Mark Zuckerberg announces layoffs of 11,000 employees

[German]Now it's official, shortly after the US midterm elections, Mark Zuckerberg, the head of Facebook's parent, Meta, announces mass layoffs. The company, which operates Facebook, Instagram and WhtsApp, plans to lay off 11,000 employees. That's an estimated 13 percent of its workforce. Other steps are intended to make Meta a leaner and more efficient company.

Mass layoffs at Meta

The economic skid marks are also making themselves felt in America's tech companies. Had I reported the days about the layoff of 50% of Twitter's workforce (see my German blog post Götterdämmerung bei Twitter? Entlassungen, Horrende Kosten, Werbekunden springen ab), now it's the turn of Facebook parent Meta. Rumored for several days, Mark Zuckerberg has now announced the layoff of 11,000 employees. A memo to employees states:

Today I'm sharing some of the most difficult changes we've made in Meta's history. I've decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.

Zuckerberg has decided that the workforce of the Meta Group will be reduced by more than 11,000 employees. Approximately 13% of the workforce will therefore be laid off. Meta wir also intends to take a number of other steps to become a leaner and more efficient company. To this end, discretionary spending will be cut and the already existing hiring freeze will be extended until the first quarter. The stock price rose 4 percent after the layoffs were announced.

Employees to be informed

Affected employees are expected to receive an email shortly informing them what this layoff means for them. After that, each affected employee will have the opportunity to speak with someone to get their questions answered and attend information sessions. Meta is also planning a series of social measures for the terminated employees. In the USA, the following is planned:

• Severance. We will pay 16 weeks of base pay plus two additional weeks for every year of service, with no cap.
• PTO. We'll pay for all remaining PTO time.
• RSU vesting. Everyone impacted will receive their November 15, 2022 vesting.
• Health insurance. We'll cover the cost of healthcare for people and their families for six months.
• Career services. We'll provide three months of career support with an external vendor, including early access to unpublished job leads.
• Immigration support. I know this is especially difficult if you're here on a visa. There's a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need.

Outside the U.S., support is expected to be similar, and the company plans to follow suit soon with separate processes that take into account local labor laws.

Meta will block access to most Meta systems for employees who were laid off today, as employees have access to sensitive information. However, employee email addresses will remain active throughout the day so everyone can say goodbye.

Digitization boost from COVID-19

Zuckerberg takes responsibility for these decisions and explains why Meta got into this situation. The COVID-19 pandemic was a major driver of digital transformation, resulting in above-average revenue growth. Many analysts predicted that this would be a sustained acceleration that would continue even after the pandemic ended. Zuckerberg too since been convinced of this, he writes. At this stage, he therefore decided to significantly increase meta-investments.

Unfortunately, this has not developed as Zuckerberg had expected. Not only has online commerce returned to previous trends, but the macroeconomic downturn, increased competition and loss of ad revenue have resulted in Meta's revenue being much lower than expected, according to Zuckerberg.

In this new environment, Meta needs to increase its capital efficiency, Zuckerberg writes. Meta has shifted more of its resources to a smaller number of high-priority growth areas, he said. These include the AI discovery engine, the ad and business platforms, and Zuckerberg's long-term vision for the Metaverse.

Meta has cut costs across the company, including by slashing budgets, reducing perks and downsizing real estate. Now it's restructuring teams across the company to improve efficiency. But those measures alone won't bring Meta's expenses in line with revenue growth. Therefore, the decision was made to make layoffs.