Meta announces to cut 11,000 of its employees which accounts for 13% of its workforce. The metaverse-driven platform cites bad market conditions and increasing competition to be the primary factors of its decision. How will the company’s Metaverse bets come into play in midst these recent layoffs?
The multinational tech company behind Facebook and Instagram, Meta Platforms, announced the layoffs of 13% of its workforce in the face of deteriorating market conditions and increasingly stringent inflation.
This was followed by layoffs from other large American tech companies like Microsoft, Twitter, Netflix, and more. Even within Web3, Coinbase announced a cut of 18% of its staff, citing a need to prioritize costs during a looming recession.
Meta platforms are primarily known as a major player in the “Metaverse shift”. Accompanied by companies like Microsoft and Alibaba, Meta poured in $36 billion dollars in building its version of the social virtual-reality version of the Metaverse.
The actual definitive definition of the Metaverse is a largely vague term at best. But for Meta, the metaverse is the next step from Facebook and Instagram’s old model of social platforms, to virtual reality or augmented reality of collaborative workspaces.
However, the company’s latest endeavors have so far been unprofitable. Meta’s Reality Labs division reported a loss of $3.7 billion. The Reality Labs division spearheads the company’s push toward the metaverse.
In 2021 alone, the company’s virtual reality division experienced a whopping loss of $10 billion. Additionally, from January to September of this year, the company has lost $9.44 billion in which losses are expected to become even more difficult entering into 2023. Moreover, skepticism towards the metaverse increase as Meta and other Metaverse driven companies continue their streak of losing profits.
Earlier this year, the CEO of Meta, Mark Zuckerberg vows to even spend more billions on the Metaverse next year. But after recent events, the company narrows its 2023 capital expenditures forecast range. The impact of Meta’s losses has not only been extended to mean only job cuts. Meta will also do other precautions to lower spending such as reducing office spaces and extending the hiring freeze into the first quarter.
Mark himself has expressed remorse over the layoffs in his message addressed to Meta employees. He cites macroeconomic downturn, increased competition, and ads signal loss were the primary causes of lowered revenues in which he explicitly expresses his regret saying “I got this wrong, and I take responsibility for that”.
Along with unpleasant events also happening within the crypto space, this has led to the massive growth of FUD within the markets at this time. During times of turmoil such as now, it’s best for people to observe what’s happening so that we could learn more about things before we take action.
Edmond is a passionate writer for Video games, GameFi and Web3. He has worked for top GameFi companies and video game/crypto news websites.