Big tech’s big cull continues as Meta axes 11,000 jobs

Meta – parent of Facebook, Instagram and WhatsApp – is to let go of 13% of its staff – a decision which chief executive Mark Zuckerberg blamed on online growth during the pandemic and its subsequent decline.

The boom in e-commerce during Covid, which led to Meta “significantly increase its investments” has not played out the way the Zuckerberg had hoped, he said in a statement to staff, posted on Meta’s site. “I got this wrong, and I take responsibility for that,” he said.

The Facebook founder added that the macroeconomic downturn and increased competition [from newer social media players such as Tik Tok which have emerged to capture a younger audience] were other factors that have contributed to his decision to lay off 11,000 employees.

The statement added that resources would now be focussed on a smaller number of “high priority growth areas” including the firm’s AI discovery engine that’s powering Instagram’s Reels, other recommendation experiences, its ads and its business messaging platforms.

Also prioritised will be the social media behemoth’s vision for the metaverse –  although jobs will not be spared in the firm’s loss-making VR division Reality Labs, which makes reality headset Quest and VR and AR platforms.

For the three months ending 30 September, Reality Labs posted an operating loss of $3.7bn and expenses of $4.0bn (up 24%).

Meta warned investors last month that Reality Labs’ operating losses in 2023 were likely to grow significantly year on year. However, the success of the business is tied to Meta making a success of virtual reality in the metaverse – something that the firm will now have to achieve with fewer staff.

“We’re making reductions in every organisation across both Family of Apps and Reality Labs, some teams will be affected more than others,” Zuckerberg said.

“Recruiting will be disproportionately affected since we’re planning to hire fewer people next year,” he added.

The latest round of job cuts comes a week after Twitter’s new owner Elon Musk also announced plans to lay off between 25% and 50% of the social media giant’s workforce.

Redundancies are expected to be made across all departments, specifically targeting sales, product, engineering, legal and trust and safety which may impact more than 7,000 staff.

Processor firms are also feeling the pinch:  Intel is expected to announce thousands of job cuts soon, after CEO Pat Gelsinger confirming to Reuters that  a cost reduction plan that would include “people actions”

Fellow chip firms Nvidia and China’s AMD have also reported lower than expected earnings in the last quarter.