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Why Did Meta Cut Off 11000 Employees? How the Company Has Fallen!

Meta, a Facebook company, is laying off approximately 11,000 individuals, or roughly 13% of its existing staff. On Wednesday, the company’s CEO, Mark Zuckerberg, sent a letter to its staff. These layoffs are being carried out for the first time in Meta’s 18-year history.

This firing occurred shortly after the firing at Twitter and Microsoft. What was the cause for the mass layoffs, why did Meta have to do it, and how would it affect the company and the economy? What impact will this layoff have on Indian employees?

In addition to laying off personnel, Meta has implemented cost-cutting initiatives as it grapples with rising costs and declining ad income. The corporation also intends to cut back on discretionary spending and recruiting during the first quarter. However, it is unclear which regions would be affected or how much money will be saved as a result of this change.

Prior to the firings, the company had indicated that the cost-cutting would be accomplished by reducing its real estate exposure and some of the benefits provided to its employees, such as dry cleaning services, take-home dinners, and free laundry.

Why Has Meta Been Pressured to Cut Costs?

The pricing decreases in Meta are mostly due to two factors: declining ad revenue and the corporation putting large sums of money towards the development of the Metaverse project. During the COVID-19 epidemic, tech companies experienced significant growth as individuals stayed at home and spent more time online on their tech devices.

Why Did Meta Cut Off 11000 Employees? How the Company Has Fallen!

This rate of growth has not been maintained since the pandemic ended. Furthermore, TikTok has been a formidable competitor to Facebook.

In his letter, Mark stated that when Covid first launched, the globe quickly went online, and the growing wave of e-commerce revealed extra revenue growth, with many predicting a permanent acceleration, including him, and a major increase in investments.

But that was a bad decision, and things did not go as planned. Online commerce has delayed the rate and magnitude of the macroeconomic decline, and increased competition and ad income loss have resulted in revenues that are lower than expected.

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On the other hand, Metaverse investors have been dissatisfied with the surplus. Metaverse receives more than $10 billion per year from Meta. Since the start of 2022, the company’s stock has dropped by more than 71%. According to the New York Times, the corporation told Reality Labs in a recent report that a portion of the company has been focused on the Metaverse and has an operational deficit of $3.67 billion.

Reality Lab also reported its lowest quarterly sales since the fourth quarter of 2020. Furthermore, the corporation anticipates that the loss will grow next year. All of this has been eroded further as a result of the United Nations’ economic slump. Meta saw its first decline in history, which was followed by another in the fall.

The Economic Impact of Layoffs

A massive firm like Meta, which was once unstoppable, is suddenly laying off people in mass for the first time, which is a strong indicator of an economic slowdown. Ad revenue has been steadily declining for digital enterprises all across the world, and this is the first evidence of a worldwide recession.

Why Did Meta Cut Off 11000 Employees? How the Company Has Fallen!

The once-unstoppable Meta being forced to make mass layoffs for the first time is a sure sign of an economic crisis. Ad income for digital platforms throughout the world has been falling as the first signs of a global recession emerge. Things have gotten worse for Meta since Apple introduced App Tracking Transparency in iOS.

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This App Tracking Transparency allows users to deny developers access to create a unique ID that tracks them and displays adverts based on their interests and activity. According to Meta, this will cost them roughly $10 billion this year.

In the letter, Zuckerberg also discussed intentions to terminate visa-holding employees. He stated that this is especially tough for visa holders. There is a notice period before the final termination, so you will all have time to work things out.

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