Facebook parent company Meta cuts 11,000 jobs in latest sign of tech slowdown

Facebook’s parent company Meta announced massive layoffs on Wednesday, cutting 11,000 jobs, or about 13% of its staff, amid an industry-wide downturn that has rocked Silicon Valley in recent times. month.

The cuts represent the first drastic downsizing undertaken by the company since its founding in 2004 and the latest sign that the once invincible tech giants are in a moment of judgment.

Calling the layoffs “some of the toughest changes we’ve made in Meta’s history,” Meta CEO Mark Zuckerberg said the company has been overhired during the pandemic, assuming ultra-growth fast would continue.

“Not only has online commerce returned to earlier trends, but the macroeconomic slowdown, increased competition, and loss of advertising signal has caused our revenue to decline from what I expected,” Zuckerberg wrote in a message to employees. “I was wrong, and I take responsibility for it.”

Meta, which has about 87,000 employees, recently suffered belt-tightening measures such as hiring freezes and the elimination of non-essential travel.

In his memo to employees, Zuckerberg said Meta’s hiring freeze will continue, along with the reduction of its real estate inventory, among other cost-cutting changes to be announced in the coming months.

The dramatic shake-up comes as the company undergoes major changes on two fronts.

First, the company has invested several billion dollars in the so-called metaverse, a utopian online future in which people live, work and play in virtual reality. This is, so far, an unproven but costly pivot away from social media activity.

Second, the uncertain economy has caused nervous advertisers to cut spending. The setback has hit Meta, since nearly all of its revenue comes from ads. It has also hurt ad-dependent services like Snap and YouTube.

According to Zuckerberg, the 11,000 employees who will lose their jobs at Meta will receive 16 weeks of severance pay and health insurance for six months. Holders of terminated visas will receive resources to help them change immigration status, he said.

Tech sector layoffs come after pandemic-fueled hiring spree

Meta, like many other tech companies, launched a hiring drive during the pandemic. It has recruited tens of thousands of new employees to meet growing demand from people stuck at home. Still, fears of a possible recession, inflation and war in Ukraine have rocked the industry.

The layoffs at Meta come at a time when much of Silicon Valley is focused on upheaval at another company: Twitter. New owner Elon Musk has laid off around 50% of his workforce in a bid to reverse the fortunes of the money-losing platform. After the layoffs were announced, former Twitter CEO Jack Dorsey publicly apologized for growing the company too quickly.

Elsewhere in tech, Amazon announced a hiring freeze across its workforce. A memo to staff on Nov. 2 said the company plans to keep “this pause in place for the next few months.”

Payment processing platform Stripe followed Amazon’s announcement with its own significant cuts. Stripe CEO Patrick Collison informed employees via email that he was cutting 14% of his workforce.

Collison said the company, like other tech companies during the pandemic boom, had been hiring too aggressively, only to see a rapid slowdown in recent months.

“We were far too optimistic about the near-term growth of the internet economy in 2022 and 2023 and underestimated both the likelihood and impact of a broader downturn,” Collison wrote to employees.

Zuckerberg, in his memo to employees, said the layoffs were a “last resort” decision he hadn’t anticipated, saying the length of the ad revenue downturn this year, combined with increased competition from rivals social media, had an impact on Meta results.

“It’s a sad moment, and there’s no getting around it,” Zuckerberg wrote.

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