Meta, Facebook’s parent company, is struggling with metaverse and is laying off 11,000 employees

Posted on November 10, 2022

Facebook no longer chains successes. The social network, renamed Meta, has sparked chain debates in recent years over the use of personal data. Today, his model is less successful. Mark Zuckerberg has announced an extensive social plan, affecting 11,000 employees of the group, due to the decline in the financial results of the group. However, he remains confident that metaverse, his new virtual reality technology, will eventually succeed.

Metaverse doesn’t seem to be successful. Meta, the group that unites the social networks Facebook, Instagram and Whatsapp, has to reduce navigation and launch the first big social plan in its history. Mark Zuckerberg, its founder, announced in a message to his employees that he had to lay off 11,000 people worldwide, or 13% of his total workforce. “Today, I’m sharing one of the most difficult changes we’ve had to make in Meta history,” Mark Zuckerberg begins before detailing the number of people affected by the plan. He adds that “we are also taking a number of additional steps to become a more efficient business by cutting discretionary spending and extending the hiring freeze into the first quarter.”

Meta is the second major U.S. tech company to plan a drastic workforce reduction within days. Elon Musk dropped the ball in early November on Twitter, which he had just acquired, by announcing brutally dismissal of half of the company’s employees. Twitter has been in a losing position for a long time, and Elon Musk, who bought it knowingly, recalled it in a tweet: “Unfortunately there is no choice when the company loses more than 4 million dollars a day.”

Meta, caught by the difficult economic climate

The former Facebook, on the other hand, has long been making huge profits. But Gafa’s F has recently been caught in a less favorable situation. The back-to-back shutdowns during the Covid-19 pandemic have really benefited the digital giants, due to the growth of e-commerce and online advertising. The return to normality is proving tougher, and Meta saw its earnings halve in the third quarter of 2022. “Many people predicted that this acceleration would be permanent and continue after the pandemic ends. I did too, so I decided to significantly increase investments. Unfortunately, it didn’t go as I expected”, admits Mark Zuckerberg.

The financial markets have made the same observation. Faced with disappointing financial results, former darlings of investors, such as Meta or Amazon, have become their pets. Technology companies have seen their stock market valuations plummet in recent months. Meta even lost almost $89 billion in market capitalization at the end of October, after announcing declining revenue and earnings.

Loss of confidence in the Meta model

Mark Zuckerberg, however, adheres to his strategy focused mainly on the development of the metaverse (metaverse in English), a technology which he considers of historical importance and in which he has invested more than 20 billion dollars in recent years. “I think we are deeply undervalued as a company today,” he asserts in his letter to employees. “We are leading the development of technology to define the future of social login and the next computing platform.”

However, the metaverse remains a bet that fewer and fewer investors seem willing to take. The utility of this technology is still very unclear, despite promises to make it a virtual meeting place. Even Meta remains burdened from many controversies which are unlikely to strengthen confidence in his model. Last year, whistleblower Frances Haugen’s revelations about the social network’s data management practices went all the way to the US Senate. She has since founded Beyond the Screenan NGO to clean up social networks.

Arnaud Dumas, @ADumas5

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