Zuckerberg, CEO of Meta Platforms Inc., announced Meta to freeze hiring and big plans to reorganize teams and cut staff for the first time ever.
This puts an end to a time when the social media giant grew quickly.
Zuckerberg said that the company would stop hiring new people and reorganize some teams to cut costs and change its priorities. This would be the first big cut to the budget since Facebook was started in 2004. He said that Meta will probably be smaller in 2023 than it is now.
Someone who was there says that he told employees about the freeze during the weekly Q&A session. He also said that the company would cut budgets for most teams, even those that were growing, and that each team would figure out how to deal with changes in headcount. This could mean not filling positions when people leave, moving people to different teams, or trying to “manage out” people who aren’t doing well, according to comments read by Bloomberg.
“I had hoped that by now, the economy would be more stable,” Zuckerberg said. “But from what we can tell so far, it doesn’t look like it has yet, so we want to plan cautiously.” A Meta spokesperson declined to comment.
Meta stock was already trading down when the news came out, so it fell even more, down 3.7% from Wednesday’s close. So far this year, the shares have dropped 60%.
Meta’s further cuts to costs and freeze on hiring are the clearest sign yet that its advertising revenue isn’t growing as fast as it used to because there is more competition for users’ attention. It’s not the best time to lay people off. Not only is the economy bad, but the company’s advertising business, which was built on precise consumer targeting, has lost some of its edges because
Apple Inc. has made it harder to track iPhone users in the name of privacy. TikTok is getting more young people who used to use Instagram. And Zuckerberg is betting a lot of money on the metaverse, a future of immersive virtual reality where he thinks people will eventually be able to talk to each other. He has said that this effort will lose money for many years.
Meta said earlier this year that it would slow down hiring for some management positions and put off giving summer interns full-time jobs. Zuckerberg said in the meeting that the freeze was needed because “we want to make sure we’re not going to add people to teams where we don’t expect to have roles next year.”
In July, Zuckerberg said that Meta would “steadily reduce headcount growth” and that “many teams will shrink so we can put more energy into other areas.” Internal priorities include Reels, which is a competitor to TikTok, and Zuckerberg’s metaverse. As of June 30, Meta had more than 83,500 employees, and it hired 5,700 more people in the second quarter.
Zuckerberg said Thursday that by the end of 2023, the company would be “a little bit smaller.” “For the first 18 years of the business, we grew quickly every year, but recently, for the first time, our sales have been flat or slightly down,” he told staff.
During its earnings call for the first quarter, Meta said that its annual costs would be about $3 billion less than it had originally thought. This cut a range of estimates that had gone as high as $95 billion. In the past, the company cut costs by stopping work on a watch with two cameras that were meant to compete with the Apple Watch.
Meta is not the only advertising-based business that is struggling because of the economy as a whole. Twitter Inc. put a freeze on hiring in May and has been telling its employees to watch their spending and cut down on travel and marketing costs.
Alphabet Inc.’s Google also said it would hire less in the second half of the year, and in August, Snap Inc. cut 20% of its staff.
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