In yet another sign of the Big Tech industry’s woes, social media giant Meta Platforms, Inc., the parent company of Facebook, is planning on laying off thousands of employees as early as Wednesday, according to the Wall Street Journal. This follows news that Twitter boss Elon Musk ordered wide-scale layoffs at his company last week, cutting staff by 50 percent from about 7,500 to 3,750. (Weirdly, there are reports circulating Sunday that he’s already asking some of them to come back.)
These will be the first large-scale terminations in the history of the 18-year-old company. Employees were told to cancel nonessential travel beginning this week, according to reports. While the percentage is expected to be lower than Twitter’s, it has a much-larger workforce (87,000) so the actual number likely will be higher.
Some are saying the company simply got too big:
Meta CEO and Co-Founder Mark Zuckerberg was aware of the issue, saying in a June company-wide meeting: “Realistically, there are probably a bunch of people at the company who shouldn’t be here.”
How did the number of employees balloon to such levels? The WSJ explains:
Meta, like other tech giants, went on a hiring spree during the pandemic as life and business shifted more online. 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.
Not only is the company bloated, but they’ve taken some big bets lately that haven’t paid off. Mark Zuckerberg has reportedly wagered at least $15 billion (some estimates are as high as $70 billion) on the virtual “Metaverse,” but has yet to see widespread success. I reported in October that enthusiasm for Zuck’s digital world was so low that even his own employees were not interested in the “buggy” flagship metaverse app, Horizon Worlds:
Also contributing to Meta’s woes are increased competition from TikTok and an Apple Inc. requirement that users opt-in to the tracking of their devices. That rule has hampered social media platforms’ ability to target ads. From a personal standpoint, I’ve asked many under-25s about their preferences, and they almost universally snarl at Facebook, and increasingly, even at Meta-owned Instagram.
Facebook parent company Meta Platforms Inc forecast a weak holiday quarter and significantly more costs next year wiping about $67 billion off Meta’s stock market value, adding to the more than half a trillion dollars in value already lost this year.
Facebook/Meta is not the only Big Tech firm facing economic problems:
Several technology companies, including Microsoft, Twitter and Snap have cut jobs and scaled back hiring in recent months as global economic growth slows due to higher interest rates, rising inflation and an energy crisis in Europe.
Facebook has had an impressive run, but the problem with these companies is that tastes are always changing, and the young are constantly moving to something else. Today it’s TikTok, but once the original users get into their 20s and 30s, they will likely drop it. Someday, the perception of TikTok among the young will be that it’s an app for old people.
Zuckerberg thinks it may take as long as 10 years for the Metaverse to truly blossom. The question is, does he have that long?