Meta CEO Mark Zuckerberg announced that the company has decided to reduce the size of its team by about 13%, cutting over 11,000 jobs.
“I want to take accountability for these decisions and for how we got here,” Zuckerberg said in a blog post as he announced the firm’s first major job cuts since its founding in 2004.
“At the start of COVID-19, the world rapidly moved online and the surge of ecommerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected,” he admitted.
“Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that,” he further added.
Last month, Meta reported a more than 50% drop in profit and a second straight quarterly revenue decline, hit by weak advertising demand, increased competition from rivals like TikTok, and Apple’s iOS privacy changes.
The social media giant’s shares have dived in 2022. Its stock has already lost two-thirds of its value so far this year.
Zuckerberg said the company also plans to take a number of additional steps to become leaner and more efficient by cutting discretionary spending and extending its hiring freeze through Q1, with a small number of exceptions.
As the social media giant aims to become more capital efficient, it has shifted more of its resources onto a smaller number of high-priority growth areas—like its AI discovery engine, ads and business platforms, and long-term vision for the metaverse, the Meta chief noted.
Facebook, which rebranded itself as Meta last October, is focused on bringing the metaverse—an immersive digital realm to life—and is making significant investments in this area. The company has lost about $9.4 billion on its metaverse technology so far this year.
While Meta is making reductions across both the family of apps and Reality Labs, some teams will be affected more than others, Zuckerberg said, adding that affected employees will have the opportunity to speak with someone to get their questions answered. In the US, the company will pay 16 weeks of base pay plus two additional weeks for every year of service, with no cap, to the affected employees.
In addition, it will cover the cost of healthcare for people and their families for six months and will provide three months of career support with an external vendor, including early access to unpublished job leads, according to the Meta chief.
“We’ll share more on how we’ll operate as a streamlined organisation to achieve our priorities in the weeks ahead,” Zuckerberg said.