Facebook parent company Meta lays off 11,000 people

Facebook parent Meta is laying off 11,000 people, about 13 per centof its global workforce, as it tries to rein in runawaycosts in the face of slowing demand for its core product, CEO Mark Zuckerberg said in a letter to employees on Wednesday.

Zuckerberg has hired aggressively in recent years, doubling the size of the company's workforce from what it was before the COVID-19 pandemic.

Most of that hiring has gone into building the metaverse an online augmented reality universe that Zuckerberg says is the future of the company and of society.

The company has spent tens of billions of dollars trying to build up its metaverse unit, known as Reality Labs, on the assumption that revenues would follow. But that hasn't happened, and worse still, the company's core business has started to slow at the same time.

"They're hemorrhaging money because of their big beton the metaverse," said Daniel Tsai, a lecturer on technology and business at Toronto Metropolitan University.

Meta and its advertisers are bracing for a potential recession. There's also the challenge of Apple's privacy tools, which make it more difficult for social media platforms such as Facebook, Instagram and Snap to track people without their consent and target ads to them.

The company posted its first quarterly loss in its history as a public company this past summer and then followed it up with another loss this fall.

"Unfortunately, this did not play out the way I expected," Zuckerberg said in a prepared statement. "Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition and ads signal loss have caused our revenue to be much lower than I'd expected. I got this wrong, and I take responsibility for that."

Canadian impact not yet known

Meta has an extensive presence in Canada, both at its Canadian headquarters in Toronto and through satellite offices across the country, with remote workers. But it's not immediately clear how many Canadian employees have been laid off.

CBC News reached out to representatives of the company, who said they had no Canadian details to add.

Earlier this year, Meta announced it had ambitious plans to hire up to 2,500 more people in Canada. On Wednesday, the company was evasive about whether any of those hires have been impacted by Wednesday's news.

"Our expansion in Canada was always a long-term one planned over a number of years. We remain committed to Canada and look forward to many years of innovation ahead in Toronto," the company said.

WATCH| Big tech sheds jobs, struggles in post-pandemic economy:

Facebook owner Meta laying off 11,000 workers worldwide

2 years ago

Duration 2:03

Facebook's parent company Meta is laying off 11,000 workers, including some here in Canada. This comes as the company records a massive drop in revenues and struggles with a widespread lack of interest in its Metaverse virtual experience. Correction: Doug Fords location was incorrectly marked as Brantford., Ont., Ford was in Bradford, Ont.

Company's stock has slumped

Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown era because more people stayed home and scrolled on their phones and computers. But as the lockdowns ended and people started going outside again, revenue growth began to falter.

Meta is just the latest large technology company to announce layoffs, but its business has suffered more than most. Meta's share price is now trading where it was in 2016.

Although the company is barely a year into its metaversepush, Tsai of Toronto Metropolitan University is already using the word "bust" to describe the venture.

"There's no demonstration it is going to work," he said in an interview. And the slowdown in the company's core business, the social media platform, is gobbling up the runway it thought it had to get the metaverse off the ground, he said.

"What we're going tosee in the following quarter is if Facebook is still struggling, you're going to have more layoffs and more cuts to come."

Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic overhaul as new owner Elon Musk took the helm. He said he had no choice but to cut the head count in half "when the company is losing over $4M/day."

In Canada earlierthis year, Shopifylaid off about 10 per cent of its staff, while fintech startup Wealthsimplelaid off about 13 per cent of its workers.

Ex-worker 'completely blindsided'

Meta needs to cut costs to stay nimble in the current economic environment, and layoffs are a quick way to do that. But that doesn't make it any easier for those who lost their jobs.

Engineering manager Eric Triebe was one of them. "I knew that layoffs were coming in the last couple days. We knew that obviously it was a possibility," the Seattle residenttold CBC News on Wednesday. "But overallI was not expecting it."

While Triebe saidhe understands that "companies grow a little bit too fast sometimes and you need to make cuts based on your profitability," the waythe news came out, via email, "completely blindsided" him, he said.

"It's a very hard thing to do at this scale, but I think there could have been a lot more care that went into this," he said. "Itfeels really poorly done."

Competition from TikTok

Competition from TikTok is also a growing threat as younger people flock to the video-sharing app instead ofInstagram, which Meta also owns.

"We've cut costs across our business, including scaling back budgets, reducing perksand shrinking our real estate footprint," Zuckerberg said.

"We're restructuring teams to increase our efficiency. But these measures alone won't bring our expenses in line with our revenue growth, so I've also made the hard decision to let people go."

Former employees will receive 16 weeks of base pay, plus two additional weeks for every year with the company, Zuckerberg said. Health insurance for those employees and their families will continue for six months.