“Meta Platforms Inc.” The age of tremendous growth at the social media behemoth has come to an end, according to Chief Executive Officer Mark Zuckerberg, who unveiled extensive plans to reorganize teams and slash manpower for the first time ever.
Facebook founder Mark Zuckerberg announced the firm would halt hiring and reorganize some teams in order to save costs and refocus priorities. This would be the first significant budget decrease since Facebook’s creation in 2004. In comparison to this year, Meta would probably be smaller in 2023, he predicted.
A participant in the weekly staff Q&A session said that he made the announcement of the freeze there. Additionally, he said that the corporation will cut expenditures for the majority of teams, including those that are expanding, and that individual teams would decide how to manage changes in headcount. According to comments examined by Bloomberg, this could entail not filling vacant positions, moving people to different teams, or trying to “manage out people who aren’t successful.”
Zuckerberg remarked, “I had anticipated the economy would have more visibly stabilised by now. A Meta representative declined to comment, saying, “But from what we’re seeing it doesn’t yet appear like it has, so we want to prepare relatively conservatively.
The price of Meta stock, which was already trading lower when the news broke, dropped even further, dropping 3.7% from Wednesday’s close. This year alone, the shares have decreased by 60%.
The additional expense cuts and employment freeze are Meta’s most glaring acknowledgement that the rise in advertising income is faltering in the face of increased user attention competition. It’s not the best moment to make cuts since, in addition to economic challenges, new privacy restrictions from Apple Inc. on tracking iPhone users have diminished the effectiveness of the company’s advertising business, which is based on accurate consumer targeting. Younger people are switching away from Instagram to TikTok. Additionally, Zuckerberg is placing a costly wager on the metaverse, an immersive virtual reality future in which he envisions human communication in the future. He has predicted that this investment will be a financial loss for many years.
This year, Meta said that it would delay offering full-time jobs to summer interns and would slow hiring for some management positions. In the discussion, Zuckerberg stated that the freeze was required because “we want to make sure we’re not adding people to teams where we don’t plan to have positions next year.”
Priorities internally include Reels, Meta’s TikTok rival, and Zuckerberg’s metaverse. In July, Zuckerberg warned that Meta would “steadily restrict personnel growth” and that “many teams are going to downsize so we can allocate emphasis to other projects.” As of June 30, Meta employed more than 83,500 people, and the second quarter saw 5,700 additional hiring.
By the end of 2023, the firm will be “slightly smaller,” according to Zuckerberg’s statement on Thursday. He explained to the team, “For the first 18 years of the company, we basically grew rapidly basically every year, and then more lately, our revenue has been flat to slightly down for the first time.
During the first-quarter earnings call, Meta disclosed that yearly spending will be around $3 billion lower than anticipated, bringing the range of possible expenses down from as high as $95 billion. A dual-camera watch that the business was developing to rival the Apple Watch was shut down in previous cuts to funding.
Meta is not the only business that relies on advertising that is experiencing broader economic difficulties. Twitter Inc. implemented its own hiring restriction in May and has since urged staff members to keep an eye on their spending and cut back on marketing and travel expenses. Google, a division of Alphabet Inc., also said that recruiting will decrease in the second half of the year, and Snap Inc. reduced its headcount by 20% in August.