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Meta Platforms is cutting more than 11,000 out of 87,000 jobs, or 13 per cent of its workforce.
CEO Mark Zuckerberg announced the move in a message to employees that Meta shared publicly.
Affect every part of company
The job cuts will affect every organisation in the company.
Some will be impacted more than others.
The social media company is also cutting discretionary spending and extending its hiring freeze through the first quarter of 2023.
The recruitment team will be "disproportionately affected" by the layoffs since it is planning to hire much fewer people next year.
The mass layoffs are the first in Meta's 18-year history.
Hiring boom during pandemic
The pandemic-led boom that boosted tech companies and their valuations led to mass hiring, which caused some companies to become bloated.
Zuckerberg said he wants to take accountability for how Meta found itself in this position.
He apparently made the decision to significantly increase Meta's investments following an exceptionally large revenue growth in the height of the pandemic, as users spent more on e-commerce.
"Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended," he explained.
His gamble did not pay off.
The return of e-commerce to pre-pandemic trends, as well as the economic downturn, had led to revenue lower than expected.
Focus on core businesses
In response, Meta has chosen to focus on its priority growth areas, including its ads and business platforms, and its long-term vision for the metaverse.
The Facebook parent is battling soaring costs from its push into the metaverse amid a weak advertising market.
No cap to severance pay
Employees will soon get an email about the layoffs.
In the United States, Meta will give affected staff members a severance pay worth 16 weeks' of their base, plus two additional weeks for every year of service, with no cap.
It will also cover the cost of healthcare for the affected employees and their families for six months.
The company promises to help them find new jobs by using an external vendor that will give them access to unpublished job listings, as well as to support employees on visa with a dedicated team of immigration specialists.
Support will be similar for those in other countries, with differences that take local employment laws into account.
Meta said it has already removed system access for those being let go on Nov. 9, given the amount of sensitive information it has access to.
Email addresses will remain active throughout the day, so co-workers would not have to guess who is still around.
Layoffs expected
The Wall Street Journal first broke the news about Facebook's plan to retrench en masse.
During the company’s most recent earnings call, the CEO said Meta could become “a slightly smaller organization” by the end of 2023.
He also has reportedly instructed managers to identify people for layoffs, and has told employees that “realistically, there are probably a bunch of people at the company who shouldn't be here".
The company has already halted new hiring and cut some projects within Reality Labs -- it's metaverse division.
Meta has been losing billions of dollars on its investments in the metaverse, with Reality Labs losing more than US$10 billion in 2021.
The company has said it expects to lose “significantly” more in 2023.
Facebook’s ad revenue has also taken a significant hit due to Apple’s changes to apps’ ad tracking abilities.
Zuckerberg controls Meta, can't be removed
Talk about removing Zuckerberg will likely come to naught.
Facebook has a dual-class structure, meaning that average shareholders own one type of stock, Class A, while Zuckerberg and a small circle of insiders hold another type, Class B.
Holders of Class B stock get 10 votes per share, while Class A holders only get one vote, meaning Zuckerberg and other Class B shareholders are essentially untouchable.
Zuckerberg alone owns 90 per cent of the company's Class B stock, enough to maintain absolute control of the company by himself.
Top photos via Mark Zuckerberg Facebook