Since Mark Zuckerberg founded Facebook in 2004, the Silicon Valley company has steadily hired more employees. At the end of September, it had the largest number of workers ever, totaling 87,314.
But on Wednesday, the company — now renamed Meta — began cutting jobs, and deeply.
Meta said it is laying off more than 11,000, or about 13 percent of its workforce, amounting to the company’s most significant job cuts. Although some areas, such as recruitment and business teams, were more affected than others, layoffs were made across departments and regions.
“I want to take accountability for these decisions and how we got here,” Mr. Zuckerberg wrote to employees. “I know it’s hard for everyone, and I’m especially sorry for those affected.”
The cuts — nearly three times those announced by Twitter last week — represent a stunning reversal of fortune for a once high-flying company whose ambitions and room for growth seemed limitless. It spent years lavishly, amassing users, buying companies like Instagram and WhatsApp, and offering enviable perks to its employees. Its data privacy practices and toxic content in its apps could undermine its financial performance, as its stock continues to rise and its revenue soars. At one point last year, Meta was valued at $1 trillion.
But the company has struggled financially this year as it tries to move into a new business – the immersive world of the so-called Metaverse – as well as a global economic slowdown and a decline in digital advertising, its main source of revenue. . As Meta’s services, lost their luster, new competitors like TikTok emerged to capture younger audiences. Last month, Meta posted a 50 percent slide in quarterly profit and its second straight sales decline. Its stock has fallen nearly 70 percent this year.
Mr. Zuckerberg, 38, attributed the cuts to growing too quickly during the pandemic when a surge in online commerce led to a big boost in revenue. As with changes in other businesses, he said he thought the shift would be permanent, leading him to significantly increase expenses. Meta’s headcount at the end of September was up 28 percent from a year earlier.
“Unfortunately, it didn’t go the way I expected,” Mr. Zuckerberg said on Wednesday. “I got it wrong, and I take responsibility for it.”
The reduction in the size of Meta’s workforce marks an effort to rein in some of the enthusiasm that has come to define an era of success in Silicon Valley. Mr. Zuckerberg said budgets would be cut, including some staff, and the company would cut back on real estate. The enrollment freeze was extended until March.
On Wednesday, laid-off employees immediately lost access to many corporate systems, although their email accounts would remain active until the end of the day “everyone can say goodbye,” Mr. Zuckerberg said.
“It will add meaningful cultural change to the way we work,” he said. The company will focus on a small number of “high priority” areas, he said, including artificial intelligence, advertising, and the metaverse.
On Tuesday, Mr. Zuckerberg met with employees to discuss the layoffs, two people who attended the meeting said. One person present said the chief executive took responsibility for the cuts, saying his company had scaled back too quickly. Meta also canceled travel plans for employees to ensure they were available to meet with managers if their teams were affected by layoffs, three other people said. The Wall Street Journal previously reported on Mr. Zuckerberg’s meeting with executives on Tuesday.
For those who lost their jobs in the United States, Metta said it would sever 16 weeks of the employee’s base salary, plus two weeks for each year a person worked for the company. Each worker and their family will be paid health care for six months.
After the layoff announcement, Meta’s stock price rose 5 percent in premarket trading.
Meta joins other tech companies, such as Snap, that have laid off employees as economic conditions become more challenging. Many of these companies boomed during the coronavirus pandemic, with some large companies reporting financial results in recent weeks that show they are feeling the effects of the global financial crisis. Last week, Twitter’s new boss Elon Musk fired about half of the company’s 7,500 employees, saying the social networking service was losing $4 million a day.
“These cycles of boom and bust are incredibly destructive to organizations because the people working there feel like they don’t know where they stand,” said Harvard management professor Sandra J. Sucher. By hiring quickly across all departments during the pandemic, Mr. Zuckerberg had set his company up for the need to cut staff, she said.
Mr. Zuckerberg is telegraphing that Meta will have to cut costs, starting with cutting many of the lucrative perks employees once enjoyed. In March, he announced that the company would be trimming or eliminating free services such as laundry and dry cleaning. He also scaled back the company’s free dinner offer, which made it difficult for employees to take home meals for themselves and their families.
In July, Mr. Zuckerberg warned employees that the company was experiencing “one of the worst recessions we’ve seen in recent history” and, in September, announced a hiring freeze.
Last month, he warned that “teams will remain flat or shrink over the next year.” He added that the company will “end 2023 as either about the same size or a slightly smaller organization than it is today.”
Mr. Zuckerberg controls Meta through a special stock structure that effectively allows him to single-handedly set the company’s direction. It also helps insulate him from the risk of outside investors ousting him from power, unlike executives like John Foley of fitness company Peloton, who had to step down after miscalculating the economic effects of the pandemic.
Within Meta, there is friction over Mr. Zuckerberg’s financial commitment to Metaverse, two executives said.
Meta has been spending billions of dollars on Metaverse-related products like virtual-reality headsets, even though such products are fantastic and there’s no guarantee people will flock to them. There was growing concern that Meta had spent too much to try to realize Mr. Zuckerberg’s ambitions, the people said, at the cost of the social network’s core business.
In its earnings report last month, Meta revealed that Reality Labs, the part of the company that operates Metaverse, had an operating loss of $3.67 billion. Reality Labs also experienced its lowest revenue since the last quarter of 2020. The company expects Reality Labs’ operating loss to widen next year.