Meta plans to cut approximately 5% of its workforce, that is, about 3,600 positions, in February. The cuts will be performance-based to “drive out lower-performing workers,” citing that 2025 will be “an intense year.”
Meta Platforms announced plans to reduce approximately 5% of its workforce in order to eliminate underperforming employees in the midst of what it describes as “an intense year,” according to an internal memo disclosed by ‘Bloomberg’ and other sources. Meta shares fell 2.3% on Tuesday following the news. According to its third quarter earnings report, Meta has some 72,404 employees around the worldmeaning the cuts could affect about 3,600 workers.
The note indicated that affected employees would receive a “generous severance package,” in line with other previous reductions. Employees in the US will receive the notification on February 10, and those in the rest of the world later.
A performance-based dismissal
Meta has insisted that staff reductions will be based on performance, with the intention of “expel underperforming employees” and hire new talent to fill those positions. “This is going to be an intense year, and I want to make sure we have the best on our teams,” the note said. Tech giants have intensified competition in artificial intelligence since Microsoft launched ChatGPT in March 2023.
Heavy investment in data center development has reduced profit margins. Although Meta reported solid profits in the quarter September, its annual net income growth slowed significantly. Meta foresees “significant growth in capital expenditures in 2025” and “a significant acceleration of growth of infrastructure spending next year,” according to its earnings release.
The announcement represents the second major round of layoffs following a 25% workforce reduction in 2023, which saw approximately 21,000 jobs eliminated. CEO Mark Zuckerberg called 2023 a “year of efficiency” after a difficult 2022, during which the company’s shares plummeted more than 60%. On the contrary, 2024 was lucrative for Meta, as Its shares rose 67% due to the rise of AI and a more favorable macroeconomic environment.
Challenges persist amid metaverse losses
Meta’s controversial metaverse project has continued to hinder its growth. The Reality Labs segment recorded losses of $12.76 billion (€12.38 billion) during the first nine months of 2024. The company expects “2024 operating losses to increase significantly year-over-year due to our continued product development efforts and investments to continue expanding our ecosystem.”
Meta will release its fourth-quarter and full-year results on January 29. Investors will closely monitor the company’s core businessparticularly AI-powered advertising, which contributes more than 90% of total revenue. “We had a good quarter driven by the progress of AI in our applications and businesses,” CEO Mark Zuckerberg said in the earnings statement in October.
Meta warms relations with Trump
Last week, Meta announced it would end its third-party fact-checking program and reintroduce political content, including previously restricted topics such as immigration and gender. The move is seen as an effort to improve relations with President-elect Donald Trump ahead of his inauguration next week. Meta Platforms previously suspended Trump’s Facebook and Instagram accounts for two years in 2021 following the Capitol riots on January 6. Trump had referred to Facebook as the “enemy of the people.”
Meta has also donated one million dollars (970,000 euros) to Trump’s inaugurationalong with contributions from Amazon and OpenAI, according to CNBC. Mark Zuckerberg will reportedly attend Trump’s inauguration on January 20, along with Elon Musk, CEO of Tesla, and Jeff Bezos, founder of Amazon.
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