Elon Musk is throwing the kitchen sink at Twitter Inc. to make something out of his $44 billion takeover. Mark Zuckerberg is sinking billions into the promise of a metaverse. That’s cost thousands their jobs at two of the world’s most popular social media platforms.
On Wednesday, Meta Platforms Inc. sacked 13% of its 87,000-strong workforce in what Zuckerberg said was one of the “most difficult changes we’ve made in Meta’s history”. The company has also extended the hiring freeze till the first quarter of 2023.
The layoffs are emblematic of the tough times ahead, an as several big tech companies freeze hiring and trim their workforce.
“I have decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go,” Mark Zuckerberg said in a statement. “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.”
Meta Platforms will restructure its business teams substantially and shift resources to selected segments. The resources will be shifted to an AI discovery engine, our ads and business platforms, and the metaverse. The company will also make reductions in every organisation across both Family of Apps and Reality Labs.
Some teams will be affected more than others, the Meta layoffs alone won’t improve profitability, Zuckerberg said.
“We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint,” he said. “We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go.”
Zuckerberg had employees in late September that Meta intended to slash expenses and restructure its teams. The Menlo Park, California-based company, which also owns Instagram and WhatsApp, then implemented a hiring freeze.
The company, which changed its name from Facebook Inc. to Meta Platforms Inc. on Oct. 28, 2021, saw its user base shrink for the first time in the final three months of last year.
Worse Than The Pandemic Era
The tech layoffs in the U.S. this year are shaping up to be worse than those in 2020 overall. Bloomberg quoted Roger Lee of Layoffs.fyi as saying in a report that more than 1,04,000 startup staffers have lost their jobs so far this year, compared to 81,000 in 2020.
Quarterly earnings, too, have come off pandemic-era highs. In the three months ended Sept. 30:
Meta Platforms’ net income fell 52% year-on-year to $27.71 billion.
Alphabet’s net income shrank 26.54% year-on-year to $13.91 billion.
Amazon’s net income fell 9.3% year-on-year to $2.9 billion.
Twitter had an operating loss of $344 million in April-June, compared with an operating income of $30 million a year ago. Now, it’s a private company.
The India Perspective
Twitter more than 90% of its staff in India—its third-largest market with nearly 25 million users—leaving behind just about a dozen employees.
“They took a broad-brush view, as far as layoffs in India are concerned, as the salary costs wouldn’t be too high here,” Manish Maheshwari, former managing director for Twitter in India, said during an interaction with BQ Prime on Nov. 5.
“It seems to be too extreme to me. This sends a signal that the commitment to a local market operation is not significant now,” he said.
While local advertisers will pause their activity as they would like the noise around the Musk takeover to die out, a smaller sales team will hinder Twitter’s ability to reach out to advertisers and service them once they return, Maheshwari said. “They’ll have to restart and reignite the work in India—maybe after two years, maybe after a year.”
Meta’s India operations are significantly larger than Twitter’s. The country
has the highest number of WhatsApp users in the world. Instagram debuted Reels in India after TikTok was banned in the country. The company has invested $5.7 billion in Jio Platforms Ltd. to take e-commerce to the masses.
The net profit of Facebook India Online Services Pvt., the registered entity of Meta Platforms in India, stood at Rs 297 crore in FY22, as compared to Rs 128 crore in the previous year, according to Tofler data. Revenue grew 56% year-on-year to Rs 2,324 crore in FY22.
The company is estimated to have 300–400 employees in the country.
Meta Platforms has lost more than 71% of its value so far this year, with investors wary of Zuckerberg’s investments to build a so-called metaverse.
Investments in more speculative technology will receive greater scrutiny, Jo-Ellen Pozner, an assistant professor of management at Santa Clara University’s Leavey School of Business, was quoted as saying in a Bloomberg report.
“For the big companies, it’s reasonable to assume that the rising tide that has been floating their boats for the past 15 years is just now a lot choppier,” Pozner said. “They clearly need to trim and to rationalise projects that they just haven’t had to do for a decade and a half because the environment was so munificent.”