• Saturday, April 20, 2024
businessday logo

BusinessDay

Market welcomes Meta’s sack of 11,000 employees

When it comes to copying and building on the ideas of other giants’ platforms, Meta’s CEO, Mark Zuckerberg is not missing in action.  Zuckerberg has been in the spotlight for the past few days after launching Threads, an Instagram-based platform set to rival Elon Musk-owned Twitter. This platform undeniably possesses most characteristics of the microblogging platform.

Meta, the parent company of Facebook, has laid off 11,000 employees representing about 13 percent of its total headcount. The market reacted positively to news of the layoff as Meta stocks rose by over 4 percent amid the announcement.

Mark Zuckerberg made the announcement in a blog post, where he took responsibility for being over-optimistic about the future growth of the company in the midst of a pandemic.

While it is less than the 50 percent workforce Twitter fired, Meta laying off 11,000 workers is the largest layoff activity by a tech company this year. It is also an indication of the deepening economic crisis in the tech ecosystem.

The layoff affects every part of the business Meta is involved in. The Facebook founder says some teams will be affected more than others.

Meta/Facebook added 42,000+ new workers between 2020 and September 2022. It had 87,000 employees by October 2022.

There is also a pause on hiring, as Meta moves towards a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.

Read also: Multinationals suspend ads on Twitter amid mass layoffs

“I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted,” Zuckerberg said.

Zuckerberg said he had bought into the belief that the growth in digital adoption and ecommerce accelerated by th3 COVID-19 pandemic was here to stay. In doing so, the company increased investment in different verticals aimed at positioning itself to maximise the growth.

Unfortunately, online commerce has returned to pre-COVID levels and the tech industry is currently shaken to its foundations by a macroeconomic downturn. Meta is also grappling with increased competition and ads revenue losses that has impacted its revenue.

Meta has lost $9.4 billion on its metaverse technology in 2022 so far and says it expects to spend even more on the business in the future. Meanwhile, the company’s flagship metaverse social platform, Horizon Worlds, is so buggy and unpopular that Meta’s own managers reportedly had to compel employees to use it.

“There is no good way to do a layoff, but we hope to get all the relevant information to you as quickly as possible and then do whatever we can to support you through this,” he said.

The layoff affects workers in and outside the US, which might include Africa. Meta has a strong presence on the continent, including Nigeria. The company will pay 16 weeks of base pay plus two additional weeks for every year of service, with no cap. Workers and their families will also get health insurance for six months, and career support.