CEO Mark Zuckerberg announced the decision in an email to staff Wednesday morning.
“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” Zuckerberg wrote. “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.”
The Facebook boss said that he wants “to take accountability” for the shift, and he went on to explain the rationale for the cuts, citing a misreading of COVID-induced digital trends, macroeconomic concerns, and Apple’s move to cut off user data from third parties.
“At the start of COVID, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments,” Zuckerberg wrote. “Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”
Zuckerberg added that the company is slashing its employee base and implementing the freeze because it wants to operate more efficiently, focusing investment on a small number of core areas and reducing costs elsewhere, like in its real estate footprint, perks, and, yes, employee base.
In a securities filing Wednesday, the company said that its 2022 expense outlook of $85 billion-$87 billion remains unchanged and includes the costs associated with the restructuring. It added that the company continues “to refine our 2023 expense budget and now expect 2023 total expenses to be in the range of $94 billion-$100 billion, lowered from $96 billion-$101 billion previously.”
“The updated range reflects our plan to add fewer employees in 2023 than we previously expected as we are significantly slowing our hiring trajectory through the beginning of 2023,” the filing continues.
To that end, Zuckerberg said in his memo that recruiting will be impacted particularly hard by Wednesday’s layoffs “will be disproportionately affected “since we’re planning to hire fewer people next year. We’re also restructuring our business teams more substantially.”
The filing also says that losses in Meta’s Reality Labs division (the unit that focuses on the metaverse) will “grow significantly” in 2023.
The major cuts at Meta follow similar cuts at Twitter, which slashed thousands of employees after Elon Musk completed his acquisition of the platform, and at Snap, which cut 20 percent of its staff and also refocused on a few core areas earlier this fall.