Meta, the parent company of Facebook, Instagram, and WhatsApp, has become the latest tech company to announce\u00a0a hiring freeze and cost cuts amid a prolonged market downturn. The move comes as Meta has invested a fortune in nascent technologies like the metaverse and VR headsets.<\/p>\n
After an era of explosive growth, Meta CEO Mark Zuckerberg has outlined plans to freeze hiring and reduce costs. This marks the first time the social media giant has taken measures to trim costs since its founding of Facebook in 2004.<\/p>\n
During a weekly Q&A session with employees, Zuckerberg said the company plans to reduce budgets across most teams. Furthermore, the company will not fill the roles of those who leave or shift to other teams. Instead, individual teams will have to sort out how to handle headcount changes, according to a Bloomberg report.<\/p>\n
\u201cI had hoped the economy would have more clearly stabilized by now. But from what we\u2019re seeing it doesn\u2019t yet seem like it has, so we want to plan somewhat conservatively.\u201d<\/p>\n
Meta\u2019s stock has been one of the major victims of the recent global market rout. The company\u2019s shares are down by more than 60% year-to-date (YTD), down from early January\u2019s $338 to around $136. Meta stock fell further on the news, finishing its latest trading day down by 3.7%.<\/p>\n
Meta is one of the biggest advertising-reliant companies. And the recent budget cuts could be an indication that its advertising revenue is stalling amid increasing competition for users\u2019 attention. This might not come as a surprise given Apple\u2019s recent privacy upgrade that targets mobile ads.<\/p>\n
Apple introduced its App Tracking Transparency (ATT) feature, which reduces targeting capabilities by limiting advertisers from accessing an iPhone user identifier, in iOS 14.5, released for iPhones last year. Earlier this year, Meta executives admitted the feature will cost the company $10 billion in sales.<\/p>\n
\u201cWe believe the impact of iOS overall is a headwind on our business in 2022,\u201d Meta CFO Dave Wehner\u00a0said\u00a0in February during a call after the company\u2019s fourth-quarter earnings report. \u201cIt\u2019s on the order of $10 billion, so it\u2019s a pretty significant headwind for our business.\u201d<\/p>\n
Moreover, the company has invested a ton\u00a0in the metaverse\u00a0and metaverse-related innovations like VR headsets. The company had initially said that it expects the metaverse to be ready\u00a0in 15 years, implying that Meta won\u2019t be able to make any money out of its metaverse-related investments any time soon. Still, priorities in the company include working on the metaverse and Reels, Meta\u2019s TikTok competitor.<\/p>\n
Nevertheless, CEO Zuckerberg has warned that the company would be \u201csomewhat smaller\u201d by the end of the next year. \u201cFor the first 18 years of the company, we basically grew quickly basically every year, and then more recently our revenue has been flat to slightly down for the first time,\u201d he told Meta\u2019s staff.<\/p>\n
This article originally appeared on The Tokenist<\/i><\/p>\n
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