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Because Mark Zuckerberg fired 11,000 people

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Because Mark Zuckerberg fired 11,000 people

San Francisco. June 2022. Mark Zuckerberg holds a meeting with his employees. An American-style ‘Q&A’. Confidential questions and answers. A recording breaks the secrecy: “I must confess that in all likelihood there are a number of people in the company who shouldn’t be here today.” The vowel of Meta’s number one ends up in the editorial offices of various US newspapers. It is the first sign of what would happen several months later.

The largest layoff plan in the history of the holding of Facebook, Instagram and Whatsapp. 11 thousand people at home. In every corner of the world. At the moment he does not know if Italy, where Meta has about fifty employees, is also involved. But the plan should have mainly affected the personnel resources sector. And the division that deals with Metaverso.

Zuckerberg: “I take my responsibilities”

Indiscretions, currently without confirmation. But in the letter to employees Mark Zuckerberg admits his faults: “I want to take responsibility for these decisions and how we got to this point,” he wrote. “I know it’s hard for everyone and I’m especially sorry for those who have been hit.”

A number of details follow. Of reasons that have led to the most painful choice since the company was founded in 2004. Since then, there have been layoffs. And a constantly growing number of employees. By the end of September it had amassed the largest number of workers ever, totaling 87,314 people. Then cold shower.

Online collapse after the pandemic. The TikTok effect

In Zuckerberg’s letter it is evident how much the picture has changed. And in what little time. The pandemic boom is over. The long months of confinement, which led to the explosion of the technology sector and the value of its main companies, are now behind us. Today there are other factors: the rise in interest rates, inflation, and the return to a normality that many considered outdated.

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“Not only has online commerce returned to previous trends,” Zuckerberg admits in the text, “but the macroeconomic downturn, increased competition and declining advertising meant that our revenues were much lower than I expected.” , added the CEO of the holding which includes Facebook, Instagram and Whatsapp. And for “competition”, the reference to TikTok is clear, the social network that more than others has eroded the company’s user base. Able to become the most used social network by the new generations. And attract advertisers and investors, wearing down the Meta galaxy’s social media business, which owes 90% of their revenue to advertising.

Four months’ leave. Better than Musk with Twitter

Meta will pay 16 weeks of leave, plus two weeks for each year of service to the dismissed employees. In addition to any remaining paid vacation, as part of the settlement package. Affected employees will also receive the shares that would accrue on November 15 and health coverage for six months, the company added. A better deal, albeit not by much, than Elon Musk did with employees fired last week from Twitter, to whom he granted a month less salary. And no severance pay for African employees (there the law does not provide for such protections, the company has justified itself).

The lost bet on the Metaverse: 9 billion burned in 9 months

Meta’s is the biggest job cut among tech companies, after the one already started by Twitter, Lyft, Stripe and other Silicon Valley tech giants. An announced cut. Planned. Although not in these terms. Today we have to deal with unexpected factors up to a year ago, such as inflation and uncertainties about the future, especially due to geopolitical tensions. But which in Meta’s case seem to weigh more. Both for the size of the company and for the huge investments it had to make to support the birth of the Metaverse.

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Exactly one year after its creation, the new technology strongly desired by Zuckerberg burned 9 billion in cash. An expensive bet. The company aimed to invest 100 billion dollars on the Metaverse by 2023. Figures that have alarmed investors. Tired of financing projects that Zuckerberg himself knows he cannot monetize for ten years. Perhaps, in other times it would have been a bearable cost. Today, in a very different macroeconomic framework, a weight that is difficult to bear.

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