Meta to cut over 11,000 jobs;  Zuckerberg Says 'I Was Wrong'

(Bloomberg) — The CEO of Meta Platforms Inc. Mark Zuckerberg said the company will cut more than 11,000 jobs in the first major round of layoffs in the social media giant’s history.

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The layoffs, amounting to about 13 percent of the workforce, were announced Wednesday in a statement. The company will also extend a hiring freeze through the first quarter.

“I want to take responsibility for these decisions and how we got here,” Zuckerberg said in a statement sent to Meta employees and posted on the company’s website. “I know this is difficult for everyone and I am especially sorry for those affected.”

The company said that while the layoffs would occur across the company, its recruiting team would be disproportionately affected and its business teams would be restructured “more significantly.” Meta will also reduce its real estate footprint, review its infrastructure spending and shift some employees to desk-sharing, with more cost-cutting announcements expected in the coming months.

Read more: Twitter, Meta Push Tech Job-Cutting Pace Near Early Pandemic Levels

Meta, whose shares have tumbled 71% this year, is taking steps to cut costs after several quarters of disappointing earnings and falling revenue. The cut, the company’s most drastic since Facebook’s founding in 2004, reflects a sharp slowdown in the digital advertising market, an economy teetering on the brink of recession and Zuckerberg’s multibillion-dollar investment in a speculative virtual reality push called the metaverse .

Shares rose about 5% in New York at the open on Wednesday.

Zuckerberg said in the statement that he expected the surge in e-commerce and web traffic since the start of the Covid-19 lockdown to be part of a steady acceleration. “But the macroeconomic downturn, increased competition and the loss of advertising signal have caused our revenue to be much lower than expected. I got this wrong.

Meta joins a string of tech companies that have announced job cuts in recent weeks or said they plan to stop hiring. Enterprise software maker Salesforce Inc. on Tuesday said it had cut hundreds of sales jobs, while Apple Inc., Inc. and Alphabet Inc. have delayed or stopped hiring. Snap Inc., parent of rival app Snapchat, is also pulling back, saying in August it would cut 20 percent of its workforce.

In a particularly chaotic round of layoffs, Twitter Inc. laid off roughly half of its workforce last week, with many employees finding out they lost their jobs when they were suddenly cut off from Slack or email.

At Meta, employees will still have access to their emails so they can say goodbye to colleagues, even though they’ve been cut off from more sensitive corporate systems, Zuckerberg said. The American workers who were laid off will also receive 16 weeks of their base salary as compensation, plus two weeks for each year they worked for the company. The company also offers six months of health cover, as well as career services and immigration support. Packages will be similar outside the US, subject to local labor laws, it said.

Zuckerberg warned employees in late September that Meta intended to cut costs and restructure teams to adapt to a changing market. The Menlo Park, Calif.-based company, which also owns Instagram and WhatsApp, implemented a hiring freeze, and the CEO said at the time that Meta expected headcount to be lower in 2023 than it is this year .

“This is obviously a different regime than we’re used to operating in,” Zuckerberg said in a question-and-answer session with employees in September. “For the first 18 years of the company, we basically grew rapidly every year, and then recently our revenue has been flat to a slight decline for the first time. So we have to adjust.”

Read more: Twitter’s big debt accounts add urgency to Musk’s recovery plans

Even with the cuts, Meta still expects losses at its Reality Labs division, which houses metaverse investments, to widen “significantly” from a year earlier in 2023, the company said in a separate regulatory filing on Wednesday.

Zuckerberg is asking investors for patience as he pours billions into his vision for the next big computing platform after cellphones: the metaverse, a collection of digital worlds accessible through virtual and augmented reality devices. The effort requires intensive investments in hardware and research that may not pay off for many years.

Meanwhile, the growth of leading social network Facebook has stalled. The company is working to speed it up and continues to add users to photo-sharing app Instagram, experimenting with a more interest-based algorithm and short-form videos called Reels.

Zuckerberg now has to make his major corporate transitions with fewer people.

–With help from Nate Lanxon.

(Updates with shares in paragraph six.)

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