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Are Meta’s Layoffs Hint of Problems in the Metaverse?
The company behind Facebook remains intent on aligning its fortunes with the metaverse despite cutting 11,000 employees as CEO admits missteps.
November 9, 2022
4 Min Read
With revenue plummeting and stiffer competition from rival social media sites, Mark Zuckerberg faces a formidable task restoring the fortunes of Meta, which owns Facebook, Instagram, and WhatsApp. Image courtesy of David Talukdar / Alamy
A sizable segment of the adult population worldwide has for years been using Facebook as social media platform to connect with family and friends and expand their social circles. Just over a year ago, CEO Mark Zuckerberg renamed Facebook Meta, as part of a strategy to align social media platforms with the metaverse, where people can interact on a number of levels, in virtual reality.
Whether the rebranding has had any negative effects is open to speculation, but Meta is now going through growing pains. The company announced it has laid off 11,000 employees, amounting to 13% of its workforce, and will impose a hiring freeze that will last through the first quarter of 2023, which was detailed in a letter from Zuckerberg to employees.
In the letter, Zuckerberg admitted that the company’s decision to rapidly expand its business during the COVID-19 pandemic did not play out as anticipated, with online commerce reverting to pre-pandemic levels. Stiffer competition from rival social media platforms, notably Tik-Tok, and a decline in advertising put a dent in company revenue, leading to Meta posting its second quarterly revenue decline and dwindling profits.
“I got this wrong, and I take responsibility for that,” Zuckerberg was quoted as saying in the letter.
Zuckerberg went on to state in the letter that Meta has been trying to redirect its investment into high-priority growth areas such as its AI discovery engine, ads and business platforms, and its long-term vision for the metaverse. Before it rebranded as Meta, Facebook unveiled smart glasses as a precursor toward an augmented reality device. Then, as Meta, the company stated it would open a brick-and-mortar store to enable customers to sample the company’s growing array of metaverse products.
The investments in these efforts strongly indicate that Zuckerberg is not going to do an about-face on moving heavily into the metaverse. But it does open speculation on how rapidly Meta can reap the financial benefits of its long-term growth strategy to maintain its market position.
So far, that strategy shift along with cost measures the company has already made—including reducing perks, scaling back budgets, and reducing its real estate footprint—were not enough to spare Meta’s talented workforce, which comprises many workers with specialized, cutting-edge technical skills. In the end, many of these employees are receiving the short end of the stick.
Zuckerberg’s letter to employees outlined a host of measures Meta was taking to ease the pain of termination. For US employees, this would include 16 weeks of base pay plus two additional weeks for every year of service, and all remaining PTO time. Meta would also cover healthcare costs for terminated employees and their families for six months and provide three months of career services including early access to unpublished job leads. The letter also stated Meta would have dedicated immigration specialists to help terminated employees on visas help work through immigration status issues.
The severance measures showed at least some compassion for those let go, a far cry from the unremorseful tone of the draconian layoffs Elon Musk instituted upon completing the acquisition of Twitter. Still, the size and scope of the layoffs—the cuts will be broad reaching throughout the organization—are likely to reverberate through the tech world as layoffs that began earlier this year continue to be announced at many companies.
Meta’s layoffs probably bring even more pain to the current economic malaise surrounding the tech world, considering the company was considered a pioneer in new media and has been highly valued as a tech stock. Zuckerberg himself has elevated himself to what some may consider a near-cult status amongst the leaders of the current tech evolution.
But Meta has also been a victim of its own recent growth. In recent years, Facebook has come under harsh criticism, with charges of censorship, hacking, and the safety and security of its users, among other things. A well-publicized outage last year had many questioning the company’s network infrastructure maintenance and repair procedures.
Besides Facebook, Meta also owns the social media platforms Instagram and What’sApp.
Spencer Chin is a Senior Editor for Design News covering the electronics beat. He has many years of experience covering developments in components, semiconductors, subsystems, power, and other facets of electronics from both a business/supply-chain and technology perspective. He can be reached at [email protected].
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