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In a Q&A session yesterday, Mark Zuckerberg reportedly told employees that Meta is cutting its budget across most teams – even ones that are growing.
Meta is planning to freeze all hiring and could reduce its headcount amid revenue challenges and increasing competition, potentially making it a smaller company in 2023 than it is this year.
After 18 years of growth, this marks the company’s first major budget cut. It follows Meta’s first ever quarterly revenue decline reported in July, when CEO Mark Zuckerberg hinted at the possibility of plans to “steadily reduce headcount growth”.
Zuckerberg broke news of the freeze to employees in a weekly Q&A session yesterday (29 September), according to a person in attendance who spoke to Bloomberg. An internal memo seen by multiple media outlets later confirmed Meta’s plans.
At the meeting, Zuckerberg reportedly said that Meta would reduce its budget across most teams – even ones that are growing – and that any changes in headcount will be handled by individual teams. This could also include a plan to “manage out people who aren’t succeeding”.
Zuckerberg blamed adverse macroeconomic conditions for the decision. Economic downturns have sharply hit the advertising industry, which is a major source of income for Meta through its family of apps such as Facebook and Instagram.
“I had hoped the economy would have more clearly stabilised by now,” Zuckerberg reportedly said. “But from what we’re seeing it doesn’t yet seem like it has, so we want to plan somewhat conservatively.”
It’s not just the state of the economy that has likely compelled Meta to be conservative. Increasing competition from other social media apps is chipping into Meta’s ad revenue, with younger users moving away from Instagram to the increasingly popular TikTok.
Also impacting Meta’s business are the changes in privacy settings that Apple made to iOS last year. This lets users choose if they want to allow apps to track their data for targeted advertising, moving away from the convention of defaulting to user consent.
This caused a rift between ad-reliant Facebook and Apple, with some estimating the privacy changes cost Facebook, Snapchat, Twitter and YouTube nearly $10bn in revenue between April and October last year.
The freeze comes at a time when Meta has been increasing investment and focus on Reels, the company’s main TikTok competitor, and building its concept of the metaverse.
The company has around 6,000 staff working for its operations in Ireland. About half of these are in contract roles and many are reportedly at risk of being laid off.
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