‘The next AOL?’: Meta’s massive layoffs raise questions about Zuckerberg’s strategy as company morale sinks

By Oliver Darcy, CNN

“A challenging period.”

That’s how Mark Zuckerberg described in a memo what the near future will be like for Meta employees after he announced the once-impervious social media company will cut another 10,000 jobs in the months ahead.

Zuckerberg, who has been conducting a review of the business as he aims to execute on his so-called “year of efficiency,” outlined key changes that will be implemented across the organization. Most importantly, from a structural standpoint, Zuckerberg said he wants to flatten the company “by removing multiple layers of management.”

“This will be tough and there’s no way around that,” Zuckerberg said in his memo, hinting at the pain and raw emotion that will soon envelope the organization as the workforce is slashed yet again.

The cuts to the parent of Facebook, Instagram, and WhatsApp come after it laid off about 11,000 employees in November, which at the time represented the company’s first-ever workforce reduction. Coupled with the new cuts, Meta will have cut about 24% of its workforce, or one in four employees, in just about half a year.

A version of this article first appeared in the “Reliable Sources” newsletter. Sign up for the daily digest chronicling the evolving media landscape here.

Meta, in particular, has been battling some of the most severe headwinds in Silicon Valley. The company has had to grapple with an ever-weakening digital advertising sector amid broader economic turmoil, Apple’s unforgiving new privacy policy, the rapid emergence of artificial intelligence technologies, and the seemingly unstoppable rise of TikTok.

Nevertheless, the layoff announcements have naturally sent morale at the Menlo Park-headquartered company plummeting. The latest announcement, in particular, has left already anxious employees distressed and wondering whether they might be on the chopping block in the near future.

But Zuckerberg signaled that the sweeping changes are necessary to survive in what he characterized as a deteriorating economy that will not soon heal.

“At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years,” Zuckerberg flatly warned, adding that the dim outlook had necessitated additional cuts “to operate more efficiently than our previous headcount reduction to ensure success.”

A former tech CEO, who asked to remain anonymous to speak candidly, said Tuesday that companies such as Meta, Google, Amazon, and Twitter had hired “stupid amounts of people” in the last few years to work on “science projects.” Speaking specifically of Meta, the executive said, “You just wonder what are these 100,000-some people doing? The app doesn’t change much.”

“These companies become hugely profitable and the CEOs think that there are all these other areas they can expand into as part of their world domination plan,” the executive remarked. “And then the economy takes a turn and everyone starts to care about profitability and growth.”

As a result, the tech executive said, “It’s surprisingly not hard for these big tech companies to cut large numbers of people without impacting the underlying revenue engine.”

For now, employees at Meta will have to wait a little longer to learn how they and their teams will be impacted. Zuckerberg indicated that the job cuts will not be complete until the end of May.

“In terms of how we should operate during this period, I encourage each of you to focus on what you can control,” Zuckerberg advised. “That is, do great work and support your teammates. Our community is extremely resilient.”

“Change is never easy,” he added, “but I know we’ll get through this and come out an even stronger company that can build better products faster and enable you to do the best work of your careers.”

The bigger question moving forward is whether Meta can indeed exit this painful phase a stronger company — or will instead continue in a slow decline as its primary products reach maturation while Zuckerberg chases the hope that one day his big bet on the metaverse will materialize.

“You can cut your way to profitability in the short term,” the former tech CEO said. “But you can’t cut your way to growth. At some point, it’s like, is this the next AOL? And I don’t know when that might be.”

The-CNN-Wire
™ & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.