Mark Zuckerberg's Metaverse Derailed by More than 11,000 Layoffs
On Wednesday, Meta CEO Mark Zuckerberg announced that Facebook’s parent company plans to slash approximately 13% of its employees, laying off more than 11,000 people in one of the “most difficult” moves in Meta’s history.
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The layoffs extend to Reality Labs, the division of Meta dedicated to the metaverse and virtual reality, which employs over 10,000 people and produces Quest headsets and the Horizon Worlds platform. Meta has invested $36 billion in Reality Labs, but has yet to reap profits or energize customers to sign up to Zuckerberg's vision of the metaverse in large numbers.
The company’s net income dropped to $4.4 billion during the third quarter, a more than 50% loss compared to last year.
Zuckerberg linked Wednesday’s layoffs to higher spending and investments the company made during the pandemic, which fueled an optimism that online-oriented tech firms might enjoy “permanent acceleration” and growth that failed to materialize. “The macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” Zuckerberg said. “I got this wrong, and I take responsibility for that.”
Citing renewed need for "capital efficiency," Zuckerberg said the company would not make any new hires through the first quarter of 2023 and would reduce its real estate footprint, even shifting to “desk sharing” for frequently remote workers. “I believe we can achieve this while spending less,” he said.
“Fundamentally, we’re making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we’re operating efficiently across both Family of Apps and Reality Labs,” Zuckerberg said, referring to Meta’s virtual reality and augment reality division.
During the third quarter of this year, Reality Labs lost more than $3.6 billion, but Zuckerberg reiterated the Meta has a “long-term vision for the metaverse.”
