Beijing Business Daily reporter Fang Binnan Zhao Tianshu
While Musk's feud with Twitter is still ongoing, Meta is also rumored to be laying off employees. It could be the biggest recent wave of layoffs in the tech industry after its rapid growth during the pandemic. A few years ago, starting in Silicon Valley, America's tech giants began a global guerrilla war. But when markets faltered and the easy money was gone, cost-cutting was the only consensus.
Mass layoffs "for the first time in history.
On Sunday, The Wall Street Journal, citing people familiar with the matter, reported that Meta plans to begin massive layoffs by Wednesday, affecting thousands of employees.
It is also the first major layoff in the company's 18-year history. Company officials have told employees to cancel nonessential travel starting this week, people familiar with the matter said.
There's speculation that while the cut won't be as dramatic as Musk's 50% cut to Twitter, Meta's workforce is far larger than Twitter's and has ballooned in recent years, so the absolute number of job cuts could exceed Twitter's.
Like other tech giants, Meta has been on a hiring spree during the pandemic, adding more than 27,000 employees in 2020 and 2021, and another 15,344 in the first nine months of this year, helped by the push to stay home during the pandemic. As of the end of September this year, Meta has over 87,000 employees.
Beijing Business Daily contacted Meta about the layoffs and future plans, but did not receive a reply as of press time. Previously, a Meta spokesperson had no comment on the news, referring only to recent statements from CEO Mark Zuckerberg.
"In 2023, we will focus our investments on a small number of high-priority growth areas. That means some teams will grow in size, but most others will stay flat or shrink over the next year. Overall, we expect to have roughly the same or slightly smaller team size by the end of 2023 than we do today." Zuckerberg said on his final earnings call in late October.
Meta has been cutting costs in recent months due to the weak market. The company had more than 87,000 employees at the end of September, according to the data. The company had already cut plans to hire engineers by at least 30 percent in June, when Mr. Zuckerberg warned employees to prepare for a recession.
The metaverse is tricky
The metaverse is seen as the root cause of the Meta layoffs. The social giant, which owns Facebook, Instagram, WhatsApp and Messenger, has spent billions of dollars on the metaverse over the past year amid a slowing global economy and soaring inflation, but has seen scant returns.
Data shows that Meta's Reality Labs division lost $4.5 billion in 2019, $6.6 billion in 2020, and $10.2 billion in 2021, and has already lost over $5.7 billion in the first half of 2022. Yu Jianing, executive director of the Metauniverse Industry Committee of the China Mobile Communications Federation, said the development of the metauniverse is a long, gradual iterative process that continues to expand its boundaries. Since the popularity of the concept of the meta-universe, the market has been looking forward to the implementation of the application, hoping that a representative application will let users fully enter the meta-universe, and even generate huge industrial value in a short time. But the reality is that this is still the "foundation stage" of the metaverse's development, and it is unlikely that we will see very successful metaverse products in the next year or two.
For Meta, Yu Jianing thinks, this gives high profile layout yuan Meta high hopes of the universe, but on another level, VR devices only yuan entrance of the universe, yuan universe application is still in exploring and developing unceasingly, the outbreak of it will depend on the development of information technology and other integration innovation, is a relatively long journey.
The failure to bet on the universe is also seen as the "Silicon Valley wunderkind" Zuckerberg's career Waterloo. A shareholder even sent a letter to Zuckerberg and Meta's board urging the company to cut costs and start laying off employees. In an open letter to Zuckerberg, U.S. tech venture Capital and private equity firm Altimeter Capital Management said Meta needed to cut jobs to streamline capex, and the shareholder said Meta had lost investor confidence as it increased spending to shift to the metacomverse business.
Meta's stock has fallen more than 70% this year amid a number of negative factors. According to Reuters, Meta forecast last month that costs would rise sharply in next year's weak holiday season. Meta has lost more than $500 billion in stock market value this year and is expected to lose about $67 billion in stock market value next year.
The tech industry is shedding jobs
In addition to Meta and Twitter, some of the biggest companies in the US are also laying off workers. Wang Yanhang, a senior researcher at the Chongyang Institute for Financial Studies at Renmin University of China, believes Meta's job cuts may only be the tip of the iceberg for US companies, and there may be more severe challenges ahead.
Several technology companies, including Apple, Microsoft and Amazon, have laid off workers and scaled back hiring in recent months as rising interest rates, inflation and the energy crisis have slowed the global economy.
In October, Microsoft laid off about 1,000 employees across multiple levels, teams and around the world. In addition, for now, Apple has suspended almost all hiring, Business Insider reported last week. Employees in all departments have been told that no permanent new hires will be made until the end of the fiscal year in September 2023.
Also suspending hiring is e-commerce giant Amazon. Amazon said executives decided to suspend hiring because of the uncertainty surrounding the economy.
For the tech industry, the post-pandemic era has been painful. University of Michigan economist Daniil Manaenkov said: "For those industries that have benefited from the coronavirus pandemic, it could be a bit painful. And that applies to people who work in those industries. It's just a little bit of pain. It's not going to be mass unemployment."
But he also said that if layoffs in the tech industry became more widespread, that could have an impact on the economy. Without government stimulus, laid-off tech workers will cut back on spending, which could lead to a broader slowdown in the consumer market.
After more than a decade of sustained expansion, the U.S. tech industry is now running out of steam, and a number of headwinds are raising concerns about its future. Some experts believe that this is a major turning point for the US technology industry, which may see the bursting of the Internet technology stock bubble like the one in 2000.
Some analysts say the pressure on tech stocks isn't over yet. Relative to historical P/Es, tech stocks still have room to fall. Falling stock prices have pushed valuations to lows unimaginable in recent years, and in many ways the tech bubble has burst.