(Bloomberg) — Meta Platforms Inc., the owner of Facebook and Instagram, said it will freeze hiring and restructure some teams in an effort to cut costs and shift priorities, a sign that years of rapid growth and expansion are finally coming to an end for the social media giant.
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Chief Executive Officer Mark Zuckerberg announced the company’s freeze during a weekly Q&A session with employees, according to a person in attendance. He added that the company would reduce budgets across most teams, even teams that are growing, and that individual teams will sort out how to handle headcount changes — whether that means not filling roles that employees depart, shifting people to other teams, or working to “manage out people who aren’t succeeding,” according to remarks reviewed by Bloomberg.
“I had hoped the economy would have more clearly stabilized by now, but from what we’re seeing it doesn’t yet seem like it has, so we want to plan somewhat conservatively,” Zuckerberg said. A Meta spokesperson declined to comment. The shares are down more than 40% so far this year.
Meta stock, which was already trading down to start the day, fell further on the news, down 4% from Wednesday’s close.
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’s not an ideal time to be cutting; 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 the company money for many years. Besides economic pressures, the company’s advertising business is l
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 was necessary because “we want to make sure we’re not adding people to teams where we don’t expect to have roles next year,” Zuckerberg explained.
Zuckerberg had warned in July that 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 Zuckerberg’s futuristic plan for the internet, known as the metaverse. Meta had more than 83,500 employees as of June 30, and added 5,700 new hires in the second quarter. Zuckerberg said the company would be “somewhat smaller” by the end of 2023.
“For the first 18 years of the company, we basically grew quickly basically every year, and then more recently our revenue has been flat to slightly down for the first time,” he told staff Thursday.
During its first-quarter earnings call, the company said annual expenses would be roughly $3 billion lower than initially projected, trimming an estimated range that had been as high as $95 billion. In prior moves to reduce spending, a dual-camera watch the company was building to compete with the Apple Watch was shuttered.
Meta is not the only advertising company to be hit by broader economic challenges. Twitter Inc. implemented its own hiring freeze back in May, and has been asking employees to watch their expenses and reduce travel and marketing costs. Alphabet Inc.’s Google, too, said that it would slow hiring during the back half of the year, and Snap Inc. cut 20% of its workforce in August.
(Adds Zuckerberg remarks obtained by Bloomberg.)
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