The Facebook group Meta is laying off more than 11,000 employees in the largest job cuts in its history. That’s about 13 percent of the workforce, said CEO Mark Zuckerberg on Wednesday. He pointed out that he overestimated the online boom at the beginning of the corona pandemic and therefore increased investments. But now the online business has returned to earlier trends – and the weakening economy and increased competition are also having a negative impact on revenues. He takes responsibility for the decisions and their consequences.
Meta has the problem that its core business with advertising in online services such as Facebook and Instagram generates less revenue than before. At the same time, the development of virtual worlds promoted by founder and boss Mark Zuckerberg under the keyword Metaverse is eating up more and more money. Zuckerberg had recently announced that the number of employees at Meta could no longer grow for the time being and could also shrink in the coming year because the group would concentrate on fewer areas.
Big losses in the Reality Labs division
In the past quarter alone, the Reality Labs division, which is working on the Metaverse, posted an operating loss of almost $3.7 billion (currently $3.67 billion). Since the beginning of the year, a deficit of 9.4 billion dollars has accumulated – with sales of 1.4 billion dollars in the area. And Zuckerberg announced that Reality Labs’ losses would “grow significantly” in the coming year.
The decline in sales accelerated. Meta is affected by the frugality of advertisers, who are spending less money on online ads in the face of high inflation and economic concerns. Meta revenue fell 4% year over year to $27.7 billion. The bottom line is that profits fell by 52 percent to around 4.4 billion dollars. The stock price has been under pressure for months because investors find the Metaverse investments too high.