Since Wednesday last week, Facebook’s parent company Meta Inc. commenced mass layoffs in response to being overstaffed. It is expected that more than 11,000 employees will be saying farewell to the team, marking the most significant job cut in the social media giant’s history.
“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” said Meta CEO Mark Zuckerberg in a blog post for employees. “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.”
The job cuts are just one of the many steps being taken by Meta to address gargantuan challenges that include a huge stock price decline in its move toward the metaverse. Zuckerberg cited being overly optimistic regarding business growth on the metaverse, which eventually led to an overstaffed company.
With Meta’s stock price declining 70% for the year, there had to be compromised to be made in order to address the plunging stock price. Valued at over $1 trillion last year, Meta’s market value has sunk to about $250 billion, according to CNN Business.
“I want to take accountability for these decisions and for how we got here,” Zuckerberg wrote in the blog. “I know this is tough for everyone, and I’m especially sorry to those impacted.”
Meta’s head of HR and Zuckerberg announced that each laid-off employee would receive at least four months’ worth of salary as severance pay. Furthermore, health insurance, immigration support, and career services will be provided as part of the many damage control methods the former employees will be entitled.
Meta is not alone in dealing with the aftereffects of the market downturn. The whole tech sector is faced with inflation, rising interest rates, and other macroeconomic factors. Consumers impressively shifted most of their spending online during the pandemic; however, it has since decreased as things start going back to normal.
“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected,” Zuckerberg explained.
A handful of tech companies also announced hiring freezes and job cuts in recent months, such as Facebook-rival Twitter, rideshare firm Lyft, and crypto exchange platform Coinbase. E-commerce giant Amazon also paused corporate hiring.
While the mass layoffs could be attributed in large part to the steep decline in stock price, it can also be surmised that Zuckerberg mistakenly focused on developing metaverse gadgets, like the highly expensive yet inefficient Oculus Meta Quest Pro headset.
On top of Meta spending a whopping $2 billion in the acquisition of Oculus, it most likely had to shell out more money in developing the Meta Quest Pro headset, which is priced at $1500. Instead of concentrating on these gadgets that would be almost useless without a working metaverse, Zuckerberg should have paid more attention to its development of the metaverse.
For instance, Zuckerberg could have partnered with developers working to integrate IPv6 with a scalable blockchain in order to bring about true peer-to-peer communication. Once fully integrated, this will not only allow for direct communication between users, but it will also facilitate the efficient handling of big data and microtransactions—two things that are crucial for the metaverse.