Since Mark Zuckerberg founded Facebook in 2004, the Silicon Valley company has steadily hired more employees. By the end of September, it had amassed its largest number of workers ever, totaling 87,314 people.
But on Wednesday, the company — now rebranded as Meta — began cutting jobs, and deeply.
Meta said it laid off more than 11,000, or about 13 percent of its workforce, representing the company’s top job cuts. The layoffs fell across different departments, although some areas, such as recruitment, were more affected than others.
“I want to take responsibility for these decisions and for how we got here,” Mr. Zuckerberg wrote in a letter to employees. “I know this is hard for everyone, and I’m especially sorry for those affected.”
On Tuesday, Mr. Zuckerberg met with executives to discuss the layoffs, two people who attended the meeting said. One attendee said the CEO took responsibility for the cuts and said his company had scaled up too quickly. Meta had also canceled employee travel plans to ensure they were available to meet with managers should their team be hit by layoffs, three other people said.
The Wall Street Journal previously reported on Zuckerberg’s meeting with executives on Tuesday.
Meta was a powerful company for many years, growing rapidly as Facebook gathered more users and bought companies like Instagram and WhatsApp. Not even controlling the data privacy practices and toxic content of its apps could dent its financial performance as inventory continued to climb and revenues soared. Last year, at one point, Meta was valued at $1 trillion.
What is the metaverse and why is it important?
The origin. The word ‘metaverse’ describes a fully realized digital world that exists outside of the world we live in. It was conceived by Neal Stephenson in his 1992 novel ‘Snow Crash’ and the concept was further explored by Ernest Cline in his novel ‘Ready Player One’.
But the company has struggled financially this year as it tries to start a new business — the immersive world of the so-called metaverse — while also grappling with a global economic slowdown and a decline in digital advertising, the main source of its revenue. Last month, Meta posted a 50 percent drop in quarterly earnings and the second consecutive decline in sales. The stock has fallen more than 72 percent this year.
Meta joins other tech companies, such as Snap, who have laid off workers as economic conditions have become more challenging. While many of these companies have boomed during the coronavirus pandemic, some of the biggest have reported financial results in recent weeks showing they are feeling the effects of global economic jitters. Last week, Twitter’s new owner Elon Musk fired about half of the company’s 7,500 employees because he said the social media service was losing $4 million a day.
“These boom and bust cycles are incredibly destructive within organizations because the people who work there feel they don’t know where they stand,” said Sandra J. Sucher, a Harvard management professor. By recruiting quickly across all departments during the pandemic, Mr. Zuckerberg had set up his company in need of staff reductions, she said.
Mr. Zuckerberg, 38, telegraphs that Meta should cut costs, starting with cutting back many of the lavish benefits employees once enjoyed. In March, he announced that the company was shortening or eliminating free services such as laundry and dry cleaning. He also reduced the company’s free dinner offerings, making it more difficult for employees to bring dinner home for themselves and their families.
In July, Mr. Zuckerberg warned his employees that the company was “going through one of the worst recessions we’ve seen in recent history” and announced a staff freeze in September.
Last month, he warned that “teams will remain flat or shrink over the next year.” He added that the company “would end up being about the same size or even a slightly smaller organization than we are today in 2023.”
Within Meta, friction has arisen over Mr. Zuckerberg’s financial obligations to the metaverse, two executives said.
Meta has spent billions of dollars on metaverse-related products like virtual reality headsets, although such products are niche and there is no guarantee that people will flock to them. There was growing concern that Meta had spent too much to achieve Mr. Zuckerberg’s ambitions, people said, at the expense of its core social networking business.
In its earnings report last month, Meta disclosed that Reality Labs, the portion of the company working on the metaverse, had $3.67 billion in operating losses. Reality Labs also had its lowest revenue since the last quarter of 2020. The company expects operating losses for Reality Labs to increase next year.
This is a news item in development. Come back for updates.
Ryan Mac and Adam Satariano reporting contributed.
