Meta, the parent company of Facebook, Instagram, and WhatsApp, has begun to reduce its workforce after a steep drop in profits and sales this year. The cuts come as the company continues struggling with a slowdown in digital advertising, primarily funded through its social media platforms. Its stock price has also fallen dramatically, mainly as investors worry about the financial health of Meta’s ambitious projects.
Among the issues that have hit Meta are a decline in online ad spending and the rise of new competitors such as TikTok. In addition, the Apple iOS privacy update that limits the targeting ability of advertisers also slashed Meta’s ad revenue.
To shore up efficiency, leaders at Meta have announced restructuring plans, including canceling lower-priority projects and reducing hiring rates. They will also slash budgets to avoid overspending.
The layoffs are expected to begin on Wednesday and could impact about 4% of the company’s global staff. Those affected will be given 16 weeks of severance pay plus two weeks each year they’ve worked at the company.
This will be the third round of layoffs since November, when Meta trimmed its headcount by 13% to address a deteriorating economy and an inability to generate cash from its multi-billion dollar investment in its Metaverse project. The reversal comes as CEO Mark Zuckerberg tries to rein in a high-flying business that was once valued at $1 trillion and had amassed billions of users.
One person who works at Reality Labs, the division responsible for Meta’s metaverse projects, said that engineers in this area were primarily spared in this round of layoffs. Instead, according to people familiar with the matter, they are now expected to be retrained at another company.
Meta’s board approved a plan to restructure the company earlier this month. The plan is designed to increase developer productivity and tooling, optimize distributed work, and garbage collect unnecessary processes.
In addition, the company has restructured its management teams to make them more effective and efficient. The restructure includes assigning more responsibility to engineers who will better support the platform’s growth and development.
The plan also aims to increase transparency about projects and priorities within the company. Employees said it would also help leaders identify and eliminate teams that don’t need to exist.
As part of its restructuring, the company also plans to introduce a performance review system that will allow managers to gauge their employees’ progress and effectiveness better. According to people who know the process, this will be a significant step in getting employees to rework their work habits.
The layoffs, announced over several months, follow recent announcements by other tech companies to freeze hiring or cut their workforces as they fight a challenging economic environment. Last Thursday, Silicon Valley firms Stripe and Lyft announced large-scale layoffs, while Amazon said it would freeze hiring in its corporate offices.