Meta, the Menlo Park-based parent company of social media sites Facebook, Instagram, and WhatsApp, announced on Tuesday that they would be laying off another 10,000 employees this Spring, marking the second round of large layoffs by the social media company in the last 4 months.
Beginning in October of last year, the tech sector across the Bay Area announced mass layoffs in the tens of thousands. These have included Twitter, Peloton, Lyft, Opendoor, Chime, Stripe, Intel, Microsoft, and numerous others. In January, Salesforce cut 10% of it’s staff, or around 7,000 jobs, in only their latest round after several other cuts last year. Seattle-based Amazon slashed 18,000 jobs, with many coming in Silicon Valley city Sunnyvale. and Google cut 12,000 employees. Last month, thousands more lost their jobs due to layoffs at former Silicon Valley stars PayPal, NetApp, Yahoo, and Twilio.
Meta previously experienced a large layoff round in November when 13% of all company employees, or around 11,000 people, were let go. While the other tech companies have blamed the economy, a looming recession, rising insurance costs, more people working from home, and the rise of AI and automation, Meta noted in November that the first round firings were based on increased competition eating into ad revenue and predicting wrongly about the growth of e-commerce and how much revenue it would generate post-pandemic.
“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” said Meta CEO Mark Zuckerberg in November. “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.”
While a drastic cut, Zuckerberg didn’t rule out any future cuts for 2023. During a quarterly earnings call last month, he even hinted that more layoffs were on the way, due to him wanting to make 2023 a ‘year of efficiency’.
“We closed last year with some difficult layoffs and restructuring some teams. When we did this, I said clearly that this was the beginning of our focus on efficiency and not the end,” noted Zuckerberg last month. “As part of this, we’re going to be more proactive about cutting projects that aren’t performing or may no longer be as crucial, but my main focus is on increasing the efficiency of how we execute our top priorities. We’ll be removing some layers of middle management to make decisions faster.”
10,000 laid off at Meta
This led to Meta’s announcement on Tuesday that another 10,000 positions would be eliminated – effectively reducing the company by 25% since last year. In addition, another 5,000 positions, currently open or unfilled, would also be removed. In a Facebook post on Tuesday, Zuckerberg said that slow growth, a reduction in advertising revenue, higher interest rates and other factors led to the layoffs this week, with a decline expected for tech companies as a whole in the next few years.
“The job cuts will take place over the next couple of months,” the Meta CEO posted. “We expect to announce restructurings and layoffs in our tech groups in late April, and then our business groups in late May. In a small number of cases, it may take through the end of the year to complete these changes. Overall, we expect to reduce our team size by around 10,000 people and to close around 5,000 additional open roles that we haven’t yet hired.”
“The last year has been a humbling wake-up call. The world economy changed, competitive pressures grew, and our growth slowed considerably. At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years. Higher interest rates lead to the economy running leaner, more geopolitical instability leads to more volatility, and increased regulation leads to slower growth and increased costs of innovation.”
Tech experts noted on Tuesday that Meta would likely not be the only tech company in Silicon Valley to have a second huge layoff round this year, as many economic and industrial factors continue to work against them.
“A few years ago, 10,000 being laid off from Facebook would have been unthinkable,” explained Julie Ochs, a San Jose-based headhunter and hiring specialist, to the Globe on Tuesday. “Now it isn’t even front page news. Tech companies continue to bleed out as economic uncertainties continue and new worries keep popping up. There’s a big push for AI programs right now that has some excitement, but past ventures like NFTs and virtual worlds are failing fast. A lot of the layoffs at Meta have actually been around NFTs there. And don’t forget about the Silicon Valley Bank debacle hurting them too.”
“As more quarterlies come in, we’ll probably see more of these companies announce another round of layoffs. It’s been rough out there, and this current climate isn’t doing them any favors.”
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