"I Want to Take Responsibility" Zuckerberg's Regret... Meta Notifies 11,000 Employees of Layoffs (Summary)

Meta Notifies Layoff of 11,000 Employees
Reasons: Economic Downturn and Advertising Revenue Slowdown
Widespread Layoffs Across Big Tech Industry

Mark Zuckerberg, CEO of Meta [Photo by Reuters]

[Asia Economy Reporter Lee Ji-eun] "I want to take responsibility for how we have come this far after making such a decision (large-scale restructuring). I know this will be difficult for everyone. I am especially sorry to those affected by this."

Meta Platforms, the parent company of the social networking service (SNS) Facebook, laid off 11,000 employees on the 9th (local time), a much larger scale than initially reported. Mark Zuckerberg, Meta's CEO, who announced this, expressed regret and said he feels responsible for the current situation. The employment downturn in U.S. tech companies appears to be spreading further, starting with Meta.

◆ "Revenue growth during the pandemic could not be sustained"... Meta stock rises

According to U.S. economic media CNBC and others, CEO Zuckerberg sent an email to all employees on the day, saying, "Today, I will share the most difficult change in Meta's history," and announced that 11,000 employees, accounting for 13% of the total 87,000 employees, would be laid off. The initial expected scale of restructuring was in the thousands, but it actually exceeded 10,000.

CEO Zuckerberg said that due to recession concerns and intensified competition this year, the revenue growth experienced during the COVID-19 pandemic period did not continue, and advertising performance declined. He emphasized, "(These factors) worsened our revenue more than I expected," and "I misjudged. I feel responsible for this."

He stated that in the U.S., employees subject to layoffs will be paid basic wages for 16 weeks of work and an additional two weeks of basic wages depending on their years of service. He added that similar measures would be taken outside the U.S., considering local employment laws, and that follow-up measures would be announced accordingly.

CEO Zuckerberg also said that in addition to this large-scale restructuring, further cost reductions would be pursued. He said, "We will reduce discretionary spending and extend the current hiring freeze until the first quarter of next year to take steps toward becoming a lean and efficient company." He emphasized that infrastructure costs are also being reviewed for efficiency.

After Meta announced the large-scale restructuring, its stock price closed at $101.47, up 5.18% from the previous day. This was the first time since the third-quarter earnings announcement on the 27th of last month that it recovered the $100 mark.

◆ Meta's sluggish growth likely to continue for the time being

The reason Meta undertook large-scale restructuring is that sales have been declining due to the global economic downturn. Meta hired about 42,000 employees from 2020, when COVID-19 began to spread, until last month. However, as advertising revenue declined, its stock price has dropped by 70% this year.

In particular, Apple's change in privacy policy since April last year is known to have had a significant impact on the decline in advertising revenue. Meta was hit in executing 'targeted advertising' as Apple introduced a method from April last year that allows apps to track users' data only with their permission. As a result, Meta's main revenue source, digital advertising revenue, recorded negative growth for two consecutive quarters.

Competition with China's video-sharing service TikTok intensified, and in February, for the first time ever, the average monthly active users decreased. Meta's third-quarter revenue this year recorded $27.71 billion, down 4% from the same period last year, showing poor performance.

According to the WSJ, CEO Zuckerberg reportedly said at an executive meeting the day before that he feels responsible for over-hiring employees due to excessive confidence in growth. Also, Lori Goler, Meta's head of human resources, reportedly stated at the meeting that employees subject to restructuring would receive severance pay equivalent to at least four months' salary.

Major foreign media forecast that despite the large-scale layoffs, Meta's sluggish growth will continue for the time being. Meta has invested more than $15 billion in the metaverse project since last year but reportedly incurred a total loss of $9.44 billion from early this year to last month.

Major foreign media, citing anonymous sources, said, "Most of Meta's resources are directed to the Reality Labs department responsible for metaverse investments, so losses are expected to increase further next year," and "Meta's massive spending has angered Wall Street and shareholders."

◆ "Trend of workforce reduction spreading across the tech industry"

CNBC reported that this trend of large-scale workforce reductions is spreading across the tech industry. U.S. ride-sharing company Lyft announced on the 3rd that it would lay off 700 employees, 13% of its total workforce. Lyft CEO John Zimmer explained the reason for the layoffs in a letter to employees, saying, "There is a possibility that the economic recession will deepen next year, and ride-sharing insurance costs have risen sharply."

Netflix, which saw a decline in users for the first time in 10 years, restructured 450 employees over two months starting in May. SNS company Snap laid off 1,000 employees, 20% of its total workforce, in August due to financial issues.

CNBC explained, "Companies that led the stock bull market for 10 years are facing uncertain economic conditions such as inflation, interest rate hikes, and energy shocks, accelerating layoffs of tech sector employees."

This content was produced with the assistance of AI translation services.