Facebook parent Meta to cut headcount for first time, slash budgets across teams

Meta will likely be smaller in 2023 than it was this year, Mr Mark Zuckerberg said. PHOTO: REUTERS

SAN FRANCISCO - Meta Platforms chief executive officer Mark Zuckerberg has outlined sweeping plans to reorganise teams and reduce headcount for the first time ever, marking an end to an era of rapid growth at the social media giant.

In what would be the first major budget cut since the founding of Facebook in 2004, Mr Zuckerberg said the company would freeze hiring and restructure some teams to trim expenses and realign priorities. Meta would likely be smaller in 2023 than it was this year, he said.

He announced the freeze during a weekly question-and-answer session with employees, according to a person in attendance. He added that the company would reduce budgets across most teams, even those that are growing, and that individual teams would sort out how to handle headcount changes. This could mean not filling roles when employees depart, shifting people to other teams, or working to manage "people who are not succeeding", according to remarks reviewed by Bloomberg.

"I had hoped the economy would have more clearly stabilised by now," Mr Zuckerberg said. "But from what we are seeing, it does not yet seem like it has, so we want to plan somewhat conservatively."

Meta stock, which was already trading down to start the day, fell further after the news on Thursday, down 3.7 per cent from Wednesday's close. The shares have fallen 60 per cent so far this year.

Meta is not the only advertising-reliant company to be hit by broader economic challenges. Twitter enacted its own hiring freeze in May, and has been asking employees to watch their expenses and reduce travel and marketing costs. Alphabet's Google, too, said that it would slow hiring during the second half of the year, and Snapcut 20 per cent of its workforce in August.

The further cost cuts and hiring freeze are Meta's starkest admission that advertising revenue growth is slowing amid mounting competition for users' attention.

It is not an ideal time to be cutting. Besides economic pressures, the company's advertising business, built on precise consumer targeting, has lost some of its edge due to new privacy restrictions from Apple on tracking iPhone users.

TikTok is attracting younger users away from Instagram, and Mr Zuckerberg is making an expensive bet on the metaverse, an immersive virtual reality future where he imagines people will eventually communicate, an effort he has said will lose money for many years.

Meta said earlier this year that it was planning to slow hiring for some management roles, and had postponed handing out full-time jobs to summer interns. The freeze announced on Thursday was necessary because "we want to make sure we are not adding people to teams where we don't expect to have roles next year", Mr Zuckerberg explained in the meeting.

He had warned in July that Meta would "steadily reduce headcount growth" and that "many teams are going to shrink so we can shift energy to other areas". Priorities internally include Reels, Meta's TikTok competitor, and Mr Zuckerberg's metaverse. Meta had more than 83,500 employees as at June 30, and added 5,700 new hires in the second quarter.

Mr Zuckerberg said on Thursday that the company would be "somewhat smaller" by the end of 2023.

"For the first 18 years of the company, we... grew quickly basically every year, and then more recently, our revenue has been flat to slightly down for the first time," he told staff. BLOOMBERG

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