Meta to Start Steep Job Cuts From This Week
Meta is set to begin the steepest job cuts in the company’s history, the Wall Street Journal reports.
Meta’s headcount stood at 87,314 at the end of September this year. The number had increased by 28% compared to the previous year. Now it looks like the company is about to change its hiring policy with the biggest job cuts in its history according to WSJ and NYT reports. Over 2023, Meta is expected to stagnate or freeze many of its teams which could result in the steepest job cuts since its founding. The report says “many thousands” are set to lose their jobs at the company starting this week.
The New York Times and the Wall Street Journal are reporting that Meta is planning huge job cuts in 2023. According to the NYT’s anonymous sources, it still isn’t clear how many employees Meta is planning to lay off or what departments in the company will be impacted. The reports say the job cuts could begin as soon as this week.
The job cuts are coming on the back of the huge financial losses that the company has incurred in recent months and the skepticism of many investors with the direction the company is taking with its huge metaverse bet.
According to the WSJ report, signs of impending job cuts started appearing last week after researchers and developers reported that the company had abruptly canceled the travel and events it had sponsored. A recent Bloomberg report stated that Meta was planning to cut back the company’s headcount and make it “smaller in 2023 than it was this year”.
For Meta, such steep cutbacks would mark the end of an era following close to two decades of boom times during which the company witnessed unprecedented growth in its business, powered primarily by its advertising business which enabled it to pivot to the metaverse.
While Meta isn’t the only tech company cutting back costs, its planned massive layoffs could be significant due to its unique structure and the rapid growth that it has experienced in recent years. Following its rebranding from Facebook to Meta, the organization of the company was restructured into two core divisions. There is Reality Labs, the division of the company that is charged with its futuristic products such as VR and AR hardware and platforms. Then there is the Family of Apps division which is in charge of Meta’s legacy moneymakers such as Facebook, Instagram, WhatsApp, and Messenger.
Meta’s Family of Apps division is primarily ad-driven and is currently facing a stiff challenge from the likes of Apple which is currently reining in its platform at a time when Meta is focused on building what it sees as the next frontier in computing. Zuckerberg has stated that Meta’s Reality Labs will focus on four key platforms, namely VR headsets, AR headsets, Horizon and its avatars, and neural interfaces such as Meta’s upcoming wristband.
Meta’s Reality Labs division has registered a drop in revenues after the company hiked the price of its best-selling piece of hardware, the Quest and Quest 2, by $100. Still, the company has confirmed it will release the consumer-focused ‘Quest 3’ next year. The upcoming headset is not yet officially named Quest 3 and Meta is yet to name any new games under development for the new headset. The new headset will have more processing power and, like the previous Quest headsets, will be subsidized in the $300 to $500 range. Meta’s planned layoffs may, therefore, refocus the company’s efforts as it seeks to dominate the consumer VR market with the planned release of its next-generation consumer headset.
In the last quarter, Meta’s profits dropped 50%, the company’s second consecutive revenue decline this year. The company responded by announcing it would undertake massive changes across the board to enable it to operate more efficiently. The company had announced that it would downsize existing teams and employees. Zuckerberg announced that teams at Metas would stay the same or shrink in size by the end of 2023.
In July this year, Zuckerberg announced that the company would face tough times following economic downturns and that the company’s staff would have to adjust to accomplish more tasks with fewer resources.
In May, Reuters reported that Meta was making cuts to its Reality Labs. Andrew Bosworth, Meta’s chief technology officer had ordered project cuts internally and emphasized a greater focus on hardware development.
A leaked memo in July this year warned of tough times ahead. In the memo, Meta’s Chief Product Officer Chris Cox emphasized the need for more quality work in the face of a slower-growth environment.
Meta’s metaverse research has proved costly, particularly at a time when the company is facing a decline in ad revenues.
Meta pivoted to the metaverse a year ago with a widely publicized rebrand from its previous ‘Facebook’ and ‘Oculus’ brand names. The company is currently investing billions of dollars into metaverse research. Some of these research projects include future technologies like virtual reality, augmented reality, and artificial intelligence.
The company’s massive investments in metaverse research are coming at a time when we are facing difficult global economic woes and a decline in its advertising business. NYT reports that many companies have curtailed their spending on social media platforms.
Meta is also facing a serious challenge from Apple’s privacy strategy. iPhone users who have installed iOS 14.5 can stop apps such as Facebook from collecting their personal data which makes it increasingly difficult to target those users with mobile advertising.