Meta, the parent company of Facebook, is looking to cut costs by 10% or more over the coming months, according to a report by the Wall Street Journal.
As part of those cost cutting measures, the company is quietly letting workers go by giving them a limited amount of time to apply for a new position with their organizations. Any employees who are unable to find a new position during that time are fired. According to the report, a similar tactic is being used by Google to cut workforce numbers.
Meta’s second quarter earnings report revealed in July that costs were up 22% year-on-year as it has invested heavily in the metaverse. On an earnings call, Meta CEO announced there would be cutbacks.
“Our plan is to steadily reduce headcount growth over the next year. Many teams are going to shrink so we can shift energy to other areas,” Zuckerberg said. “This is a period that demands more intensity,” he continued, “and I expect us to get more done with fewer resources.”
Meta also reported its first ever annual decline in revenues for the second quarter, and predicted sales would drop again in the next three months.
The company has faced significant challenges this year beyond the macroeconomic difficulties facing every organization. Apple’s privacy update to its operating system made it more difficult for Meta to collect and sell information about its users, and advertisers are spending more on other social media platforms. The rise of competitors like TikTok has also hit user growth at Facebook and Instagram.
These issues have affected Meta’s share price over the past year. The stock is down more than 56% so far this year, performing much worse than the S&P 500 which is down less than 20% and the Nasdaq Composite, which is down around 26% for the year.