Meta Has Begun Laying Off Workers to Reduce OpEx by 10%
Meta’s plans to lower operating expenses (opex) by 10% equate to a reduction of $2.046 billion in absolute terms to $18.41 billion.
Meta has reportedly started to lay off some employees as part of their efforts to cut down operating expenses. According to the current and former managers who spoke with the Wall Street Journal, the Menlo Park-headquartered company is looking to slash costs by 10%.
In Q2 2022, Meta’s revenue declined for the first time in years. The company’s income statement was further aggravated by its operating expenses surging by 22.46% year-over-year to $20.46 billion during the same period, thus impacting the overall profitability for the third consecutive quarter.
Meta’s plans to lower operating expenses (opex) by 10% equate to a reduction of $2.046 billion in absolute terms to $18.41 billion.
Facebook’s parent company Meta has managed to avoid layoffs for more than a few quarters since Apple’s introduced the privacy-focused App Tracking Transparency in iOS in April 2021, allowing users to opt out of online tracking for personalized ads.
However, consistent hits to the bread and butter of its business, the ad revenue, have taken a toll on the social networking giant, presently working toward transitioning itself into a metaverse company.
Meta also advised caution as it entered Q3 2022, suggesting slower growth in “serious times” due to economic headwinds as price inflation forces businesses to cut down on advertising and other marketing expenses.
See More: Meta Partners With Qualcomm To Develop Customized Chips for the Metaverse
During its Q2 2022 earnings call, the company put forth an unenthusiastic outlook for Q3 2022, citing a weak advertising demand from its Family of Apps segment due to macroeconomic uncertainties. Meta also expects the already loss-making Reality Labs division (AR/VR + metaverse) to bleed cash even further in Q3 2022. Meta’s share price in the trailing 12 months has slid by 58.59%.
In July, the company said it is slowing down hiring and lowering expectations by clarifying that “teams should not expect vast influxes of new engineers and budgets.” Reportedly, the company is now trimming down what it considers to be excess without making too much noise over it and is reorganizing its teams.
It is unclear exactly how many of the 83,553 Meta employees (as of the latest disclosure in June 2022) have got the ax so far. According to the WSJ’s sources, expect more in the coming weeks.
Meta employees who are asked to leave can reapply within the company and will have 30 days to find themselves another position. Those unable to find greener pastures internally in this timeframe will effectively cease to be a part of Meta going forward.
The bulk of the 10% or $2.046 billion in opex savings is expected to come from headcount reduction though other overheads and consulting budgets will be decreased. How this will impact its efforts to monetize Reels, which CPO Chris Cox called “a bright point” from H1 2022, Shops Ads and Business Messaging, is unknown.
Monetization is one of the six investment priorities Meta spelled out in July. The others are: Metaverse (experience building and user retention, Discovery Engine, Community Messaging, WhatsApp and Messenger-driven), AI for platform recommendations, research, augmented reality; and renewed privacy commitments under domestic and international laws.
Meta quietly laying off staff comes on the heels of Google halving the size of its internal research and development division, Area 120, from 14 projects to seven. Earlier in September 2022, Google CEO Sundar Pichai mentioned at the Code Conference in Los Angeles that the search and ad-tech giant needs to become more efficient by 20%.
Like those at Meta who are shown the door, Google employees of Area 120 also have a window to find internal job opportunities, albeit Googlers have until January 2023 for the same.
Let us know if you enjoyed reading this news on LinkedIn, Twitter, or Facebook. We would love to hear from you!
MORE ON THE TECH JOBS
