Last Updated on November 6, 2022
Facebook parent company Meta is set to announce large-scale layoffs that will affect thousands of employees this week, according to a report from the Wall Street Journal. The cuts could end up being the largest tech workforce reduction conducted this year, surpassing the recent Twitter layoffs that will reportedly affect at least half of its workforce. Meta reported more than 87,000 employees at the end of September.
While smaller on a percentage basis than the Twitter layoffs, the number of axed employees could account for one of the largest labor reductions across all industries this year. For Meta, which previously went by Facebook, the move will account for the biggest round of layoffs in the company’s 18-year-history.
A spokesman for Meta declined the outlet’s request for comment, referring to Chief Executive Mark Zuckerberg’s recent statement that the company would “focus our investments on a small number of high priority growth areas.”
“So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year,” he said on the company’s third-quarter earnings call on Oct. 26. “In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”
The Wall Street Journal previously reported that Meta was looking to reduce expenses by 10 percent over the next year, in part through staff reductions. “Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg told employees at a companywide meeting in June.
Like many companies in the tech space, Meta added a sizable number of employees in 2020 and 2021 as online became more common due to the pandemic. The social media giant added more than 27,000 employees in 2020 and 2021, and added an additional 15,344 in the first nine months of this year.
At the time of the planned layoffs, Meta’s stock price is down 70 percent on the year. The company has seen its growth share in the social media space decline in face of increased competition from Apple and TikTok, while the company itself has blamed deteriorating macroeconomic trends.
On the financial side, Meta’s spending has significantly increased over the past few quarters, causing its cash flow to decline by 98 percent in the previous quarter. Much of the company’s spending has been put towards the “metaverse” and Zuckerberg’s commitment to Reality Labs, a division of the company responsible for both virtual and augmented reality headsets as well as the creation of the metaverse.
Zuckerberg has described the metaverse as “a constellation of interlocking virtual worlds in which people will eventually work, play, live and shop.”
Investors appear to be spooked by the company’s heavy focus on the metaverse. Last month, investment firm Altimeter Capital said in an open letter to Zuckerberg that Meta should slash staff and cool its metaverse ambitions, the report stated.