Dusseldorf The Facebook group Meta is laying off more than 11,000 employees – the largest job cuts in the company’s history. CEO Mark Zuckerberg spoke on Wednesday of 13 percent of the workforce being laid off. Most recently, the group had 87,000 employees. The “Wall Street Journal” had already reported on Monday about upcoming mass layoffs.
Founder Zuckerberg also attributes the layoffs that are now apparently necessary to his own mistakes. In a letter to the workforce on Wednesday, he pointed out that business had grown above average at the beginning of the corona pandemic due to the sharp increase in online trade. Like many people, he expected this growth to continue and therefore increased investments.
But now the online business has returned to earlier trends – and the weakening economy and increased competition are also weighing on revenues. “I was wrong, and I take responsibility for it,” Zuckerberg wrote.
Zuckerberg only wants to invest in a few projects
Meta now wants to focus resources on a few high-priority areas. According to Zuckerberg, these include the advertising platform, through which the group makes a large part of its sales, and the “long-term vision for the metaverse”.
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In addition, the social media group wants to develop a “discovery machine” with artificial intelligence that will show members content that matches their usage habits. Competitor Tiktok is currently enjoying great success, especially with young users.
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Meta has already reduced costs in recent months, for example by cutting budgets or eliminating extras. But that’s not enough, Zuckerberg explained – that’s why he made the “hard decision to let employees go”.
Problems caused by economic concerns and data protection
The problems can be seen in the business figures. In the third quarter, Meta revenue shrank four percent to $27.71 billion, the second straight decline. Profits even collapsed by about half to $4.4 billion. That was the worst result since 2019 and the fourth straight decline.
The most important reason: The core business with advertising in online services such as Facebook and Instagram is doing worse than before. In view of high inflation and concerns about the economy, advertisers are more frugal.
13 percent of the workforce have to go.
(Photo: IMAGO/NurPhoto)
At the same time, Apple’s data protection policy makes personal advertising on mobile devices such as the iPhone and iPad, the so-called targeting, more difficult. Since last year, developers have had to explicitly ask for permission if they want to track user activities across different apps. Since many reject this, advertising platforms generate less money.
It’s a structural change for the advertising industry. In February, meta management put the losses from this alone at “more than ten billion dollars”. The fact that other advertising-financed online services such as Snapchat are also suffering is little consolation.
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As sales go down, expenses go up. Above all, the development of virtual worlds driven by Zuckerberg under the keyword Metaverse is expensive, the cumulative losses since 2019 amount to 30 billion dollars. Many shareholders criticize these investments as too high.
In the last quarter alone, the Reality Labs division, which is working on the Metaverse, posted an operating loss of almost $3.7 billion. Since the beginning of the year, a deficit of 9.4 billion dollars has accumulated – with sales of 1.4 billion dollars in the area.
And Zuckerberg announced that the division’s losses would “grow significantly” in the coming year.
In addition to criticism of this specific project, shareholders and analysts also have fundamental concerns with regard to Meta’s business. After years of rapid growth, the almost classic social media services such as Facebook and Instagram are hardly gaining any more users in important markets such as the USA. The share price has fallen by almost 70 percent since the beginning of the year.
After all, the news from Wednesday was good: After the announcement of the layoffs, the titles rose by almost five percent before the market.
With agency material
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