Facebook parent Meta is laying off 13% of the workforce or 11,000 employees. CEO Mark Zuckerberg made the announcement in a letter to employees on Nov. 9, which the company also shared publicly.
The Meta layoffs come on the heels of significant layoffs from Twitter last week, which cut an estimated half of its workforce after Elon Musk completed his purchase of the company.
The changes at Meta will put the brakes on some of the company’s projects, and Zuckerberg said that the social media giant will focus its efforts on a narrower group of priorities going forward.
“We’ve shifted more of our resources onto a smaller number of high priority growth areas – like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse,” Zuckerberg wrote in his letter to employees.
Is the Metaverse Worth Such a Big Bet?
But not everyone in the industry is convinced that the metaverse is worth the big bet that Meta has made and just committed to continuing to make.
“These layoffs speak to the obvious issue that Meta has with their investment in the metaverse,” says Hyoun Park, CEO and chief analyst at Amalgam Insights. “They have been losing $10 billion a year for the past couple of years in this investment, which is large even for a company of Meta’s size. This investment has resulted in a meaningful reduction in cash on hand for Meta … These losses speak both to a lack of business model for the metaverse as well as the technological gaps that still exist in creating a metaverse experience that is compelling and affordable to the general populace.”
What About Facebook?
Park also believes that Facebook seems to have reached “a ceiling in terms of the amount of revenue that it can effectively support similar to the issues that Netflix is starting to run into. Digital companies have traditionally been working under the assumption that they had no ceiling of users that they could reach, and that growth would continue indefinitely.”
But that is not the case.
“The COVID-based acceleration of digital adoption has started to show cracks …” Park says. “Digital companies cannot simply continue to rapidly increase staffing year after year with the assumption that revenue will simply catch up to their hiring activities.”
Will Tech Giant Layoffs Impact the Labor Market?
Which brings us back to the layoffs. The current job market has remained one where talent is still in high demand, in spite of business leaders’ talk of a coming recession and tech giants beginning significant layoffs. A CompTIA analysis of the October job market showed that remote work is just as strong as ever in job listings, too.
“The Federal Reserve remains intent on slowing the economy, so some corresponding degree of slowing in the labor market is inevitable,” says Tim Herbert chief research officer for CompTIA, a computing industry organization. “With that said, hiring continues to defy expectations.” At least it has up until the end of October. It’s yet to be seen how these new layoffs will impact November job numbers.
Will the new layoffs from Meta and Twitter and others impact the labor market for skilled technology workers?
“Meta and other large tech companies have effectively been hoarding talented technology workers over the past decade,” says Park. “This layoff now creates a glut of supply for talented developers, marketers, and other business professionals with experience working with global platforms that scale to billions of users.”
But that doesn’t necessarily mean that there will be weaker demand for this technology talent, according to Park. Rather, it’s an opportunity for other organizations to build their talent base.
This is a “redistribution of talent from the largest tech companies to the mid-market and startup companies that have more effectively read the market and found product-market fit,” Park says.
What to Read Next:
Could Elon Musk’s Staff Purge Create a ‘Twitter Mafia?’
The Future of Work: Optimizing Hybrid for 2023
IT Job Opportunities for the Semi-Retired