Meta Cuts Over 11,000 Jobs;  Zuckerberg says, ‘I got that wrong’

Meta Cuts Over 11,000 Jobs; Zuckerberg says, ‘I got that wrong’

(Bloomberg) — Mark Zuckerberg, CEO of Meta Platforms Inc., said the company will cut more than 11,000 jobs in the first major round of layoffs in the social media giant’s history.

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The cuts, which correspond to about 13% of the workforce, were announced in a statement on Wednesday. The company will also extend its hiring freeze through the first quarter.

“I want to take responsibility for those decisions and for how we got here,” Zuckerberg said in the statement, which was sent to Meta employees and posted on the company’s website. “I know this is difficult for everyone and I am particularly sorry for those affected.”

The company said that while there will be cuts across the business, its recruiting team will be disproportionately affected and its business teams will be “more substantially” restructured. 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.

Read More: Twitter, Meta Push Tech Downsizing Pace Near Early Pandemic Levels

Meta, whose shares have plummeted 71% this year, is taking steps to cut costs after posting several quarters of disappointing earnings and declines in sales. The cut, the company’s most drastic since Facebook’s founding in 2004, reflects a sharp slowdown in the digital advertising market, an economy teetering on the brink of recession, and Zuckerberg’s multibillion-dollar investment in a speculative virtual reality venture called the Metaverse.

Shares rose about 3.5% in premarket trading on Wednesday, before markets in New York opened.

Zuckerberg said in the statement he expected the surge in e-commerce and web traffic since the start of the Covid-19 lockdown to be part of a permanent acceleration. “But the macroeconomic downturn, increased competition and loss of advertising signals have resulted in our earnings being much lower than expected. I got that wrong.”

Meta joins a slew of tech companies that have announced job cuts or announced they will stop hiring in recent weeks. Enterprise software maker Salesforce Inc. said Tuesday it has laid off hundreds of employees from its sales teams, while Apple Inc., Inc. and Alphabet Inc. have all slowed or suspended hiring. Snap Inc., parent company of rival app Snapchat, is also downsizing, saying in August it would cut 20% of its workforce.

In a particularly chaotic round of layoffs, Twitter Inc. shed about half of its workforce last week, with many employees finding they had lost their jobs when they were suddenly cut off from Slack or email.

At Meta, employees still have access to their email so they can say goodbye to co-workers despite being cut off from more sensitive company systems, Zuckerberg said. US workers who have been cut will also receive 16 weeks of their base salary as severance pay, plus two weeks for each year they have worked at the company. The company also offers six months of medical insurance, as well as career services and immigration assistance. The packages will be similar outside the U.S., in accordance with local labor laws, it said.

Zuckerberg had warned employees in late September that Meta plans to cut costs and restructure teams to adapt to a changing market. The Menlo Park, Calif.-based company, which also owns Instagram and WhatsApp, imposed a hiring freeze, and the CEO said at the time that Meta expected headcount in 2023 to be fewer than it is this year.

“It’s obviously a different mode than what we’re used to,” Zuckerberg said in a Q&A with employees in September. “For the company’s first 18 years, we basically grew rapidly every year, and more recently, for the first time, our sales have been flat to slightly declining. So we have to adapt.”

Read more: Twitter’s Big Debt Bills Add Urgency to Musk’s Turnaround Plans

Despite the cuts, Meta still expects losses at its Reality Labs division, which houses the Metaverse investments, to increase “significantly” year over year in 2023, the company said in a separate regulatory filing on Wednesday.

Zuckerberg has begged investors for patience while he pours billions into his vision for the next major computing platform after cellphones: the Metaverse, a collection of digital worlds accessible through virtual and augmented reality devices. The effort requires intensive investments in hardware and research, which may take many years to pay off.

Meanwhile, growth at social flagship Facebook has stagnated. The company is working to speed this up and continue adding users to the photo-sharing app Instagram by experimenting with a more interest-based algorithm and short videos called Reels.

Now Zuckerberg has to make his big business transitions with fewer people.

–Assisted by Nate Lanxon.

(Updates with details on severance pay in paragraph 10)

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