Facebook's parent company Meta fired 11,000 employees worldwide on Wednesday as the company struggles with declining sales due to the tight advertising market. This is one of the largest rounds of layoffs at a company this year and the first broad intervention in Meta's 18-year history.
Out of the total global workforce, this represents a downsizing of around 13%. At least until the first quarter of next year, no new staff will be hired either. Meta will also cut its spending, including on real estate and infrastructure.
"This is a sad moment, but we can't ignore it," said Mark Zuckerberg, the CEO of Meta and founder of Facebook in a message sent to his staff on Wednesday and posted on the company website. "I know this is difficult for everyone, I'm sorry for those affected."
Gambles and mistakes
In recent years, there seemed to be no limit to growth. In June last year, Meta (then called Facebook) reached a market capitalisation of $1,000 billion, making it only the fifth US company ever to achieve that after industry peers such as Apple, Microsoft and Amazon. However, today it looks drastically different.
One aspect that still raises questions is the gamble Zuckerberg ventured into in the summer of 2021, when he pumped billions into the 'metaverse'. Questions remain on whether it will ever make money. 70% of Meta's stock market value has since gone up in smoke, which causing investors to doubt the credibility of the venture. Consequently, Meta is doing remarkably worse than industry peers.
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Another aspect that has pushed Meta into its current position is the drastically changed economic conditions. Inflation and impending recession are drying up advertisement budgets worldwide.
"At the onset of the pandemic, the world switched to online working and shopping at an accelerated pace that led to a huge increase in sales," Zuckerberg wrote. "Many thought that this boom would last, I was one of them. Unfortunately, things turned out differently. I made a mistake. I take full responsibility for that."
New trend of tech layoffs
Meta is by no means the only tech company to have to lay people off after the prosperous pandemic years.
Amazon announced a week ago that it was not hiring any more new employees for the time being. Taxi app Lyft announced 650 layoffs. Payment platform Stripe is laying off 1,100 employees. And then, of course, there is Twitter, where more than half of its 7,500 employees were laid off by new owner Elon Musk.
Investors in Meta favoured Zuckerberg's initiative as the stock rose about 6%.