Facebook is planning to begin large-scale layoffs this week that will affect thousands of employees with an announcement planned as early as Wednesday.
Facebook parent company Meta Platforms Inc forecast a weak holiday quarter and significantly more costs next year wiping about $67 billion off Meta’s stock market value, adding to the more than half a trillion dollars in value already lost this year.
The disappointing outlook comes as Meta is contending with slowing global economic growth, competition from TikTok, privacy changes from Apple, concerns about massive spending on the metaverse and the ever-present threat of regulation.
The impending layoffs were first reported in the Wall Street Journal.
Chief Executive Mark Zuckerberg has said he expects the metaverse investments to take about a decade to bear fruit.
In the meantime, he has had to freeze hiring, shutter projects and reorganize teams to trim costs.
Facebook is planning to begin large-scale layoffs this week that will affect thousands of employees with an announcement planned as early as Wednesday. Facebook CEO Mark Zuckerberg is planning to lay off up to 12,000 underperforming Facebook workers
Meta’s share price has continued to plummet with a 73 percent fall since the start of 2022
Since the start of 2022, Meta’s shares have taken a precipitous fall
Meta Platforms Inc. has been ranked the worst performer on the S&P500, as its shares continue to slump amid concerns over the development its costly virtual world – the Metaverse
Meta shareholder Altimeter Capital Management urged Mark Zuckerberg to cut the company’s workforce by 20 percent and investments in the Metaverse by 50 percent. Zuckerberg (above) has aggressively pushed billions of dollars into company’s VR projects
‘In 2023, we’re going to focus our investments on a small number of high priority growth areas. So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year. In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today’ Zuckerberg said on the last earnings call in late October.
The social media company had in June cut plans to hire engineers by at least 30%, with Zuckerberg warning employees to brace for an economic downturn.
Meta’s shareholder Altimeter Capital Management in an open letter to Mark Zuckerberg had previously said the company needs to streamline by cutting jobs and capital expenditure, adding that Meta has lost investor confidence as it ramped up spending and pivoted to the metaverse.
The push to cut thousands of jobs comes after reports that Meta was looking to slash 12,000 people from the company. Pictured: Employees in Meta’s Silicon Valley office at Menlo Park
Altimeter said annual free cash flow can be doubled to $40billion if Zuckerberg cuts 17,000 jobs, trimmed capital expenditure by at least $5billion to $25billion a year and capped annual investment in the Metaverse to $5billion instead of the current $10billion.
‘Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world,’ Altimeter CEO Brad Gerstner wrote in the letter. ‘In short, Meta needs to get fit and focused.’
Several technology companies, including Microsoft, Twitter and Snap have cut jobs and scaled back hiring in recent months as global economic growth slows due to higher interest rates, rising inflation and an energy crisis in Europe.
Meta has spent billions and hired thousands of employees around the world to build the Metaverse, which refers to a shared digital environment that uses augmented or virtual reality technology to make it feel more realistic.
But the company’s dreams have fallen short as the Reality Labs unit, which works on augmented and virtual reality, has continuously reported staggering losses. It lost $5.8billion in the first six months of the year.
Altimeter said such huge investments ‘in an unknown future is super-sized and terrifying, even by Silicon Valley standards’.
Meta has placed a big bet on its Metaverse being the next big frontier of the technology industry, with CEO Mark Zuckerberg (pictured left, and his avatar right) funnelling more than $36 billion into the project that many consider – so far at least – to be failing
A report from WSJ last month said that Meta’s Metaverse is more than 300,000 users short of its year end goal despite Zuckerberg investing billions and hiring hundreds for the venture
A little under a year since Zuckerberg rechristened Facebook as Meta, internal documents obtained earlier this month revealed that his Metaverse virtual reality universe is struggling to meet its goals.
That’s according to documents that were seen by the Wall Street Journal. The company planned to hit 500,000 users of its virtual reality platform, Horizon Worlds, by the end of 2022. The number at the time of writing is less than 200,000, still well below a revised goal of 280,000 by the end of 2022.
The documents also reveal that the majority of those 200,000 users, don’t come back after entering the system once with many complaining most of the areas are bereft of other users.
Zuckerberg has claimed that the Metaverse is the future despite several negative reviews about how its virtual world looks and operates
They’ve also complained of avatars floating around eerily with no legs – an issue Meta says it’ll fix in the coming months.
