PALO ALTO — Not even the Metaverse can escape the growing wave of layoffs sweeping Silicon Valley during the current economic downturn, according to a report published Sunday in The Wall Street Journal.
Meta Platforms Inc., the parent company of Facebook, Instagram and WhatsApp, could announce large-scale layoffs this week involving thousands of positions, the Journal reported.
As of its last income statement, Meta has more than 87,000 employees. The planned layoffs would be the first large-scale reduction to occur in the company’s 18-year history.
A company spokesperson declined to comment on the report on Sunday, but pointed to founder Mark Zuckerberg’s recent earnings call.
“In 2023, we are going to focus our investments on a small number of high priority growth areas, so that means some teams will grow significantly, but most other teams will remain stable or contract over the next year. Overall, we plan to end 2023 with roughly the same size, or even a slightly smaller organization than we are today.”
Citing sources, the Journal reported that company officials have already told employees to cancel non-essential travel starting this week.
While the layoffs are newsworthy, they won’t come close to the massive number of job cuts put in place last week on Twitter by Elon Musk when he took over the company.
The San Francisco-based social media giant told workers by email Thursday that they would learn on Friday if they had been laid off. About half of the company’s 7,500 employees have been laid off, Yoel Roth, Twitter’s head of security and integrity, confirmed in a tweet.
Musk tweeted Friday night that there was no choice but to cut the jobs “when the company is losing over $4 million a day.” He did not provide details of the company’s daily losses and said employees who lost their jobs were offered three months’ salary as severance pay.
While Twitter’s downsizing could grab the spotlight, the social media giant isn’t alone. The tech industry has seen months of steady layoffs, affecting many people in the Bay Area.
“In the back of your mind, I guess, you expect this to happen,” ‘Bart’ said of his layoff notice. “But it was quite sudden.”
“Bart”, who prefers not to reveal his identity, worked for Stripe until Thursday. Like many tech companies, the online payment giant, whose US headquarters are in south San Francisco, has boomed during the pandemic. Today, it cuts 14% of its workforce.
“I think a lot of people are overhired, a lot of it is,” he said of the industry-wide layoffs. “A lot of companies had a lot of growth during COVID and overhired.”
“It’s a rebalancing,” explained Olaf Groth, professor at UC Berkeley Haas School of Business and CEO of Cambrian Futures. “I think it was going to happen. Like we did in 2000, and I think it’s going to happen periodically, yes.”
Groth says the tech world has seen layoffs every three to five years, so it’s not uncommon. What is different is this macroeconomic landscape. Inflation, geopolitical turmoil and lingering talk of an impending recession paint things in a different light.
“But the good news is that there are hiring going on, which is why I call it a rebalancing,” Groth said.
“Hopefully, in that balance, we’ll get to that soft landing. If everyone laid off, we’d be scared of a hard and rude awakening next year. But in this way, with two steps forward, one step backwards, hopefully we can calibrate this so that it doesn’t become a big meltdown in the economy.”
“I think it’s quite different,” Bart said of this round of layoffs compared to previous years. “I think it’s going to bounce back. For all it’s worth, my inbox is pretty flooded. People are still hiring.”
Widespread layoffs and people still hiring. This is another sign of a complex and messy economy. And that’s enough for Bart to be cautiously optimistic on this first day after losing his job,
“I’ll use some time to recuperate and figure out what’s next,” Bart said of his short-term future. “But there are opportunities there. So it’s not totally dry, which is great.”