access to unpublished job leads.
Immigration support. I know this is especially difficult if youre here on a visa. Theres a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need.
Outside the US, support will be similar, and well follow up soon with separate processes that take into account local employment laws.
We made the decision to remove access to most Meta systems for people leaving today given the amount of access to sensitive information. But were keeping email addresses active throughout the day so everyone can say farewell.
While were making reductions in every organization across both Family of Apps and Reality Labs, some teams will be affected more than others. Recruiting will be disproportionately affected since were planning to hire fewer people next year. Were also restructuring our business teams more substantially. This is not a reflection of the great work these groups have done, but what we need going forward. The leaders of each group will schedule time to discuss what this means for your team over the next couple of days.
The teammates who will be leaving us are taented and passionate, and have made an important impact on our company and community. Each of you have helped make Meta a success, and Im grateful for it. Im sure youll go on to do great work at other places.
What other changes are we making?
I view layoffs as a last resort, so we decided to rein in other sources of cost before letting teammates go. Overall, this will add up to a meaningful cultural shift in how we operate. For example, as we shrink our real estate footprint, were transitioning to desk sharing for people who already spend most of their time outside the office. Well roll out more cost-cutting changes like this in the coming months.
Were also extending our hiring freeze through Q1 with a small number of exceptions. Im 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. 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.
Im currently in the middle of a thorough review of our infrastructure spending. As we build our AI infrastructure, were focused on becoming even more efficient with our capacity. Our infrastructure will continue to be an important advantage for Meta, and I believe we can achieve this while spending less.
Fundamentally, were making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure were operating efficiently across both Family of Apps and Reality Labs.
How do we move forward?
This is a sad moment, and theres no way around that. To those who are leaving, I want to thank you again for everything youve put into this place. We would not be where we are today without your hard work, and Im grateful for your contributions.
To those who are staying, I know this is a difficult time for you too. Not only are we saying goodbye to people weve worked closely with, but many of you also feel uncertainty about the future. I want you to know that were making these decisions to make sure our future is strong.
I believe we are deeply underestimated as a company today. Billions of people use our services to connect, and our communities keep growing. Our core business is among the most profitable ever built with huge potential ahead. And were leading in developing the technology to define the future of social connection and the next computing platform. We do historically important work. Im confident that if we work efficiently, well come out of this downturn stronger and more resilient than ever.
Well share more on how well operate as a streamlined organization to achieve our priorities in the weeks ahead. For now, Ill say one more time how thankful I am to those of you who are leaving for everything youve done to advance our mission.
Mark
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