Since the Spring of 2022, the number of users of Horizon Worlds has been declining.
Less than ten percent of the worlds in the Metaverse receive more than 50 visitors and the majority of these worlds receive zero visitors.
Last month, Meta announced how it would also be closing one of its New York offices as part of a plan to reduce growth and cut costs by at least 10 percent in the coming months.
Meta will end its lease of the 200,000 square foot office space at 225 Park Avenue South in the Flatiron district of Manhattan, anonymous sources told Bloomberg
The 225 Park Avenue South office served as a ‘great bridge’ to a new space in Hudson Yards which was planned to open soon
A 300,000 square foot expansion of the company’s 770 Broadway office was planned earlier this year but those plans were abandoned in the summer, Bloomberg reported
Facebook agreed to lease 730,000 square feet in the historic Farley Building opposite Pennsylvania Station
WHAT IS HORIZON WORLDS?
Horizon Worlds, released by Meta on December 9, is a gaming app that allows users in the US and Canada to gather with others, play games and build their own virtual worlds.
Users have to be at least 18 years old and have the proper equipment – a Quest 2 virtual reality (VR) headset.
Horizon World first announced in 2019 and launched last year in beta.
An early tester of Meta’s Horizon Worlds metaverse app said her avatar was virtually groped by a stranger.
The company will end its lease of the 200,000 square foot office space at 225 Park Avenue South in the Flatiron district of Manhattan.
‘Two twenty-five Park Avenue South has served as a great bridge space to get us to our new offices at Hudson Yards and Farley,’ said Meta Spokesperson Jamila Reeves in an email statement, confirming the company’s plans to give up the space.
The closure comes as Meta have been combining New York office spaces and in advance of plans for its enormous 1.5 million square foot Hudson Yards office.
It is part of a shift in the company’s approach to office space in New York and is the latest in a series of changes that signal intentions to scale down and decelerate growth in the city.
In the summer it backed out of its plans to expand 770 Broadway offices by 300,000, reported Bloomberg.
Meta currently has four offices in New York City at 770 Broadway, 225 Park Avenue, the Farley Building and Hudson Yards.
With expansion of the office at 770 Broadway paused and departure from 225 Park Avenue to take place soon the company will be focusing on Hudson Yards and the Farley Building.
Facebook isn’t the only company that is laying off workers.
On Friday, Twitter employees braced for widespread layoffs as new owner Elon Musk overhauls the social platform.
In a letter to employees obtained by multiple media outlets, the company said employees would find out by 9 a.m. Pacific Standard Time if they had been laid off. The email did not say how many people would lose their jobs.
Several employees tweeted early Friday that they had already lost access to their work accounts.
Twitter’s roughly 7,500 employees have been expecting layoffs since Musk took the helm of the company. Already, the billionaire Tesla CEO has fired top executives, including CEO Parag Agrawal, on his first day as Twitter’s owner.
He also removed the company’s board of directors and installed himself as the sole board member.
On Thursday night, many Twitter employees took to Twitter to express support for each other – often simply tweeting blue heart emojis to signify Twitter’s blue bird logo – and salute emojis in replies to each other.
THE FACEBOOK ‘METAVERSE’: A VIRTUAL WORLD WITHIN A WORLD
In a recent interview, Mark Zuckerberg said that over the next five years, he wants people to think of Facebook not as a social media company, but a ‘metaverse’ company.
That is one that is akin to a virtual environment where people can work and play for most of their 24 hours without leaving their home.
‘And my hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company,’ Zuckerberg said in the interview with The Verge.
‘And obviously, all of the work that we’re doing across the apps that people use today contribute directly to this vision in terms of building community and creators.
‘But this is something that I’m spending a lot of time on, thinking a lot about, we’re working on a ton. And I think it’s just a big part of the next chapter for the work that we’re going to do in the whole industry.’
So what exactly is the metaverse?
As Zuckerberg describes it, it’s a ‘vision’ that spans the entire tech industry, calling it the successor to the mobile internet.
‘But you can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it,’ he continued.
‘And you feel present with other people as if you were in other places, having different experiences that you couldn’t necessarily do on a 2D app or webpage, like dancing, for example, or different types of fitness.’
The Facebook CEO says his vision – which he has been working on for several months – would not only reach into virtual reality, but augmented reality, computers, mobile devices and game consoles as well.