Meta CEO Mark Zuckerberg apologized to employees after the company confirmed it would lay off 11,000 staff, equivalent to 13 percent of its workforce.
Zuckerberg told executives in a meeting on Tuesday that broad cuts of 11,000 jobs would be announced, with recruiting and business teams to face major losses.
Meta employees then received the confirmation about the large-scale layoffs in a company-wide email that was sent today at 0600 EST.
In a message to employees published hours later, Zuckerberg took “accountability” for the job cuts and admitted that the situation at Meta, the parent company of Instagram and Facebook, was far worse than he expected.
In the message, Zuckerberg explained that the company had over-invested at the start of COVID-19, betting that the increase in online activity would continue after the pandemic.
“Unfortunately, this did not play out the way I expected,” he writes.
“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”
In the message, Zuckerberg also said the company would shift resources to “high priority growth areas” such as its AI discovery engine, advertising and business platforms, and its metaverse project.
Meta says it will pay 16 weeks of base salary plus two additional weeks’ pay for every year of service as part of its severance packages, and all remaining paid time off. Employees will also get the cost of healthcare for six months and those affected will receive their 15 November vesting.
The company plans to cut discretionary spending and extend its hiring freeze through the first quarter of next year.
Meta reported more than 87,000 employees at the end of September. The job cuts are set to be one of the biggest layoffs of the year.
In October, the company had $80 billion wiped off its market value after it reported another quarter of declining revenues. Meta’s shares have fallen by almost two-thirds this year amid heightened concern about the company’s prospects.
In his message to employees, Zuckerberg said the company would continue to invest in the metaverse despite concerns among analysts and investors.
Zuckerberg has continued to pump money into Reality Labs, the company’s metaverse division even though it has made a $3.7 billion loss over the past three months, with no end to losses in immediate sight.
Zuckerberg says he is confident that the company’s spending on the metaverse will pay off — but not for another decade.
However, amid these struggles, Instagram remains a major growth driver for the company and Reels is now the fastest-growing format across Meta’s family of apps and services.
In a recent interview, Instagram head Adam Mosseri admitted that the social media platform is facing “urgency” to drive revenue to Reels.
Image credits: Header by Anthony Quintano, CC by 2.0