Mark Zuckerberg, chief of Facebook parent Meta, has revealed the company will lay off 11,000 staff or about 13% of its current worldwide headcount. Affected staff will be notified today.
The company reported its Q3 earnings last month, with revenues down $4 billon year over year to $27.7 billion and almost no growth in user numbers across its core Family of Apps, namely Facebook, Instagram and WhatsApp.
While layoffs in the tech sector have been happening for the past few months, layoffs of this scale by one of the top tech firms is a sign of how tough things are looking even for some of the world's most valuable companies. Until now, Meta has conducted targeted hiring freezes, but not announced layoffs.
"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."
Meta had a global headcount of 87,314 as of September 30, 2022, up 28% year over year. At the Q3 earnings update, Meta said it expected its headcount at the end of 2023 to be approximately in-line with its Q3 2022 levels. It had commenced hiring freezes in parts of the business, but continued hiring in others, in particular AI and VR/AR, aka Meta's Reality Labs.
Meta will offer affected staff in the US 16 weeks' severance plus two additional weeks for every year of service with no cap; remaining paid time off; RSU vesting; health insurance for the next six months; career services; and "immigration support" for staff reliant on visas. Support will be "similar" outside the US, according to Zuckerberg.
But Meta is immediately cutting off system access to affected staff.
"We made the decision to remove access to most Meta systems for people leaving today given the amount of access to sensitive information. But we're keeping email addresses active throughout the day so everyone can say farewell," Zuckerberg wrote.
Zuckerberg said he made some wrong bets based on his expectations from what happened in the COVID-19 pandemic, when everyone went digital.
"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," he 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 said the while the cuts will affect the Family of Apps and Reality Labs, he noted groups like recruiting would be "disproportionately affected since we're planning to hire fewer people next year."
He added: "We're also restructuring our business teams more substantially. This is not a reflection of the great work these groups have done, but what we need going forward. The leaders of each group will schedule time to discuss what this means for your team over the next couple of days."
Zuckerberg said layoffs were a "last resort" and the company has made other changes, including shrinking its real estate footprint and moving to desk-sharing for those who often work from home or elsewhere. More cost-cutting changes are happening in coming months.
Meta will also extend its hiring freeze through Q1 wth a "small number of exceptions".
"Fundamentally, we're making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we're operating efficiently across both Family of Apps and Reality Labs," said Zuckerberg.