The Miserable Position Mark Zuckerberg Says Meta Is In
Mark Zuckerberg has instituted a hiring freeze and plans to cut costs at Meta.
For the first time in 18 years, Meta Platforms Inc has outlined plans to freeze hiring, cut costs and restructure its teams. The announcement was made by Mark Zuckerberg during a weekly Q&A session with staff. He added that the company would widely reduce budgets and headcounts, calling an end to an era of rapid growth. The social media giant’s realignment of priorities also means that the firm will be smaller in 2023.
The impending cost cuts and hiring freeze are Mark Zuckerberg’s biggest admission that advertising revenue growth has slowed amid mounting competition for users’ attention. And due to economic pressure, it’s not an ideal time for reductions. Especially since the company’s advertising business, which is built on precise consumer targeting, has lost an edge due to new privacy restrictions from Apple Inc that limit the tracking of iPhone user activity.
Meanwhile, TikTok is steadily luring younger users away from Instagram which prompted Mark Zuckerberg to build short-form video products like Reels. The company is also making an expensive bet on the metaverse – an immersive virtual reality future where he believes people will eventually communicate. But the CEO says the project will lose money for many years before it becomes profitable. Meta had more than 83,500 employees in June and added 5,700 new hires in the second quarter.
But the cost reductions at Meta aren’t surprising, since Mark Zuckerberg said the company would be slow hiring for some management roles in July. At the time the social media giant also postponed handing out full-time jobs to summer interns. Now, the new freeze is necessary because the firm wants to be sure they’re not adding people to teams that don’t expect to have roles next year.
“I had hoped the economy would have more clearly stabilized by now,” Mark Zuckerberg said via Bloomberg. “But from what we’re seeing it doesn’t yet seem like it has. So we want to plan somewhat conservatively.” He added that anyone on staff who feels like Meta isn’t the right place for them is welcome to resign. Following the news from Mark Zuckerberg, Meta stock which was already trading down fell by a further 3.7%. The company’s shares have dropped by 60% so far this year.
During Meta’s first-quarter earnings call, Mark Zuckerberg said annual expenses would be approximately $3 billion lower than initially projected, cutting its previous estimated range of $95 billion. Other efforts to reduce spending included shutting down development of a dual-camera watch the company was building to compete with the Apple device. But Facebook’s parent company is not the only advertising-reliant firm to be hit by broader economic challenges.
Much like Mark Zuckerberg, Twitter Inc. enacted its own hiring freeze in May and has been asking employees to watch their expenses and reduce travel and marketing costs. Alphabet Inc.’s Google said that it would slow hiring during the second half of the year, while Snap Inc cut 20% of its workforce in August. Amazon has also pared down its workforce by 99,000 staffers since the start of the year.
