New symbol of the difficulties experienced by the tech sector, Meta, parent company of the social networks Facebook and Instagram, launched, on Tuesday March 14, a new job cuts plan which will bring the reduction of its workforce to nearly 25% in less than six months.
In a letter sent to employees and published on the group’s website, its CEO, Mark Zuckerberg, thus announced on Tuesday the elimination of 10,000 positions, as well as the disappearance of 5,000 currently unoccupied positions, for which there will be no ultimately no recruitment.
Meta had already announced in early November the loss of 11,000 jobs. The company had never launched a social plan in twenty years of existence. With the one she announced on Tuesday, the workforce reduction will be 24%. Meta saw its annual revenue drop to $116.61 billion in 2022, or 1%, compared to 2021. Never, since its IPO in 2012, has the firm seen its annual revenue decline.
The list of positions affected will be unveiled at the end of April and the restructuring will be launched by the end of the year, at an overall cost estimated between 3 and 5 billion dollars, according to documents filed with the Securities and Exchange Commission (SEC , the policeman of the American Stock Exchange), which Agence France-Presse (AFP) was able to consult. This workforce reduction should allow Meta to reduce its expenses by 3 billion dollars by 2023.
“The first wave of layoffs allowed Meta to deal with the damage caused by fierce competition to capture users and advertising. This new announcement should be welcomed by investors, who want to see Meta refocus on its core business.”, said Jasmine Enberg, analyst for Insider Intelligence. The stock rose 6% at 4:50 p.m. French time on the New York Stock Exchange to 191.75 dollars.
A struggling industry
For Mark Zuckerberg, the decision is justified by the need to make meta “a better technology company” And “to improve our financial performance in a difficult environment, so that we can achieve our long-term vision”.
The co-founder of Facebook, who alone embodies the social network, took up the term used during the presentation of the annual results, at the beginning of February, namely that 2023 must be “the year of efficiency” for Meta. “Meta recognizes that it needs to scale back its costly metaverse ambitions and refocus on improving its core business, especially in the face of emerging threats, such as artificial intelligence.”added M.me Ember. The group still has difficulty valuing the huge investments made in the metaverse, presented by Mr. Zuckerberg as the future of the Internet.
Symbol of these difficulties, Meta sharply reduced the price of its virtual reality headsets in early March. In addition to the job cuts, the company will slow the pace of its hiring, added Mr. Zuckerberg, who also plans to“cancel non-priority projects”.
The group had already announced the hiring freeze until the end of March 2023. It now ensures that recruitment, as well as transfers within the group, will resume at the end of the restructuring. After posting insolent growth since its creation, Facebook, which became Meta at the end of 2021, has suffered since last year from the slowdown in online advertising.
The movement is accentuated by the modification of the operating system of the iPhone, which no longer allows the platform to collect as much data on its users as before. In addition, Facebook and Instagram are subject to increasingly strong competition, in particular from the video platform TikTok, which is chipping away at its market share.