USA: Mark Zuckerberg, CEO of Meta Platforms Inc., for the first time announced broad plans to reorganize teams and cut staff, ending a period of rapid growth at the social media giant.
In what would be the first significant budget cut since Facebook's founding in 2004, Zuckerberg announced that the company would stop hiring and reorganize some teams to reduce costs and realign priorities. He predicted that the meta would be less important in 2023 than this year.
One participant in the weekly employee Q&A session claimed that he had announced the freeze there. Additionally, he said the company would cut budgets for most teams, including those that are expanding, and that individual teams would decide how to handle changes in headcount.
It may be trying to fill vacancies, move people to other teams, or "manage people who don't succeed," according to comments investigated by Bloomberg.
Zuckerberg said, “I expected the economy to be more clearly stable by now. A Meta spokesperson declined to comment, saying, “But what we are seeing doesn’t seem like it yet, so We want to do some planning. conservatively.
The price of Meta stock, which was already falling at the start of the day, fell further after the news, down 3.7% from Wednesday's close at the end of the day. The shares have fallen 60 per cent so far in 2018.
The additional cost reductions and hiring freeze are the meta's most obvious acknowledgment that growth in ad revenue is slowing due to competition for user attention. It's not the best time to cut back, because in addition to economic pressures, Apple Inc. is keeping an eye on iPhone users. The U.S.'s new privacy restrictions have undermined the effectiveness of the company's advertising business, which is based on precise consumer targeting. Younger users are switching from Instagram to Tiktok.
Additionally, Zuckerberg is making an expensive bet on the Metaverse, an immersive virtual reality future in which he imagines human communication in the future. He predicted that this investment would cause economic losses for many years.
This year, Meta announced that it would delay offering full-time jobs to summer trainees and slow recruitment for some management positions. At the meeting, Zuckerberg said the freeze was necessary because "we want to make sure we're not adding people to teams where we don't expect to play a role next year."
In July, Zuckerberg issued a warning about the meta, saying it would "constantly reduce headcount growth" and that "many teams are going to shrink so we can move energy to other areas." Internal preferences include Zuckerberg's Metaverse and Reels, Meta's TikTok rival. As of June 30, Meta employed more than 83,500 people, and in the second quarter 5,700 new employees were hired.
According to Zuckerberg's Thursday statement, the company will be "somewhat smaller" by the end of 2023. He explained to the employees, "For the first 18 years of the company, we grew exponentially basically every year, and then more recently, our revenue dropped a little bit for the first time ever.
In its first quarter earnings call, Meta disclosed that annual expenses would be approximately US$3 billion lower than anticipated, reducing the range of potential costs to less than US$95 billion. A dual-camera watch that the company was developing to rival the Apple Watch was locked in a previous cut for spending.
Meta isn't the only business that relies on advertising facing macroeconomic difficulties. Twitter Inc. implemented its own hiring freeze in May and has since urged staff members to monitor their spending and cut marketing and travel expenses. Google, Alphabet Inc. also announced that hiring would slow in the second half of the year, and Snap Inc. reduced its workforce by 20% in August.