In less than six months, Meta reduced its workforce by nearly 25%

Meta, parent company of social networks Facebook and Instagram, has undertaken to reduce its workforce by nearly 25% in less than six months, a new symbol of the difficulties experienced by the tech sector, conqueror until recently.

In a letter sent to employees and published on the group’s website, its CEO Mark Zuckerberg thus announced on Tuesday the elimination of 10,000 positions, as well as the disappearance of 5,000 positions currently unoccupied and for which there will ultimately be no recruitment. .

This new wave comes after a similar announcement in early November, which affected 11,000 group employees, i.e. a total drop of 24% in the workforce of the giant of Menlo Park (California).

This is a first for a company that had never launched a social plan in 20 years of existence.

The list of positions affected will be unveiled at the end of April and the restructuring will be launched by the end of the year, at an overall cost estimated between three and five billion dollars, according to documents filed with the Securities and Exchange Commission (SEC , the policeman of the American Stock Exchange) that AFP was able to consult.

This workforce reduction should allow Meta to reduce its expenses by three billion dollars by 2023.

“The first wave of layoffs allowed Meta to deal with the damage caused by the fierce competition (between social networks, editor’s note) to capture users and advertising. This new announcement should be welcomed by investors, who want to see Meta to refocus on its core business,” said Jasmine Enberg, analyst for Insider Intelligence.

The title rose 6% at 3:50 p.m. GMT on the New York Stock Exchange, to 191.75 dollars.

For Mark Zuckerberg, the decision is justified by the need to “make (of Meta) a better technology company” and “to improve our financial performance in a difficult environment, so that we can carry out our long-term vision”.

The exterior of Meta’s headquarters in Menlo Park on November 9, 2022 (AFP/Archives – JOSH EDELSON)

The co-founder of Facebook, who alone embodies the social network, took up the term used during the presentation of the annual results, at the beginning of February, namely that 2023 must be “the year of efficiency” for Meta.

“Meta recognizes the need to scale back its costly metaverse ambitions and refocus on improving its core businesses, particularly in the face of emerging threats, such as artificial intelligence,” added Mrs Enberg.

The group still has difficulty valuing the huge investments made in the metaverse, presented by Mr. Zuckerberg as the future of the Internet.

– A sector in distress –

Symbol of these difficulties, Meta sharply reduced the price of its virtual reality headsets in early March.

In addition to the job cuts, the company will slow the pace of its hiring, added Mark Zuckerberg, who also plans to “cancel non-priority projects”.

The group had already announced the hiring freeze until the end of March 2023. It now ensures that recruitment, as well as transfers within the group, will resume at the end of the restructuring.

A user of Meta's Oculus headset at the Mobile World Congress in Barcelona on February 28, 2023 (AFP - Josep LAGO)
A user of Meta’s Oculus headset at the Mobile World Congress in Barcelona on February 28, 2023 (AFP – Josep LAGO)

After posting insolent growth since its creation, Facebook, which became Meta at the end of 2021, has suffered, since last year, from the slowdown in online advertising.

The movement is accentuated by the modification of the operating system of the iPhone, which no longer allows the platform to collect as much data as before on its users.

In addition, Facebook and Instagram are subject to increasingly strong competition, in particular from the video platform TikTok, which is cutting back on its market share.

But the group is also trying to find new growth opportunities, such as the potential development announced Friday of a new social network that would compete with Twitter, hoping to take advantage of the difficulties of the blue bird.

In addition, Meta suffers, like the entire technology industry, from the rise in interest rates, which penalizes a very cash-intensive sector to finance its development.

In 2022, Meta’s revenue contracted 1% to $116.6 billion.

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