It’s been a rough couple of weeks for Silicon Valley. Last week, Big Tech’s favorite bank collapsed and needed to be seized by regulators, leaving even typically-leftwing members of Congress begging the White House for a bailout. One that Biden was all too happy to oblige.
On Tuesday, another tech giant announced a huge layoff, signaling once again that the economy may be sitting on the knife’s edge.
The Wall Street Journalreports, “Meta Chief Executive Mark Zuckerberg said in an email to staff on Tuesday that the company would in the coming months conduct multiple rounds of job cuts, as well as cancel some projects and reduce hiring rates as part of what he has dubbed the “year of efficiency.”
Company recruitment teams will be cut first, followed by restructuring and layoffs in its technology groups in late April, Mr. Zuckerberg said. Business teams will face layoffs in May, he added. The company will also stop hiring for about 5,000 open positions.
Mr. Zuckerberg said his company must cope with a longer term change in the economy, marked by the end of low interest rates, growing geopolitical tensions and costly new regulations.
“At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years,” Mr. Zuckerberg wrote. “Given this outlook, we’ll need to operate more efficiently than our previous headcount reduction to ensure success.”
The layoffs would be the Meta’s second round of cuts since last November.
The New York Timeswrote that the Facebook parent company “is dealing with many challenges these days. It is grappling not only with a digital advertising slowdown but also with Apple’s privacy changes to its mobile operating system, which have restricted Meta’s ability to collect data on iPhone users to help target ads. It also faces steep competition from TikTok, which has soared in popularity over the past few years.
Meta is also in the midst of a tricky transition to become a “metaverse” company, connecting people to an immersive digital world through virtual-reality headsets and applications. Mr. Zuckerberg sees the metaverse as the next-generation computing platform, so Meta has been spending billions of dollars on the effort and reallocating workers to its Reality Labs division, which is focused on products for the metaverse.
Yet it’s unclear if people will want to use metaverse products. In recent months, the public has instead gravitated to chatbots, which are built on artificial intelligence. Meta has invested in A.I. for years but has not lately been at the center of the conversation about the technology.
In his announcement on Tuesday, Mr. Zuckerberg laid out a new vision to streamline the company’s organization, including removing layers of management, ending lower-priority projects and rebalancing product teams with a focus on engineering. He added that the moves were a response to global conditions, including increased regulation, geopolitical instability, higher interest rates and a cooling economy.”
Big Tech isn’t the only major industry looking to trim its employee numbers. Last week General Motors offered “voluntary buyouts to a “majority” of its 58,000 U.S. white-collar employees, as it aims to cut $2 billion in structural costs over the next two years.”