Facebook & Meta CEO Mark Zuckerberg testifies at a House Financial Services Committee hearing in Washington, U.S., October 23, 2019. Photo by REUTERS/Erin Scott.
Facebook founder Mark Zuckerberg shared a message with Meta employees on Wednesday announcing 11,000 layoffs, roughly 13% of the company’s workforce, due to declining revenue and a pandemic-influenced prediction of company acceleration that failed to come to fruition.
Zuckerberg explained that the surge in e-commerce at the beginning of the COVID-19 pandemic and subsequent lockdowns led him to believe that Facebook and its parent company Meta would, too, reap the benefits of rapid growth.
“Unfortunately, this did not play out the way I expected,” Zuckerberg said. “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.”
The statement comes one week after Elon Musk announced large-scale layoffs at Twitter following a wave of other tech industry job cuts including Stripe, Salesforce, Lyft and others.
Brad Gerstner, the CEO of Meta shareholder Altimeter Capital, shared an open letter to Zuckerberg last month in which he suggested layoffs and implored the CEO to revitalize Meta into a leaner, faster and more successful company.
“Meta has drifted into the land of excess — too many people, too many ideas, too little urgency,” Gerstner said. “This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”
The bottom line, said Gerstner, is that Meta needs to get its mojo back.
“Meta has three huge problems to overcome: It is no longer an innovative groundbreaker; its grip on market domination is dwindling; and the promise of the metaverse, the centerpiece of Zuckerberg’s vision for the future of his company, has been diminished by a combination of consumer apathy, business skepticism, and the realities of a sinking worldwide economy,”
Zuckerburg said layoffs were a last resort and that they had tried implementing other cost cutting changes before cutting jobs. Meta had shrunk its real estate footprint, shifting to a shared deskspace environment for many employees who are already working largely outside of the office. Meta also decided to cut discretionary spending and extend their hiring freeze through the first quarter of next year. Despite those changes, layoffs were still necessary. The founder also said more cost-cutting changes can be expected in the coming months as part of the tech giant’s structural overhaul.
In his final thoughts, Zuckerburg said he remains confident that Meta will come out of the ongoing economic downturn stronger than ever.
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