What happened to the tech giant?

Facebook owner Meta has confirmed it is cutting 13% of its global workforce as part of cost-cutting and corporate restructuring.

In a message to staff announcing the cuts, founder Mark Zuckerberg apologized and took responsibility, saying he had been “wrong” about some of the company’s business decisions.

So how did Meta end up here?

– Global economic slowdown

The global economic slowdown affected all major companies, rising inflation and other factors affecting revenues.

But the tech sector has been particularly hard hit as many companies have taken on more staff after seeing an increase in revenue and customer demand during the pandemic as more and more people move online.

The result now that the economy is slowing is that many companies are finding they have teams too big to sustain – Snapchat and Twitter are just two notable examples which have also recently announced substantial job cuts.

Some of Meta’s problems, and the industry at large, are also due to a drop in ad spend – a key revenue source for platforms such as Facebook and Instagram – as advertisers tighten their belts in order to survive. current economic headwinds.

This means that companies such as Meta must now consider other means – such as staff reductions – to save money.

In his statement to staff on the cuts, Mr Zuckerberg said: ‘The macroeconomic downturn, increased competition and loss of advertising signal has caused our revenue to decline from what I expected.

“I was wrong and I take responsibility for it.”

– Increased competition

The pressure on Facebook and Instagram also comes from growing competition in the marketplace, both for user attention and ad spend.

Apps like TikTok and BeReal take up valuable screen time on Meta’s platforms, again hurting the company’s standing with advertisers, just as platforms like Netflix are also starting to introduce advertising.

TikTok good

TikTok’s short video approach attracts younger users at a higher rate than Meta’s apps (Peter Byrne/PA)

TikTok’s short-form video approach is attracting younger users at a higher rate than Meta’s apps, while BeReal is growing due to increasingly negative sentiment towards social media in general and the impact that time prolonged screen has on mental health and well-being.

Unlike the traditional social media approach of constantly pushing content to users in an attempt to keep them online, BeReal only allows users to post once a day when prompted by the app, and they can only see their friends’ content once they’ve posted themselves.

Meta also admitted that its business has been affected by Apple’s privacy updates, which significantly reduce the ability of apps and advertisers to track user activity and target them with ads based on that data.

And the company is facing imminent independent regulation for the first time, with a number of countries working on new content and security rules for social media platforms – with potential fines of up to billions of pounds and blockings of sites as penalties for breaching the proposed rules of the UK’s Online Safety Bill.

– Metaverse bet

But perhaps the biggest issue for Meta is specifically Mark Zuckerberg’s decision to shift the company’s focus to the Metaverse.

It’s the idea of ​​an immersive online world in which people can work and socialize, which is often achieved using virtual reality headsets, and which Zuckerberg says will become the next generation of Internet.

However, it remains a concept and does not yet exist in any substantial form beyond a handful of specific and limited applications.

But Meta has pledged to spend billions of dollars every year to build and grow the Metaverse, despite fears it will never take off as a way to go online.

Some tech experts have noted that virtual reality, the technology that underpins the Metaverse, has yet to gain popularity with the public, despite having been available for several years.

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