Mon. Oct 2nd, 2023

    Not even Mark Zuckerberg’s beloved metaverse projects are safe from Meta’s sweeping layoffs

    Mark Zuckerberg said he was conducting a thorough review of Meta’s infrastructure spending.

    Meta has announced sweeping layoffs across the whole company, including its metaverse division.
    As of April there were more than 10,000 people working on its metaverse projects.
    Meta has pumped billions of dollars into its Reality Labs division, leading to massive losses.

    Mark Zuckerberg has announced sweeping layoffs at Meta that will affect the whole company, including its metaverse division.

    Zuckerberg said on Wednesday that the layoffs of 11,000 staff, or 13% of Meta’s workforce, would affect “every organization” across its two divisions, Family of Apps and Reality Labs. The latter encompasses its VR and metaverse projects.

    Zuckerberg said that in addition to the layoffs, Meta was also cutting discretionary spending and extending its hiring freeze until the first quarter of 2023. It had already scaled back budgets, reduced staff perks, and cut its real estate budget, 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,” he wrote.

    Meta’s third-quarter net income fell 52% to $4.4 billion compared with the same period last year, while its operating margin sunk from 36% to 20%.

    In October 2021, Zuckerberg rebranded Facebook’s parent company as Meta to reflect its push into the “metaverse.” Since then, the company has been flailing – in the second quarter of 2022, it posted its first year-on-year revenue decline, with another drop following in the next quarter.

    From the start of 2019 to September 30 this year, Meta has plowed $36 billion into Reality Labs, according to analysis by Insider of its financial statements. Zuckerberg said on Wednesday that Meta had shifted resources to a “smaller number of high priority growth areas,” including its “long-term vision for the metaverse.”

    Meta said that as of April there were more than 10,000 people working on its metaverse projects – more than a tenth of its workforce.

    Reality Labs has reported massive losses that are crushing the company’s profits. In the first nine months of 2022, the division spent $10.8 billion but generated revenues of just $1.4 billion, leading to huge operating losses. “We continue to anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,” Meta said in an SEC filing on Wednesday.

    “I’m currently in the middle of a thorough review of our infrastructure spending,” Zuckerberg said. “As we build our AI infrastructure, we’re focused on becoming even more efficient with our capacity. Our infrastructure will continue to be an important advantage for Meta, and I believe we can achieve this while spending less.”

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    Read the original article on Business Insider


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