October 28, 2021 local time, California, USA, Meta logo. People's Vision Data Picture
Since its establishment, Meta announced its first plan to lay off employees and reduce budgets.
On September 29th local time, Bloomberg reported that Meta, the parent company of Facebook (Facebook ), announced for the first time that it plans to lay off employees and reorganize its team to reduce its budget. This is the first time the company has significantly cut its budget since its inception in 2004, and may mark the end of the period of rapid development of Meta.
According to people familiar with the matter, Meta CEO O Mark Zuckerberg announced the decision at a weekly employee Q&A meeting. Zuckerberg said the company plans to freeze recruitment, fire employees and reorganize some teams in order to cut spending and adjust priorities.
Zuckerberg also said that the company will reduce the budget of most teams, and even teams whose business is developing may face layoffs. Meta's human resources director Lori Goler said the company will not fill out positions in resigned employees, and will also suspend internal transfers to avoid transferring employees to other teams.
Zuckerberg said, "I hope the economy can stabilize, but from the current situation, this is not the case, so the company needs to act conservatively." There are signs of a layoff plan for
Meta. On September 21, the Wall Street Journal quoted people familiar with the matter as saying that Meta plans to cut at least 10% of its spending in the next few months by cutting large numbers of employees.
Earlier this year, Meta had said plans to slow down the recruitment of some management positions and postpone the opening of formal positions to summer interns. Zuckerberg said in July that Meta will reduce the size of its teams to focus on businesses with higher priorities - short video software Reels and meta-universe related projects.
According to Meta's financial report, as of June 30, the company had more than 83,500 employees, a 32% increase in employee numbers compared with last year. Zuckerberg said Meta will shrink slightly by the end of 2023, but Goler said Meta still plans to hire "thousands" in 2023.
Meta has announced several budget cuts, which may be affected by the sluggish second-quarter performance.
's second-quarter financial report showed that Meta's performance was lower than expected, with revenue falling 1% to about US$28.8 billion, the first year-on-year decline in revenue since its listing, and net profit fell for three consecutive quarters. Among them, the growth of advertising business, which is the pillar of revenue, slowed down, and advertising revenue during the period fell by 1.5% year-on-year to about US$28.1 billion.
Zuckerberg told employees, "The company has grown rapidly every year in the first 18 years since its establishment, but its revenue has been flat or slightly declined recently, for the first time in history."
Meta's advertising business has been hit by a double blow. On the one hand, the "App tracking transparency (ATT)" function launched by Apple has impacted Meta's advertising business. Under this function, only if the user actively authorizes it, the App can track iPhone users. On the other hand, the strongly rising Tiktok continues to attract users from Meta's Facebook, Instagram and other platforms.
In addition, the Reality Labs, the core business meta-universe department, has not yet achieved profitability. In the second quarter, the department achieved revenue of US$452 million, and increased by nearly 48% year-on-year, but the loss reached US$2.802 billion. The division lost $2.96 billion in the first quarter of this year and $10.2 billion in the full year of 2021. Meta said Reality Labs could have lower revenues in the third quarter than in the second quarter.
Meta's guidance on third-quarter performance is not optimistic, with total revenue expected to range from US$26 billion to US$28.5 billion. The company's chief financial officer Dave Wehner said the forecast shows that weak advertising business due to economic instability will continue.
It is worth noting that Meta is not the only tech company to cut expenses. Social media Twitter (Twitter) announced a recruitment freeze in May, requiring employees to reduce spending on travel and other things. Its rival Snap announced a layoff of about 20% in August.
Google parent company Alphabet also said it will slow down recruitment in the second half of this year. According to the Wall Street Journal, on September 30, Alphabet announced that it will close the cloud gaming platform Stadia launched in 2019 due to the lack of users.Previously, Area 120, the company's R&D innovation incubator unit, was cut off half of its R&D projects, and nearly half of its employees may be cut.
As of September 29, the closing of US stock , Mate's share price fell 3.67% to close at US$136.41 per share. The company's share price has fallen by more than 59% this year. Since reaching its peak in September 2021, Meta's market value has fallen by more than US$710 billion.
