Facebook parent Meta laid off more than 11,000 employees on Wednesday in a companywide culling that was widely expected as Mark Zuckerberg’s firm struggles through a downturn.
The round of pink slips impacted roughly 13% of Meta’s overall workforce and constitute the most significant layoffs in the company’s history. Prior to the cuts, Meta had more than 87,000 employees globally.
Meta’s stock has plunged more than 70% this year as Zuckerberg pours billions into a troubled metaverse project despite sagging ad revenue and declines in its user base. Meta shares rose 5% in premarket trading after the layoffs were announced.
Zuckerberg apologized to employees regarding the layoffs in a companywide memo – and admitted that he had underestimated the extent to which Meta’s revenue would decline during the company’s recent slump.
The Meta boss also acknowledged the company has overspent on his watch, noting that he “made the decision to significantly increase our investments” while betting that the pandemic-era e-commerce boom would be a permanent trend.
“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 CEO said job cuts would impact employees across Meta’s “family of apps,” which includes Instagram and WhatsApp, as well as the Reality Labs division responsible for building the metaverse. Meta’s recruiting team will be ‘disproportionately affected” by the layoffs as the company pulls back on hiring.
Zuckerberg’s letter said company has decided to “remove access to most Meta systems” for impacted workers – a move he said was necessary due to “the amount of access to sensitive information.”
Zuckerberg outlined additional cost-cutting moves, including cuts to “discretionary spending” and extending a companywide hiring freeze through the first quarter. Meta will require desk sharing for employees “who already spend most of their time outside the office,” he added.
“I view layoffs as a last resort, so we decided to rein in other sources of cost before letting teammates go. Overall, this will add up to a meaningful cultural shift in how we operate,” Zuckerberg added.
Axed workers in the US will receive a minimum of 16 weeks of severance, health insurance, career services and will be compensated for any outstanding paid time off.
Zuckerberg has indicated for months that he preferred to reduce the company’s workforce.
“Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg said during a meeting in June.
Meta has repeatedly pointed to worsening macroeconomic conditions as a key cause of financial pain. However, the company has faced mounting pushback from investors as it spends wildly to build the metaverse – with little to show for its effort so far.
Investors were reportedly further alarmed last month after Meta indicated that its losses from the metaverse project would “grow significantly” in the next year, while capital spending would increase to as much as $39 billion.
Meta also reported dismal quarterly results in its most recent report, with revenue declining 4% to $27.71 billion for the quarter.