27,000 seats. That’s the number of jobs Meta, that company known as Facebook until last year, created between 2020 and 2021, those years of hyperconnection in which, in the heat of the Covid-19 pandemic, many technology companies grew without restraint. Barely a year later, the company’s situation is markedly different. The value of its shares has fallen by 70% and the main concern of its executive director, Mark Zuckerbergthey are no longer those social networks with which he began to transform the world about 18 years ago.
At the end of 2022, the future of the company, or so the executive believes, depends on that kind of new virtual world known as the metaverse. And while it continues to generate losses of billions quarter after quarter, and the advertising business on sites like Facebook and Instagram suffers, it is up to the company to make cuts. Some, moreover, unprecedented in its history, as is the case of the 11,000 jobs that, as announced, Meta plans to destroy soon. Or what is the same: 13% of the total workforce.
Crisis postpandemia
Indeed, many large technology companies have suffered the effects of returning to normality after the toughest moments of the pandemic. Among the examples we find Netflix, with the drop in subscriptions and its new plans aimed at attracting new users. Also to Microsoft, a company that recently also had to make significant cuts in its workforce. Even Stripe, a new Internet payment processing platform, has laid off 1,000 employees. And, furthermore, using arguments very similar to those used by Meta a few hours ago.
In his shared letter with employees, Zuckerberg noted that by start of covid, the rise in e-commerce led to outsized revenue growth for numerous companies: “Many people predicted that this would be a permanent acceleration that would continue even after the pandemic was over. I did too, so I made the decision to significantly increase our investments.”
However, the plan did not go as the executive expected. “Not only has online commerce returned to previous trends, but the macroeconomic downturn, increased competition, and loss of ad signals have caused our revenue to be much lower than I expected,” Zuckerberg notes.
Meta’s main source of income, advertising has been slowing down for months. The company blames the situation on Apple and its new tools focused on privacy and the emergence of new social networks with which the user’s attention is disputed, as is the case, especially, of TikTok.
In the last quarter, the company had 50% of net income than in the same period of 2021. However, expenses increased by 20%. With this scenario, investors have begun to raise their voices about the need to redirect the course of the company by making drastic changes in investments, especially as it affects the construction of the metaverse. Changes that, for the moment, it seems that they are not going to happen.
All to new business
The future of Meta goes through the new virtual world. And that Mark Zuckerberg has it clear and meridian. no matter what Reality Labs, the division of the company in charge of its development, loses billions every quarter. The roadmap set by the executive just a year ago, when he announced that his company would be “first metaverse and then social networks” does not change.
Zuckerberg himself acknowledged in the letter that, over the next few months, the company’s investment will be targeted specifically “to a smaller number of high-priority growth areas.” Among them, obviously, is the metaverse. It doesn’t matter that in recent months the losses generated by investment in this new segment, which is expected – or so it was said not so long ago – to move hundreds of billions by the end of the decade, have not stopped increasing.
In 2022, the bloodletting already exceeds 10,000 million dollars. And by 2023 everything indicates that the losses will continue to grow. It is also foreseeable that the number of employees dedicated to its construction will grow soon, since Meta has only announced that it intends to freeze hiring until the beginning of 2023.
It should be remembered that in recent months the company has not made much progress in creating the metaverse. The platforms that he has designed and that promise to be key to the extension of the experience generate doubts and, in addition, his brand new mixed reality glasses, the Meta Quest Pro, have a price of 1,800 euroswhich places them out of reach of the majority of users.
In addition, things can get more complicated for Zuckerberg in the coming months, when Apple, as many analysts expect, presents its first viewer of this type and begins to compete directly with Meta in the hardware field.