Zuckerberg-Kahlschlag: Facebook group Meta lays off 11,000 employees

Sales are falling, costs are rising – now thousands of employees are paying the bill at the Facebook group Meta. CEO Mark Zuckerberg seems to be sticking with his expensive and controversial Metaverse project.

The Facebook group Meta lays off more than 11,000 employees in the first major job loss in its history. That is about 13 percent of the workforce, CEO Mark Zuckerberg announced on Wednesday.

Meta is in a dilemma: while less money is coming in through its core business of online advertising, the group is spending more and more billions under the keyword Metaverse on Zuckerberg’s vision of a virtual world.

With a price drop after the last quarterly figures, the stock market made it clear how few investors think of the price. The job cuts now follow the already announced austerity measures. The stock gained about 4 percent in premarket trading.

Zuckerberg pointed out that he overestimated the online boom at the start of the pandemic and therefore increased investment. Now the Internet business has returned to previous trends.

In addition, the weakening economy and increased competition weighed on sales. He takes responsibility for the decisions and their consequences. “It’s a sad moment,” Zuckerberg wrote.

Huge Expenses

Whether the Metaverse will establish itself as the next computing platform after the smartphone is an open question. But the costs are already real.

In the last quarter alone, the Reality Labs division, which is working on the Metaverse, posted an operating loss of nearly $3.7 billion. Since the beginning of the year, a deficit of $9.4 billion has built up – with sales of $1.4 billion in the area.

At the same time, less money remains in the till. Meta-apps like Facebook and Instagram generated operating profit of $32 billion in the past nine months, up from $41 billion a year earlier.

Calculated differently: Back then, the group burned nearly 17 percent of the Metaverse’s operating income, up from nearly 30 percent this year. When the numbers were presented, Zuckerberg announced that Reality Labs’ losses would “increase significantly” over the next year.

Existing cost-saving measures are not enough

The Facebook founder has now emphasized that he sees job cuts as a last resort. Previously, costs had been reduced elsewhere, for example through smaller office spaces. Employees who usually work outside the office should now share a desk. There will be a far-reaching hiring freeze until the end of the first quarter of 2023.

The job losses will affect both the lucrative app business and reality labs, Zuckerberg emphasizes. There were no figures for different areas.

At the same time, he confirmed his belief that the future would be developed at Meta. “I believe that we are deeply underestimated as a company today.” “Historically important work” is done at Meta.

Series of cuts at US tech companies

The job loss at Meta follows a few days after a clear cut at Twitter, where about half of its roughly 7,500 employees had to go under new boss Elon Musk. This radical dimension may be due to the tech billionaire’s ideas for the short message service. But elsewhere in the tech industry, overly optimistic expectations took revenge after the Corona crisis.

One example is fitness equipment manufacturer Peloton, which believed it could replace gyms permanently after a shortage of stock at the height of the pandemic. But the trend did not last, and Peloton had to halt the construction of an additional factory at great expense and lay off several thousand workers. Most recently, the chip company Intel, among others, has cut jobs.

(aeg/sda/awp/dpa)