• by Karlene Lukovitz  @KLmarketdaily, November 9, 2022

Meta on Wednesday announced that it will lay off 11,000 employees — the largest cuts in its history. 

Due largely to stalled advertising growth because of Apple's privacy policy impacts on ad targeting and competition from TikTok, Meta's net income plummeted 52% in this year's third quarter, which also marked its second consecutive quarter of  revenue decline. The company also projected another revenue decline in Q4.

“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history," Meta CEO Mark Zuckerberg wrote in a blog post directed to employees. “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.

“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” Zuckerberg continued. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected. 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. I got this wrong, and I take responsibility for that.” 

While the layoffs — which already began today — will impact workers in areas across the company’s Family of Apps and metaverse-focused Reality Labs, recruitment will be hardest-hit. Meta extended its hiring freeze through Q1, and plans to continue reduced hiring into the year. 

“I’m going to watch our business performance, operational efficiency, and other macroeconomic factors to determine whether and how much we should resume hiring at that point,” Zuckerberg said. “This will give us the ability to control our cost structure in the event of a continued economic downturn. It will also put us on a path to achieve a more efficient cost structure than we outlined to investors recently.” 

The company cut costs before resorting to layoffs, including scaling back budgets, reducing perks and shrinking its real estate footprint, and has shifted resources to “high priority growth areas” such as its AI discovery engine, its advertising offerings and business platforms, and its “long-term vision for the metaverse,” Zuckerberg said. He added that he believes that Meta’s AI infrastructure, while an important advantage, can be maintained more cost efficiently. Other operating costs are also being reduced, in part through restructuring of teams, he said.

Meta’s core business “is among the most profitable ever built, with huge potential ahead,” and the company is “leading in developing the technology to define the future of social connection and the next computing platform,” Zuckerberg concluded. 

He apologized to all of those impacted, and thanked them for their contributions. The company is providing 16 weeks of severance pay plus two additional weeks for every year of service, and will pay for six months of healthcare insurance for employees and their families.