Facebook parent company, Meta Inc has said it would be laying off 11,000 of its employees, an approximately 13 percent of its total staff.
The CEO and founder of the company, Mark Zuckerberg while announcing the job cut in a blog post, blamed himself for the situation, averring that he was at fault for being overoptimistic about the company’s future growth based on a pandemic surge.
In his words;
“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.”
This would be the first broad layoff ever since the 2004 existence of Meta, then known as Facebook Inc.
According to Zuckerberg, the company would now become “leaner and more efficient” by cutting spending and staff, and shift more resources to “a smaller number of high priority growth areas,” including ads, AI, and the metaverse.
CEO Zuckerberg asserted further that Meta’s recruiting team would be particularly “disproportionately affected” by the cuts.
It would be recalled that in September this year, the company reported some 87,000 employees, but the new layoff announced by the company will mark the first broad cuts since its inception.
A projected downturn in the United States economy has caused a downward spiral in many tech stocks together with increasing competition by rivals like TikTok who have in recent times upped their game may be responsible for Meta’s drop in traction.
It’s investment in the latest iteration of the internet, the Metaverse has not yielded the expected traction, as it appears increasingly misguided.
The company has this year alone invested about $9.4 billion on its metaverse project, and plans to spend even more on the business in the future.
The company’s stock which had fallen by 70 percent in 2022 had a spike in reaction to this week job cut announcement.
Meta has lost over $700 billion in market value in recent weeks but Mark Zuckerberg’s announcement of the layoff had the stock price rising more than four percent in premarket trading.
The Meta CEO in the new blog post announcing the layoff said sacked employees in the United States would be compensated with 16 weeks of base pay plus two additional weeks for each year of service, 6 months health insurance coverage, and support for finding a new career. He also promised help for the laid off employees as they navigate immigration issues.
He said Meta would institute a hiring freeze the I it through first quarter of 2023 with a small number of exceptions.
Zuckerberg while concluding his note told employees that he’s not oblivious of the scepticism of some persons to the company’s investment in the metaverse.
“I believe we are deeply underestimated as a company today,” wrote Zuckerberg. “Billions of people use our services to connect, and our communities keep growing. Our core business is among the most profitable ever built with huge potential ahead. And we’re leading in developing the technology to define the future of social connection and the next computing platform.”