Facebook parent company Meta will reportedly announce sweeping job cuts this week. While this is part of a wider trend of tech businesses tightening their belts in the face of the difficult economic environment, it also reflects the difficulties Mark Zuckerberg’s company is having transitioning to focus on the nascent ‘metaverse’.
The Wall Street Journal, which first reported the news, says thousands of people will be affected by the layoffs across Meta’s teams around the world. It currently employs some 87,000 staff. News of which roles are under threat could come as soon as Wednesday, the WSJ says, citing sources in the company.
Meta had already instituted a hiring slowdown this year, announcing over the summer that it was cutting the number of engineering roles it was recruiting for by 30%. Tech Monitor has approached the company for comment.
Meta job cuts part of wave of tech layoffs
Tech businesses around the world have been cutting staff in recent weeks in the face of a global slowdown in demand caused by rising inflation and high interest rates.
As reported by Tech Monitor on Friday, payments platform Stripe is planning to lay off some 1,000 workers, or 14% of staff. CEO Patrick Collison said in an email to staff that he and his co-founders made two “consequential mistakes” which meant they now needed to make cuts. “We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.”
On the same day, ride-hailing giant Lyft said it was looking to reduce headcount by 14%. Friday also saw Twitter announce wide-ranging job cuts, with the company’s workforce shrinking by up to 50%. However, Bloomberg reported yesterday that some of these people were fired by error and have now been asked to return, while other people who have left may also be asked to come back and help build the features which the platform’s new billionaire owner Elon Musk wants to implement.
Zuckerberg’s metaverse vision for Meta stalls?
The cuts at Meta, which rebranded from Facebook last year, also reflect problems specific to the organisation. At the time of the rebranding, Zuckerberg made clear his intentions for his business to become “the metaverse company”, referring to the idea that future social and business interactions will take place in virtual worlds.
Meta wants to provide technology and services which underpin the metaverse, but so far take-up from businesses has been modest and the strategy is proving costly. Though executives are enthusiastic about the concept, they are not yet ready to make large investments in virtual worlds. As a result, Meta’s metaverse technologies division, Reality Labs, has lost $9bn this year alone.
This has contributed to a weak outlook for the business going forward, which led its share price to slump when its latest quarterly results were announced last month. Following the announcement, $67bn was wiped off the company's value.
Zuckerberg remains confident in his metaverse vision, but told analysts on Meta's most recent earnings call that it could take up to a decade to bear fruit.
"In 2023, we're going to focus our investments on a small number of high-priority growth areas," he said. "So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year. In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organisation than we are today."