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Facebook parent Meta cuts 11,000 jobs in social media giant’s first big layoff

Meta Platforms Inc. CEO Mark Zuckerberg said the company will cut more than 11,000 jobs in the first major round of layoffs in the social media giant’s history.

The cuts, equal to around 13% of the workforce, were disclosed in a statement on Wednesday. The company will also extend its hiring freeze until the first quarter.

“I want to take responsibility for these decisions and how we got here,” Zuckerberg said in the statement that was sent to Meta employees and posted on the company’s website. “I know this is difficult for everyone, and I’m especially sorry for those affected.”

The company said that while reductions will occur across the business, its recruiting team will be disproportionately affected and its sales teams will be restructured “more substantially”. Meta will also reduce its real estate footprint, revise infrastructure spending and transition some employees to office sharing, with further cost-cutting announcements expected in the coming months.

Meta, whose stock has plunged 71% this year, is taking steps to cut costs after several quarters of disappointing profits and falling revenue. The retrenchment, the company’s most drastic since Facebook was founded in 2004, reflects a sharp downturn in the digital advertising market, a faltering economy on the brink of recession and Zuckerberg’s multi-billion dollar investment in a virtual reality speculative push called the metaverse.

Shares rose about 5% in New York at the open of trading on Wednesday.

Zuckerberg said in the statement that he expected the surge in e-commerce and web traffic since the start of the Covid-19 lockdowns would be part of a permanent acceleration. “But the macroeconomic slowdown, increased competition and loss of advertising signal caused our revenue to decline from forecast. I was wrong.

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Meta joins a wave of tech companies that have announced job cuts in recent weeks or said they plan to halt hiring. Enterprise software maker Salesforce Inc. said on Tuesday it had cut hundreds of workers from sales teams, while Apple Inc., Amazon.co.uk Inc. and Alphabet Inc. have all slowed or suspended hiring. Snap Inc., parent company of rival app Snapchat, is also scaling back, saying in August it would cut 20% of its workforce.

In a particularly chaotic series of layoffs, Twitter Inc. cut about half of its workforce last week, with many employees finding out they had lost their jobs when they were suddenly cut off from Slack or email.

At Meta, employees will continue to have access to their emails so they can say goodbye to co-workers, despite being cut off from more sensitive corporate systems, Zuckerberg said. U.S. workers who have been laid off will also receive 16 weeks of their base salary as severance pay, plus two weeks for each year they worked for the company. The company also offers six months of healthcare coverage as well as career services and immigration support. The packages will be similar outside the United States, in accordance with local employment laws, he said.

Zuckerberg had warned employees in late September that Meta intended to drastically cut expenses and restructure teams to adapt to a changing market. The Menlo Park, Calif.-based company, which also owns Instagram and WhatsApp, implemented a hiring freeze, and the CEO said at the time that Meta expected the workforce to be smaller in 2023 than it is this year.

“It’s obviously a different mode than what we’re used to operating in,” Zuckerberg said during a question-and-answer session with employees in September. “For the first 18 years of the business, we basically grew rapidly every year, and then more recently our revenue was flat or slightly down for the first time, so you have to adapt.”

Even with the cuts, Meta continues to expect losses from the Reality Labs division, which houses Metaverse investments, to increase “significantly” year-over-year in 2023, the company said Wednesday. company in a separate regulatory filing.

Zuckerberg has asked investors for patience as he pours billions into his vision for the next great computing platform after mobile phones: the Metaverse, a collection of digital worlds accessible via virtual and augmented reality devices. This effort requires intensive investments in equipment and research that may not bear fruit for many years.

Meanwhile, the growth of flagship social network Facebook is stagnating. The company is working to speed it up and continues to add users to the Instagram photo-sharing app, experimenting with a more interest-based algorithm and short videos called Reels.

Now Zuckerberg must pull off his major corporate transitions with fewer staff.

Kurt Wagner, Bloomberg

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