Meta has confirmed it will begin laying off 11,000 employees from Wednesday, in what Mark Zuckerberg described as a necessary move after the company overextended during the pandemic. The cuts represent about 13% of Meta's workforce.
Zuckerberg said the company wrongly believed the surge in online activity during Covid-19 would be permanent, leading to overinvestment. As lockdowns lifted, revenue contracted, leaving Meta financially exposed with nearly 90,000 staff. He also cited a macroeconomic downturn, increased competition, and ads signal loss due to Apple's privacy changes.
While Zuckerberg did not name rivals, the reference to competition points to TikTok, which has been stealing users, and Apple's 2021 policy limiting data tracking. However, he did not mention Meta's massive investment in the metaverse, which has cost over $12bn in R&D in 2021 alone with minimal revenue.
Shareholders have expressed concern, with Altimeter Capital's Brad Gerstner calling for metaverse spending to be capped at $5bn per year. Despite this, Zuckerberg remains committed, stating resources have shifted to high priority growth areas including AI, ads, and the metaverse.
Meta remains highly profitable, but Zuckerberg appears focused on his long-term vision for the metaverse, even as the company cuts jobs to fund it.
