Meta Platforms CEO Mark Zuckerberg has announced plans to cut more than 11,000 jobs or around 13% of its workforce, and extended its hiring freeze until the end of March.
The group directly employs around 3,000 people in Ireland, indicating that a total of around 350 jobs at the company's international headquarters in Dublin, data centre in Clonee and Reality Lab in Cork are at risk. Meta indirectly employs a further 6,000 agency workers in Ireland, and these roles are not immediately affected it is believed.
Though Meta has gone ex-growth, its advertising revenue – which takes in Facebook, Instagram, WhatsApp and Messenger – has held up quite well year to date. In the nine months to end September, ad revenue of $83bn was very marginally ahead of a year earlier.
That works out at average ad revenue of €2,130 million per week year-to-date.
However, overhead surged by $12bn in the period, with R&D spend increasing by $8bn year-on-year due to the company’s bet on the Metaverse.
In Association with
For the January to September 2022 period, net profit was $18.5bn, still a very respectable net margin of 22.3%, but way down on the 34.5% net margin enjoyed in 2021.
In a mea culpa to staff, the Facebook founder noted that 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. Unfortunately, this did not play out the way I expected," Zuckerberg admitted.
“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.”
Capital efficient
Zuckerberg said Meta needs to become "more capital efficient" and shift resources to a smaller number of "high priority growth areas" such as AI, advertising, business users, and the Metaverse.
"We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint," Zuckerberg wrote.
"We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go."
Meta informed all staff that they would receive an email informing them whether they have been made redundant or not, and that affected employees would have the opportunity to speak to a management representative to ask questions.
Redundancy terms
Meta will pay US staff who have lost their jobs 16 weeks' base pay plus two additional weeks' pay for every year of service as severance, plus all remaining paid time off, and RSU vesting up to 15 November.
They will also retain their health insurance coverage for themselves and their families for six months, and three months of career support from a third party, including early access to unpublished job leads.
Those laid off who were working in the US on a visa will be helped by immigration specialists in making their plans and handling their immigration status.
Meta said support would be similar for affected staff members working outside the US, and that it would take into account local employment laws before informing them of available measures.
Zuckerberg (38) outlined broad cuts, specifically mentioning the group's recruiting and business teams as among those facing the brunt of the layoffs.
In his memo to staff, Zuckerberg said layoffs would be made "in every organisation across both Family of Apps and Reality Labs", and that recruiting would be disproportionately affected since the group is planning to hire fewer people next year.
"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," he said.
Zuckerberg also outlined "a cultural shift" in how Meta operates stemming from reduced costs, with desk sharing being introduced for employees who already work remotely predominantly and more cost-cutting changes to be announced.
Office rationalisation
In its Q3 results statement, Meta said that ongoing rationalisation of its office footprint will lead to incremental costs in the near term. The company expects to account for a $900m charge in Q4 relating to office consolidation, and $2 billion for the full year.
Meta expects capital expenditures in 2023 to be in the range of $34-39bn, driven by investments in data centres, servers, and network infrastructure. Increase in AI capacity is driving substantially all of the capital expenditure growth in 2023, according to the firm.
The Q3 statement also cautioned that the company continues to monitor developments regarding the viability of transatlantic data transfers and their potential impact on its European operations.
On the hiring freeze, Zuckerberg said: "I’m going to watch our business performance, operational efficiency, and other macroeconomic factors to determine whether and how much we should resume hiring at that point."
Concluding his missive on an optimistic note, Zuckerberg declared: "I believe we are deeply underestimated as a company today. Billions of people use our services to connect, and our communities keep growing.
"Our core business is among the most profitable ever built with huge potential ahead. And we’re leading in developing the technology to define the future of social connection and the next computing platform.
"We do historically important work. I’m confident that if we work efficiently, we’ll come out of this downturn stronger and more resilient than ever."
The Facebook job cuts come after a number of tech giants, including Stripe and Twitter, also announced redundancies.
(Pic: Getty Images)
