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Mark Zuckerberg is squaring up to Elon Musk in the competition of which tech CEOs can blow the most billions and make their workers suffer the consequences.
As The New York Times reports, on Wednesday, Nov. 9, Zuckerberg announced that Facebook’s parent company, Meta, would lay off 13 percent of its global workforce, totaling about 11,000 people. In an email to employees, Zuckerberg also said Meta would be “taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze” through early 2023.
It’s been an extremely brutal year for the tech sector, with Zuckerberg offering up this explanation for Meta’s struggles: “At the start of COVID, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected. 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.”
The biggest consequence of Zuckerberg getting these decisions “wrong” was Meta’s stock absolutely tanking about 70 percent this year (normally, such disastrous decision-making could lose a person their job, but unlike those 11,000 other people, Zuckerberg seems safe). But another decision Zuckerberg arguably got wrong — which he declined to mention in his email — is that Meta also lost about $20 billion (per Insider) on its widely mocked and deeply unpopular metaverse project.
The project began late last year when Facebook changed its name to Meta, which Zuckerberg said reflected the company’s desire to refocus around AR/VR technologies. At the time, Facebook was also dealing with a major PR crisis amid reports that the company was well aware of the damage its platforms — which also include WhatsApp and Instagram — were causing, from spreading misinformation to stoking mental health issues.
The subsequent rollout of the metaverse — which is part of the Reality Labs project — has, to say the least, not gone well. The virtual landscape, which Zuckerberg clearly hoped would be used for everything from socializing to work meetings to gaming, has been plagued by technical difficulties and faced steep criticism and mockery. No moment better encapsulated the project’s prolonged flop era than when it announced its big “upgrade” last month: Legs for your metaverse avatar.
All that technical innovation cost Meta $10 billion in 2021 and $9.4 billion in 2022 (so far). Nevertheless, Zuckerberg will persist, with Meta saying in a statement late last month, “We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year.”
