Sina Technology News Beijing time on the morning of March 15th, Meta CEO Mark Zuckerberg announced the second round of layoffs, affecting about 10,000 employees, and freezing the recruitment of 5,000 vacancies.
Late last year, the company had undergone a round of major layoffs involving about 11,000 employees.
When announcing the latest layoff plan, Zuckerberg’s speech mainly focused on Meta’s future, including four mentions of artificial intelligence (AI), positioning the development of AI technology as Meta’s current “biggest single investment.” Zuckerberg, who renamed Facebook Inc. to Meta in pursuit of the Metaverse, mentioned the Metaverse only twice in this speech about the company's future.
This is a major shift from last year. Last year Zuckerberg seemed more obsessed with the Metaverse, even though others inside the company were worried about the prospects of the Metaverse business and felt that the work in this area lacked strategy.
Now Zuckerberg says AI will be integrated into every Meta product. "We already have the infrastructure to do this on a scale we haven't seen before," he said. "I think it's going to be an amazing experience."
Meta's financial report late last year was also focused on AI. During the conference call, Meta execs mentioned AI nine times, but Metaverse briefly mentioned it twice. Meta is using AI to optimize user-oriented content recommendations while improving its precision advertising capabilities. Since the beginning of last year, Facebook's advertising business has been adversely affected by Apple's (152.59, 2.12, 1.41%) iOS system privacy policy adjustments.
Building the Metaverse "remains at the heart of defining the future of social relationships," Zuckerberg said Tuesday. He then quickly turned to the question of user growth for Meta's apps, including Facebook, Instagram and WhatsApp.
This is the situation facing the meta universe business. Meta announced last month that Reality Labs, the company's metaverse division, will be led by chief technology officer Andrew Bosworth and will be as efficient as the rest of the company. It also said last week that Reality Labs would kill some products this year, such as the Portal smart display.
Zuckerberg’s previous bets on many metaverse products and billions of dollars in R&D investment have not yet been converted into actual revenue, but at that time some investors called on the metaverse to find a way to hedge these bets, saying “ Meta has fallen into a situation of excess—too many people, too many ideas and too little urgency."
"In 'Year of Productivity,' we're focused on eliminating duplicative or low-priority projects and making all organizations as lean as possible," Zuckerberg said.
That came as a relief to investors and Wall Street analysts. Over the past year, they have grown frustrated with the enormous costs of Zuckerberg's investment in Metaverse. Reality Labs lost nearly $14 billion last year, and is expected to lose $15 billion this year and $20 billion a year thereafter. The current expectation is that losses in this business will narrow in the future.
On Tuesday, local time, Meta’s share price closed up more than 7% on the news, hitting its highest point in the past six months. Investors responded positively. Technology expert Mark Schilsky said in an investor report that Meta's round of layoffs, including Reality Labs, is good news for investors, because everyone is not optimistic about Zuckerberg's continued investment in the Metaverse.
Evercore senior managing director Mark Mahaney noted Tuesday that Meta's 2023 expense forecast has been cut by another $3 billion, to $86 billion to $92 billion from a previous range of $89 billion to $95 billion.
Mahaney: "The year of efficiency is just getting more efficient. By announcing new expense guidance, Meta is announcing their ability to restore growth to the company while maintaining tight control over expense increases."