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Exclusive-Meta slashes hiring plans, girds for ‘fierce’ headwinds
Global Banking & Finance Review®
Company
By Katie Paul
(Reuters) -Facebook-owner Meta Platforms Inc has cut plans to hire engineers by at least 30% this year, CEO Mark Zuckerberg told employees on Thursday, as he warned them to brace for a deep economic downturn.
“If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history,” Zuckerberg told workers in a weekly employee Q&A session, audio of which was heard by Reuters.
Meta has reduced its target for hiring engineers in 2022 to around 6,000-7,000, down from an initial plan to hire about 10,000 new engineers, Zuckerberg said.
Meta confirmed hiring pauses in broad terms last month, but exact figures have not previously been reported.
In addition to reducing hiring, he said, the company was leaving certain positions unfilled in response to attrition and “turning up the heat” on performance management to weed out staffers unable to meet more aggressive goals.
“Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg said.
“Part of my hope by raising expectations and having more aggressive goals, and just kind of turning up the heat a little bit, is that I think some of you might decide that this place isn’t for you, and that self-selection is OK with me,” he said.
The social media and technology company is bracing for a leaner second half of the year, as it copes with macroeconomic pressures and data privacy hits to its ads business, according to an internal memo seen by Reuters on Thursday.
The company must “prioritize more ruthlessly” and “operate leaner, meaner, better executing teams,” Chief Product Officer Chris Cox wrote in the memo, which appeared on the company’s internal discussion forum Workplace before the Q&A.
“I have to underscore that we are in serious times here and the headwinds are fierce. We need to execute flawlessly in an environment of slower growth, where teams should not expect vast influxes of new engineers and budgets,” Cox wrote.
The memo was “intended to build on what we’ve already said publicly in earnings about the challenges we face and the opportunities we have, where we’re putting more of our energy toward addressing,” a Meta spokesperson said in a statement.
The guidance is the latest rough forecast to come from Meta executives, who already moved to trim costs across much of the company this year in the face of slowing ad sales and user growth.
Tech companies across the board have scaled back their ambitions in anticipation of a possible U.S. recession, although the slide in stock price at Meta has been more severe than at competitors Apple and Google.
The world’s biggest social media company lost about half its market value this year, after Meta reported that daily active users on its flagship Facebook app had experienced a quarterly decline for the first time.
Its austerity drive comes at a tricky time, coinciding with two major strategic pivots: one aimed at re-fashioning its social media products around “discovery” to beat back competition from short-video app TikTok, the other an expensive long-term bet on augmented and virtual reality technology.
In his memo, Cox said Meta would need to increase fivefold the number of graphic processing units (GPUs) in its data centers by the end of the year to support the “discovery” push, which requires extra computing power for artificial intelligence to surface popular posts from across Facebook and Instagram in users’ feeds.
Interest in Meta’s TikTok-style short video product Reels was growing quickly, said Cox, with users doubling the amount of time they were spending on Reels year over year, both in the United States and globally.
Some 80% of the growth since March came from Facebook, he added.
That user engagement with Reels could provide a key route to bolster the bottom line, making it important to boost ads in Reels “as quickly as possible,” he added.
Chief Executive Mark Zuckerberg told investors in April that executives viewed Reels as “a major part of the discovery engine vision,” but at the time described the short video shift as a “short-term headwind” that would increase revenue gradually as advertisers became more comfortable with the format.
Cox said Meta also saw possibilities for revenue growth in business messaging and in-app shopping tools, the latter of which, he added, could “mitigate signal loss” created by Apple-led privacy changes.
He said the company’s hardware division was “laser-focused” on successfully launching its mixed-reality headset, code-named “Cambria,” in the second half of the year.
(Reporting by Katie Paul; Editing by Kenneth Li, Peter Henderson and Lisa Shumaker)
A financial crisis is a situation in which the value of financial institutions or assets drops significantly, leading to a loss of confidence in the economy and often resulting in widespread economic disruption.
Performance management is a systematic process aimed at improving organizational performance by developing the performance of individuals and teams to achieve strategic objectives.
An economic downturn is a decline in economic activity characterized by reduced consumer spending, lower production, and increased unemployment, often leading to a recession.
Investment is the act of allocating resources, usually money, to generate income or profit, often involving the purchase of assets such as stocks, bonds, or real estate.
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