Exclusive-Meta planning sweeping layoffs as AI costs mount

Exclusive-Meta planning sweeping layoffs as AI costs mount

Meta's Layoff Plans and the Impact of AI Investments

By Katie Paul, Jeff Horwitz and Deepa Seetharaman

NEW YORK/SAN FRANCISCO, March 13 (Reuters) - Meta is planning sweeping layoffs that could affect 20% or more of the company, three sources familiar with the matter told Reuters, as Meta seeks to offset costly artificial intelligence infrastructure bets and prepare for greater efficiency brought about by AI-assisted workers.

No date has been set for the cuts and the magnitude has not been finalized, the people said.

Internal Discussions and Company Response

Top executives have recently signaled the plans to other senior leaders at Meta and told them to begin planning how to pare back, two of the people said. The sources spoke anonymously because they were not authorized to disclose the cuts.

"This is speculative reporting about theoretical approaches," Meta spokesperson Andy Stone said in response to questions about the plan. 

Layoff History and Efficiency Initiatives

If Meta settles on the 20% figure, the layoffs will be the company's most significant since a restructuring in late 2022 and early 2023 that it dubbed the "year of efficiency." It employed nearly 79,000 people as of December 31, according to its latest filing.

The company laid off 11,000 staffers in November 2022, or around 13% of its workforce at the time. Around four months later, it announced it was cutting another 10,000 jobs.

Zuckerberg's Focus on Generative AI

AI Talent Acquisition and Investment

Over the last year, CEO Mark Zuckerberg has been pushing Meta to compete more forcefully in generative AI. The company has offered huge pay packages, some worth hundreds of millions of dollars over four years, to court top AI researchers to a new superintelligence team.

The company has said it plans to invest $600 billion to build data centers by 2028. Earlier this week, it acquired Moltbook, a social networking platform built for AI agents. Meta is also spending at least $2 billion to buy Chinese AI startup Manus, Reuters previously reported. 

Efficiency Gains from AI

Zuckerberg has alluded to efficiency gains from the investments, saying in January he was starting to see "projects that used to require big teams now be accomplished by a single very talented person."

Industry Trends and Comparisons

Layoffs Across Tech and Finance

Meta's plans reflect a broader pattern among major U.S. companies, particularly in tech, this year. Executives have pointed to recent improvements in AI systems as one reason for the changes.

In January, Amazon confirmed it would cut some 16,000 jobs, amounting to nearly 10% of its workforce. Last month, the fintech company Block chopped nearly half of its staff, with CEO Jack Dorsey explicitly pointing to AI tools and their growing capability to help companies do more with smaller teams. 

Challenges with Meta's AI Models

Setbacks with Llama 4 and Behemoth

Meta's planned AI investments follow a series of setbacks with its Llama 4 models last year, including criticism that it provided misleading results on the benchmarks it used for early versions. It abandoned the release of the largest version of that model, called Behemoth, which had been due out in the summer.

Superintelligence Team and Avocado Model

The superintelligence team has been working to reassert the company's standing this year by building a new model called Avocado, but the performance of that model has also lagged expectations.

Reporting Credits

(Reporting by Deepa Seetharaman and Jeff Horwitz in San Francisco and Katie Paul in New York; editing by Kenneth Li, Rod Nickel and Diane Craft)