Facebook's Parent Company Meta Has Sacked Over 11 000 Employees
Facebook’s parent company, Meta, has sacked over 11 000 employees and is set to extend the hiring freeze.
Meta had overextended, The Guardian reported citing Facebook founder Mark Zuckerberg.
Like many of its competitors, Meta believed the rise in online activity during the coronavirus pandemic was a permanent shift which could continue even yonder the lockdowns.
As Meta’s revenue surged during the lockdowns, the company invested accordingly.
However, Meta’s revenues contracted, leaving the company, with almost 90 000 employees, financially exposed.
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Zuckerberg also said wider “macroeconomic downturn” hammered all tech stocks equally, as profit today started to look tastier than growth tomorrow in the eyes of investors facing the end of the western world’s zero interest rate policy.
He also said there has been “Increased competition,” which hurt further, as did “ads signal loss”.
Although Zuckerberg did not name Facebook’s rivals, it is believed he was referring to competition from TikTok, a trendy app stealing users and dominating the zeitgeist and a change of policy at Apple.
In 2021, Apple limited the amount of data, or “signals”, Facebook could gather about the behaviour of iPhone users, which made it harder for small businesses to use Facebook adverts to profitably acquire new customers.
In 2021 alone, Meta spent more than $12bn (£10bn) on research and design (R&D) at its Reality Labs metaverse wing and brought in barely a sixth of that in the few metaverse products it actually makes revenue from.
Those losses are growing: in 2019 Reality Labs lost $4.5bn with $500m in revenue, and in 2020 $6.6bn with $1.1bn in revenue. In an earnings call in February, Zuckerberg said he expected the losses to “increase meaningfully” over 2022.
Shareholders panicked. Brad Gerstner, the founder of Altimeter Capital, and a long-term shareholder in the company wrote an open letter to Zuckerberg in October, calling on him to radically scale back.
If Gerstner’s estimate is even remotely accurate, Meta could pay every single employee who is losing their job a $9m severance fee, and still spend less than it is expected to invest in building out the metaverse business.
