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| Meta Lays Off More Than 11,000 Employees | Meta Lays Off More Than 11,000 Employees |
| (about 2 hours later) | |
| Since Mark Zuckerberg founded Facebook in 2004, the Silicon Valley company has steadily hired more employees. At the end of September, it had amassed its largest-ever number of workers, totaling 87,314 people. | Since Mark Zuckerberg founded Facebook in 2004, the Silicon Valley company has steadily hired more employees. At the end of September, it had amassed its largest-ever number of workers, totaling 87,314 people. |
| But on Wednesday, the company — now renamed Meta — began cutting jobs, and deeply. | But on Wednesday, the company — now renamed Meta — began cutting jobs, and deeply. |
| Meta said it was laying off more than 11,000 people, or about 13 percent of its work force, in what amounted to the company’s most significant job cuts. The layoffs were made across departments and regions, with areas like recruiting and business teams affected more than others. The divisions that were not cut as steeply included engineers working on projects related to the metaverse, the immersive online world that Mr. Zuckerberg has bet big on, two people with knowledge of the matter said. | Meta said it was laying off more than 11,000 people, or about 13 percent of its work force, in what amounted to the company’s most significant job cuts. The layoffs were made across departments and regions, with areas like recruiting and business teams affected more than others. The divisions that were not cut as steeply included engineers working on projects related to the metaverse, the immersive online world that Mr. Zuckerberg has bet big on, two people with knowledge of the matter said. |
| “I want to take accountability for these decisions and for how we got here,” Mr. Zuckerberg, 38, wrote in a letter to employees. “I know this is tough for everyone, and I’m especially sorry to those impacted.” | “I want to take accountability for these decisions and for how we got here,” Mr. Zuckerberg, 38, wrote in a letter to employees. “I know this is tough for everyone, and I’m especially sorry to those impacted.” |
| The cuts — nearly triple the number that Twitter slashed last week, though not as deep a percentage — represent a stunning reversal of fortune for a once high-flying company whose ambition and room for growth had seemed limitless. Meta spent lavishly over the years, accumulating users, buying companies such as Instagram and WhatsApp, and showering its employees with enviable perks. Not even scrutiny over its data privacy practices and the toxic content on its apps could dent its financial performance, as its stock continued climbing and its revenues soared. At one point last year, Meta was valued at $1 trillion. | |
| But the company has struggled financially this year as it has tried to move into a new business — the immersive world of the so-called metaverse — while grappling with a global economic slowdown and a decline in digital advertising, the main source of its revenue. New competitors like TikTok emerged to capture a younger audience while Meta’s services lost their sheen. Last month, Meta posted a 50 percent slide in quarterly profits and its second straight sales decline, even as its spending soared by 19 percent. Its stock has dropped roughly 70 percent this year. | |
| Mr. Zuckerberg attributed the cuts on Wednesday to growing too quickly during the pandemic, when a surge in online commerce led to a big spike in revenue. He said he had thought the shift would be permanent, leading him to significantly increase spending. Meta’s number of employees at the end of September was 28 percent higher than a year earlier. | |
| “Unfortunately, this did not play out the way I expected,” Mr. Zuckerberg said. “I got this wrong, and I take responsibility for that.” | “Unfortunately, this did not play out the way I expected,” Mr. Zuckerberg said. “I got this wrong, and I take responsibility for that.” |
| The reduction in Meta’s work force was an attempt to rein in some of the exuberance that came to define an era of success in Silicon Valley. Mr. Zuckerberg said that budgets would be reduced, including some employee perks, and that the company would cut back on real estate. A hiring freeze was extended until March. | |
| On Wednesday, laid-off employees immediately lost access to most corporate systems, though their email accounts will remain active until the end of the day “so everyone can say farewell,” Mr. Zuckerberg said. | On Wednesday, laid-off employees immediately lost access to most corporate systems, though their email accounts will remain active until the end of the day “so everyone can say farewell,” Mr. Zuckerberg said. |
| “This will add up to a meaningful cultural shift in how we operate,” he said. The company will focus on a smaller number of “high priority” areas, he said, including artificial intelligence, advertising and the metaverse. | “This will add up to a meaningful cultural shift in how we operate,” he said. The company will focus on a smaller number of “high priority” areas, he said, including artificial intelligence, advertising and the metaverse. |
| Meta began notifying European-based employees of the cuts during their morning, with those retaining their jobs receiving emails just minutes after those who were laid off, three employees said. As the Silicon Valley headquarters began waking up Wednesday, employees described tense hours as people stared at their inboxes awaiting news. | |
