Meta, formerly known as Facebook, was thought by many to be a mythological being. A kind of eternal elf, now that The Rings of Power they are in the limelight, which remained impassive in the face of adversity. Affected, yes, but unscathed by the passage of time that he has not been kind to Mark Zuckerberg’s social network. Until now, because the company’s founder himself has announced plans to reorganize teams. The kind formula of saying that a workforce reduction and a halt in the expansive growth of Meta are coming – which includes Instagram, WhatsApp and Facebook.
It is a historical fact to the credit of technology. Since it was founded in 2004 –before the great financial crisis–, Meta has never stopped growing. Neither in income, nor in active users. Before a rival that could face the power of the mother social network, a quick solution: the acquisition. In 2014 with WhatsApp and 2012 with Instagram. But something changed in the accounts for the first quarter of 2022. The arrival of the metaverse, from which Zuckerberg laid the foundation stone for the next technology bubble in the sector, and the threat of TikTok marked a before and after. In parallel, the reduction in income in the advertising sector -the most important division of Meta-, which continues to plummet.
The announcement of the hiring freeze, and possible dismissals in some of the non-strategic areas of Meta, resonated among the company’s employees during their weekly session. As anticipated Bloomberg, the reduction of the teams will be in the hands of the managers of each of the units. Those who, depending on their activity, will have their budget reduced to a greater or lesser extent.
However, Zuckerberg’s speech continues to focus on the international economic situation. Which none of the big tech companies can tiptoe through. “I expected that the economy had already stabilized more clearly”, collects Bloomberg in Zuckerberg’s words to his employees. “But from what we’re seeing, it doesn’t look like he’s done it yet, so we want to plan somewhat conservatively.” It is, in fact, the most catastrophic statement that the founder of the social network has made in years.
The lack of credibility could not with Meta, but TikTok yes
The history of Meta, or more specifically of Facebook, as a company and a social network is anything but good. Everything that concerns the privacy of users and their credibility in protecting them has been in question for years. Literally, too. Specifically, since 2018, when the founder had to sit before the House of Representatives of the United States Congress to testify about Cambridge Analytica. A fact that not only involved espionage of the data of millions of users, but also manipulation that reversed the electoral results. All aligned with the famous Fake News that, far from being solved, are still valid today.
and although Cambridge Analytica was serious, the reality is that it happened without pain or glory for ordinary mortals. Probably, if we asked anyone about what this crisis involved, few would remember the impact on Meta.
It has not been a lack of credibility that has put Meta on the ropes. He has been a competitor. For the first time, Facebook and Instagram are facing a rival. Enjoying immunity until recently – Snapchat never caught on with the public – TikTok has changed the rules of the game. Of Chinese origin, Meta can neither consider acquiring a new rival nor copy his spirit; like he already did on Instagram with Snapchat. TikTok is deeply penetrating the new generations – those that Meta can no longer conquer – and Meta does not seem to know how to face this new reality. After all, in his 18 years of life, he had never had such a strong pair to measure himself against.
Was the metaverse a good idea?
Zuckerberg made a big change in Facebook during 2021. First, he left the name of the social network for precisely the activity he maintained. To group all his business, he chose the name of Meta. It was the prelude to what was to come: the new business in which technology was laying all its eggs. Future eggs, yes. The metaverse entered through the front door and hand in hand with Zuckerberg.
Hires were soon announced. Thousands of them. And also in Europe; something historic for what used to be Facebook. Also millions of dollars in investment. And soon after a relaxation in the aspirations of the Meta metaverse. Just under a year later, the promised crisis hit the company’s digital universe and terrestrial hiring. They announced cuts in hiring, precisely in those that would create that metaverse. The reason? Indeed, the crisis. But also a less positive forecast of the profitability forecasts of the new line of business of Meta. The metaverse, so far, has only burned money and, although it has put the company back at the center of the ecosystem, that is not having an impact on its accounts.
In addition, Meta repeats a trend that began a few years ago with virtual reality and the purchase of Oculus. The simple announcement lit the fuse in a sector that, as soon as it rose, deflated by leaps and bounds. The VR winter that Zuckerberg brought about seems to have a replica in the metaverse. And one that will fall from higher.
Meta, you are not alone: the technology companies only talk about layoffs
It has been a constant for months in the sector of large technology companies. Since the beginning of 2022, everything has been announcements of staff reductions. Also of a serious problem of lack of talent that occupies technological positions. Another of the paradoxes of the new century. The war between Ukraine and Russia, the energy crisis and the global economic crisis resulting from the pandemic have been the icing on a cake plagued with uncertainty.
Zuckerberg himself pointed out earlier this year that he would reduce his efforts to hire more managers within one of the Meta subsidiaries. But that was 9 months ago, and things have changed for the worse. What used to stay in the upper echelons of the company has now gone down to the common people. Thus, at the end of 2022 we will see a much smaller Facebook than how the year began. A fact never seen before in the history of one of the most powerful technology companies.
But sorrows are better mourned in company and Meta is not alone. All those who are linked to advertising have had to put the scissors. Snap, Aphabet or Twitter have also taken over a good part of the international workforce –mainly those linked to the marketing sector–.
With some winds vaguely reminiscent of the dot-com crisis a few decades ago, it was the pandemic that marked a before and after. Blaming the drop in advertising would be, above all, lacking the rigor of the facts. The reality is that the oversize and the millions –normally of dollars– watering the ecosystem have been to blame. Now, with much more selective checkbooks, it’s time to adjust to budgets.
It is difficult to make a list of all the technology companies that have announced layoffs or staff adjustments. Practically, it would be easier to say those that have not put the scissors to date. Tesla, Netflix, Shopify, Klarna, LinkedIn… It goes without saying that the world of cryptocurrencies is the one that has suffered the most from the fall. With the cryptocurrency crisis, the business has suffered its biggest dismantling in its short history.
And, in the end, all waiting for the storm to pass. Also a Meta that seemed indestructible.