Meta is cutting 13 percent of its workforce, or more than 11,000 employees, as Facebook faces major challenges in a weak advertising market. It is one of the biggest tech layoffs of the year, closely following the news that half of Twitter’s employees are being retrenched.
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It is the first time in Facebook’s 18-year-long history that they have had to restructure and let go of employees. The tech boom from the past couple of years have come to an abrupt end, with many tech companies now struggling to remain profitable amidst rising interest rates and decades-high inflation.
“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,” CEO Mark Zuckerberg said in a message to employees. “I got this wrong, and I take responsibility for that.”
As many other businesses have stressed, Zuckerberg has said that the company needs to be more capital efficient in these tough times. Facebook will shift its resources to “high-priority growth areas” such as its AI discovery engine, ads and business platforms, as well as its metaverse project.
The retrenchment packages made available to employees has also been shared by the company. Meta said it would pay 16 weeks of base pay plus two additional weeks for every year of service as a part of the severance package and all remaining paid time off. Employees will get cost of healthcare for six months and those impacted will receive their 15 November vesting.
Discretionary spending will also be cut for the foreseeable future. And it will extend its hiring freeze into the first quarter of 2023. The company’s shares have lost more than two-thirds of their value over the year.
