Mark Zuckerberg’s ‘year of efficiency’ now means another 10,000 layoffs and a hiring freeze on 5,000 more jobs
Meta’s brutal year of efficiency is only just getting started. After laying off around 11,000 employees in November, the company is resorting to even more firings and job cuts. The Facebook parent is terminating around 10,000 jobs and halting hiring for 5,000 open positions, CEO Mark Zuckerberg announced in a blog post Tuesday, in the latest tech sector push to lower costs and streamline operations.
Zuckerberg did not specify what areas of the company would be most affected by job reductions, although Meta’s recruiting team is one of the departments getting downsized, as slower hiring rates are likely to be a permanent reality at the company moving forward.
The first round of Meta layoffs affected around 13% of overall staff, and employees have been bracing for more terminations for weeks ever since Zuckerberg made publicly clear that the company was going to double down on efficiency and become leaner in every department during its last quarterly earnings call with investors last month.
The CEO declared at the time 2023 was going to be the company’s “year of efficiency” as it aimed to become a “stronger and more nimble organization.” He added that while Meta would double down in certain competitive areas including artificial intelligence, unnecessary and underperforming projects were on the cutting board. Of the November layoffs, Zuckerberg said it was the “beginning of our focus on efficiency and not the end.”
A turbid economic climate for tech companies has been especially difficult for social media platforms like Meta, which in addition to Facebook also owns Instagram and Whatsapp. Advertising revenue at the company has been slowing since last year, while investors and Meta shareholders have also grown critical of Zuckerberg’s decision to steer the company into uncharted waters with his metaverse push, first announced in late 2021.
Like many other tech companies, Meta expanded wildly during the early years of the pandemic and hired aggressively, but has since been forced into downscaling as the Federal Reserve began raising interest rates to cool down the economy last year. The company had more than 87,000 employees in September, a 28% increase from the year before.
In his blog post announcing the latest layoffs, Zuckerberg mentioned Meta's "year of efficiency" six times. He referred to the company's A.I. vision as "our single largest investment" and stated that the company's long-term goal is to build A.I. "into every one of our products." Zuckerberg also said A.I. will be employed within the company to improve efficiency, calling it one of Meta's "tools that will make us most effective over many years." He said Meta is planning to use A.I. to "help engineers write better code faster, enabling us to automate workloads over time, or identifying obsolete processes that we can phase out."
But Zuckerberg also suggested Meta may have permanently moved on from its freewheeling past to focus on efficiency and cost-cutting. He warned the company may still struggle to stay profitable in the immediate future as conditions in today's market environment threaten to persist past this year.
"We should prepare ourselves for the possibility that this new economic reality will continue for many years," Zuckerberg wrote, adding that a prolonged period of higher interest rates, global geopolitical instability, and stricter regulation of the tech sector could lead to slower growth and higher costs for the company.
Regulation has become an increasingly thorny issue for tech companies, and especially for social media platforms. Last month, Twitter found itself on the receiving end of a lawsuit that ended up in front of the Supreme Court. The suit threatens to weaken Section 230, which online companies have long relied on to protect themselves from content posted by third parties on their platforms.
Tech companies suffered a blow in 2021, when newly appointed Federal Trade Commission Chair Lina Khan made clear one of her priorities was to rein in Big Tech companies, saying they had expanded to the point of monopolizing the sector. Coming down on tech has been notoriously difficult for Congress to get right, but stricter regulations are one of the few areas with relative bipartisan agreement.
"Given this outlook, we’ll need to operate more efficiently than our previous headcount reduction to ensure success," Zuckerberg wrote.
While investors have been tepid on the billions Zuckerberg has spent on developing the metaverse, his push for efficiency and fewer redundancies has been well-received. The company's shares are up over 50% since the beginning of the year, and have more than doubled in value since last November when the first wave of layoffs was announced.
This story was originally featured on Fortune.com
More from Fortune:
5 side hustles where you may earn over $20,000 per year—all while working from home
ChatGPT helped me make a plan to buy a $500,000 home, but experts warn me it's a bad idea
This is how much money you need to earn annually to comfortably buy a $600,000 home