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Meta Platforms Inc. is planning to lay off thousands of employees out of its 87,000-strong workforce, the Wall Street Journal reported, citing people familiar with the matter.
This would be the first broad head-count reduction in the company’s 18-year history.
The cuts, to begin as early as Wednesday this week, could be the largest round in a recent spate of tech job cuts after the industry’s rapid growth during the pandemic.
Meta reported more than 87,000 employees at the end of September 2022.
Employees have been told to cancel non-essential travel, the company's leaders informed workers.
The number of Meta employees expected to lose their jobs could be the largest to date at a major technology corporation in a year, dwarfing Twitter's recent cuts where 3,700 out of 7,500 jobs are expected to be axed.
The cuts at Meta on a percentage basis will be smaller than Twitter's no doubt.
Meta's position
Meta referred WSJ to CEO Mark Zuckerberg's recent statement that the company would “focus our investments on a small number of high priority growth areas”.
The social media founder said on the company’s third-quarter earnings call on Oct. 26: “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.”
Earlier in end-June, Zuckerberg had already told employees at a company-wide meeting: “Realistically, there are probably a bunch of people at the company who shouldn’t be here.”
WSJ earlier reported in September that Meta was planning to cut expenses by at least 10 per cent in the coming months, in part through staff reductions.
Staffing reductions have already occurred at Meta over the past several months, in which employees were managed out or saw their roles eliminated, according to WSJ.
Meta mass hired workers during pandemic
Meta, like other tech giants, went on a hiring spree during the pandemic with more people going online then.
WSJ reported that it added more than 27,000 employees in 2020 and 2021, and added a further 15,344 in the first nine months of this year -- about one-fourth of that during the most recent quarter.
Meta spending big money
Meta’s stock has fallen more than 70 per cent this year.
The company has highlighted deteriorating macroeconomic trends, but it has ramped up with high spending, threatening the company’s core social-media business.
Growth for that business in many markets has stalled.
Apple's requirement that users opt in to the tracking of their devices has curtailed the ability of social-media platforms to target ads.
Competition from TikTok has dimmed Meta's influence.
Meta’s free cash flow declined 98 per cent in the most recent quarter, WSJ reported, due to expenses rising sharply.
The company has had to invest more heavily in the additional computing power and artificial intelligence needed to further develop Reels, Meta’s TikTok-like short-form video platform on Instagram, and to target ads with less data.
But much of Meta’s ballooning costs stem from Zuckerberg’s commitment to Reality Labs.
That division of the company is responsible for the creation of the metaverse and virtual- and augmented-reality headsets
Zuckerberg has billed the metaverse as virtual worlds where people will eventually work, play, live and shop.
The effort has cost the company US$15 billion since the beginning of 2021.
Horizon Worlds users have been largely unimpressed.
WSJ reported in October that visitors to Horizon Worlds had fallen over the course of the year to well under 200,000 users.
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