Facebook parent company Meta is set to begin another round of job cuts this week, part of a multi-phase downsizing effort that may trickle for months and affect thousands of workers, according to a person familiar with the matter.
Meta poised to begin laying off thousands of workers this week
The latest layoffs build upon November workforce cuts that slashed 11,000 jobs, or about 13 percent of Meta’s workforce, in the first widespread layoffs in the company’s history.
Meta declined to comment.
Meta’s downsizing comes at a chaotic time for the tech industry, following the stunning collapse of Silicon Valley Bank, which catered to tech start-ups. It was the second-largest bank failure in U.S. history. The implosion set off a three-day saga in which start-up founders warned that they might be unable to make payroll or be forced into layoffs if their funds were frozen.
Though the crisis was averted by the U.S. government’s announcement late Sunday that it would guarantee the at-risk deposits, the tech sector is still slashing tens of thousands of jobs. About 1,532 tech companies have laid off 289,613 workers in 2022 and 2023, according to Layoffs.fyi, an online layoff tracker for the tech sector. In addition to Meta, Google and Amazon have cut their workforces.
Like many internet platforms that make money from digital advertising, Meta is encountering economic challenges. The company is facing intensifying competition for advertising dollars and users from newer entrants in the social media market such as the short-form video network TikTok. Some digital advertisers have reduced their spending on social media ads because inflation has created too much market instability.
Meanwhile, the Menlo Park, Calif.-based company over-hired during the coronavirus pandemic, as many social media platforms experienced a boom during government-driven shutdowns.
Zuckerberg has pledged that 2023 will be the “year of efficiency” as the company seeks to trim middle management and speed up its decision-making.
“We closed last year with some difficult layoffs and restructuring some teams,” Zuckerberg said last month during a call with investors. “When we did this, I said clearly that this was the beginning of our focus on efficiency and not the end.”
In addition to layoffs, Meta is also planning to deflate the company’s hierarchy to reduce the leadership layers between Zuckerberg and interns. Meta’s plans have included pushing some managers into roles without direct reports.
Meta Chief Financial Officer Susan Li said last week at a Morgan Stanley technology conference that the company is continuing to evaluate how it is deploying resources — a process that will probably lead to “tough decisions” to wind down some projects and shift resources away from some teams. She added that the company is also looking at streamlining cross-functional teams and processes, as well as investing in automation to boost efficiency.
Despite its economic challenges, Meta — which changed its name from Facebook more than a year ago — is still investing in its big bet to build out immersive digital realms known as the metaverse. Zuckerberg argues people will want to work, shop and socialize through augmented and virtual-reality-powered devices, which he thinks will become the next great computing platform after mobile phones.
But Meta has struggled to grow the audience for virtual reality, in part because the company is still developing the underlying technology and a wider range of applications that would expand its appeal. Meta has said it expects operating losses for Reality Labs, the division working on VR hardware offerings such as the Quest headsets, to grow in 2023.
