CEO of Meta Platforms Inc. Mark Zuckerberg announced extensive plans to restructure teams and slash staff for the first time in company history, bringing to an end a period of tremendous development.
In what would be the first significant budget cut since Facebook’s launch in 2004, Zuckerberg announced that the firm would halt hiring and reorganise some teams in order to save costs and refocus priorities. He predicted that Meta will be less significant in 2023 than it was this year.
A participant in the weekly staff Q&A session said that he made the announcement of the freeze there. He continued by saying that the corporation would cut expenditures for the majority of teams, even those that are expanding, and that individual teams would decide how to manage changes in headcount.
The price of Meta stock, which was already trading lower when the news broke, dropped even further, dropping 3.7% from Wednesday’s close. This year alone, the shares have decreased by 60%.
The additional expense cuts and employment freeze are Meta’s most glaring acknowledgement that the rise in advertising income is faltering in the face of increased user attention competition. It’s not the best moment to make cuts since, in addition to economic challenges, new privacy restrictions from Apple Inc. on tracking iPhone users have diminished the effectiveness of the company’s advertising business, which is based on accurate consumer targeting. Younger people are switching away from Instagram to TikTok.
Additionally, Zuckerberg is placing a costly wager on the metaverse, an immersive virtual reality future in which he envisions human communication in the future. He has predicted that this investment will be a financial loss for many years.
This year, Meta said that it would delay offering full-time jobs to summer interns and would slow hiring for some management positions.
In July, Zuckerberg issued a cautionary note about Meta, stating that it would “steadily curtail staff growth” and that “many teams are going to downsize so we can allocate resources to other areas.” Internal priorities include Zuckerberg’s metaverse and Reels, Meta’s TikTok rival. As of June 30, Meta employed more than 83,500 people, and the second quarter saw 5,700 additional hiring.
Meta is not the only business that relies on advertising that is experiencing broader economic difficulties. Twitter Inc. implemented its own hiring restriction in May and has since urged staff members to keep an eye on their spending and cut back on marketing and travel expenses. Google, a division of Alphabet Inc., also said that recruiting will decrease in the second half of the year, and Snap Inc. reduced its headcount by 20% in August.
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