| For those who lost their job in the United States, Meta said it would pay severance of 16 weeks of their base pay, along with two additional weeks for every year they worked at the company. Laid-off workers and their families will have health care paid for six months. | |
| Meta joins other tech companies, such as Snap, that have laid off employees as economic conditions have grown more challenging. While many of these companies boomed during the coronavirus pandemic, some of the largest ones have reported financial results in recent weeks that showed they are feeling the fallout of global economic jitters. Last week, Elon Musk, the new owner of Twitter, laid off roughly half the company’s 7,500 employees, saying the social media service was losing $4 million a day. | |
| “These cycles of boom and bust are incredibly destructive within organizations because people employed there feel like they don’t know where they stand,” said Sandra J. Sucher, a management professor at Harvard. By rapidly hiring across all departments during the pandemic, Mr. Zuckerberg had set up his company to need reductions in staff, she said. | “These cycles of boom and bust are incredibly destructive within organizations because people employed there feel like they don’t know where they stand,” said Sandra J. Sucher, a management professor at Harvard. By rapidly hiring across all departments during the pandemic, Mr. Zuckerberg had set up his company to need reductions in staff, she said. |
| Mr. Zuckerberg has been telegraphing that Meta will have to clamp down on costs, starting with cutting back on many of the lavish perks that employees once enjoyed. In March, he announced that the company was trimming or eliminating free services like laundry and dry cleaning. He also scaled back free dinner offerings, making it harder for employees to take home dinner for themselves and their families. | |
| In July, Mr. Zuckerberg warned employees that the company was experiencing “one of the worst downturns that we’ve seen in recent history,” and in September he announced a hiring freeze. | |
| Last month, he warned that “teams will stay flat or shrink over the next year.” He added that the company would “end 2023 as either roughly the same size or even a slightly smaller organization than we are today.” | Last month, he warned that “teams will stay flat or shrink over the next year.” He added that the company would “end 2023 as either roughly the same size or even a slightly smaller organization than we are today.” |
| On Tuesday, Mr. Zuckerberg met with executives to discuss the layoffs, two people who took part in the meeting said. Meta had also canceled travel plans for employees to ensure they were available to meet with managers, should their team be affected by layoffs, three other people said. The Wall Street Journal earlier reported Mr. Zuckerberg’s meeting with executives on Tuesday. | On Tuesday, Mr. Zuckerberg met with executives to discuss the layoffs, two people who took part in the meeting said. Meta had also canceled travel plans for employees to ensure they were available to meet with managers, should their team be affected by layoffs, three other people said. The Wall Street Journal earlier reported Mr. Zuckerberg’s meeting with executives on Tuesday. |
| Inside Meta, friction has been building over Mr. Zuckerberg’s financial commitments to the metaverse, two executives said. | Inside Meta, friction has been building over Mr. Zuckerberg’s financial commitments to the metaverse, two executives said. |
| The company has been spending billions of dollars on metaverse-related products such as virtual-reality headsets, though such products are niche and there is no guarantee that people will flock to them. There was growing concern that Meta had spent too much on trying to realize Mr. Zuckerberg’s ambitions, the people said, at the cost of the core business of social networking. | The company has been spending billions of dollars on metaverse-related products such as virtual-reality headsets, though such products are niche and there is no guarantee that people will flock to them. There was growing concern that Meta had spent too much on trying to realize Mr. Zuckerberg’s ambitions, the people said, at the cost of the core business of social networking. |
| In its earnings report last month, Meta disclosed that Reality Labs, the part of the company working on the metaverse, had $3.67 billion in operating losses. Reality Labs also experienced its lowest revenue since the final quarter of 2020. The company expects the operating losses for Reality Labs to increase next year. | In its earnings report last month, Meta disclosed that Reality Labs, the part of the company working on the metaverse, had $3.67 billion in operating losses. Reality Labs also experienced its lowest revenue since the final quarter of 2020. The company expects the operating losses for Reality Labs to increase next year. |
| While research teams working for Reality Labs were affected by Wednesday’s layoffs, two employees said engineers working on metaverse-related projects were largely spared. | |
| Mr. Zuckerberg controls Meta through a special stock structure that effectively allows him alone to set the company’s direction. It also helps insulate him from the risk of being forced out of power by outside investors, unlike executives such as John Foley from the fitness company Peloton, who had to step down after miscalculating the economic effects of the pandemic. |