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There are a lot of reasons why Mark Zuckerberg felt he had no choice but to institute a bruising wave of 11,000 redundancies at Meta.
The company behind Facebook had overextended, he said. Like many of its competitors, it believed the rise in online activity during the coronavirus pandemic was a permanent shift: that although people were forced to turn to e-commerce, video chats and online gaming because they couldn’t leave their homes, they would choose to carry on living that way once restrictions were lifted.
And so as Meta’s revenue surged, the company invested accordingly. Although trends didn’t snap back to where they were in early 2020, nor did they continue unchanged. As lockdowns lifted and in-person socialisation returned, Meta’s revenues contracted, leaving the company, with almost 90,000 employees, financially exposed.
There were other reasons offered by Zuckerberg for the job losses. A wider “macroeconomic downturn” hammered all tech stocks equally, as profit today started to look tastier than growth tomorrow in the eyes of investors facing the end of the western world’s zero interest rate policy. “Increased competition,” he said, hurt further, as did “ads signal loss”.
Zuckerberg did not name the rivals eating Facebook’s lunch. But it’s clear he was referring to competition from TikTok, a trendy app stealing users and dominating the zeitgeist, and a change of policy at Apple. In 2021, Apple limited the amount of data, or “signals”, Facebook could gather about the behaviour of iPhone users, which made it harder for small businesses to use Facebook adverts to profitably acquire new customers.
