Facebook issues more tough-luck news to workers
CEO Mark Zuckerberg's team has made a tough decision affecting its employees.
Meta Platforms (META) - Get Free Report, formerly known as Facebook, is a technology titan. It's one of the biggest companies on the planet. Its Facebook, Instagram, and WhatsApp social media and messaging apps boast over two billion daily users.
The company has enjoyed tremendous success since CEO Mark Zuckerberg founded it in 2004. However, it’s dealt with its fair share of controversy, too, including user privacy and censorship concerns.
More recently, Meta Platforms has come under fire for taking a hard-line approach to remote work. On October 3, Facebook's management made another tough decision affecting many workers. Chesnot/Getty Images
Meta Platforms targets workers
Meta Platforms' apps require highly skilled technology workers, including software programmers. It also manufactures next-generation augmented reality hardware that requires cutting-edge processing power.
Related: UAW workers fire back at General Motors over wage claims
During the COVID pandemic, the company hired many new workers to address soaring demand for at-home entertainment. It also funneled billions of dollars into developing new technologies, including the Metaverse and new computer chips designed specifically to power its hardware, including Quest mixed-reality headsets and smart glasses designed with eyewear maker Ray-Ban.
Those investments may yet pay off, but they've taken a big toll on Meta Platforms profitability. As a result, Mark Zuckerberg's team has been forced to embrace widespread cost-cutting, including the elimination of many jobs.
For instance, the company laid off 10,000 workers earlier this year, increasing the total number of employees it let go to about 21,000 during the past year.
The decision to issue pink slips to about one-quarter of its workers has helped Meta Platforms' bottom line improve despite sluggish advertising sales industrywide. In Q2, earnings grew 31% year-over-year to $3.23 per share.
The improved profitability has helped Meta Platforms' shares more than double this year. Still, a smaller workforce may have contributed to the company's decision to require workers to return to the office beginning after Labor Day.
If workers assigned to offices fail to appear in person at least three days per week, they could get fired or receive substandard performance reviews.
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Meta Platforms employees were delivered even more bad news on October 3. The company is laying off members of the silicon team at Reality Labs tasked with creating the chips for its hardware, according to Reuters.
The company didn't disclose exactly how many employees will be issued pink slips, but the Facebook Agile Silicon Team reportedly employs about 600 people.
The decision is in keeping with Meta Platforms' focus on cost-cutting this year. It may also reflect growing pessimism that it can deliver its own high-performance chips more quickly and less expensively than buying from outside semiconductor companies, including existing supplier Qualcomm (QCOM) - Get Free Report.
Facebook isn't the only company attempting to create its own chips. Amazon (AMZN) - Get Free Report has designed chips internally for use in training and operating large-language models or generative AI programs similar to ChatGPT. For example, CEO Andy Jassey said in April that its Inferentia2 chip, which was rolled out earlier this year, will allow customers to "be able to get a lot more done with AWS’s training and inference chips at a significantly lower cost.”
It remains to be seen if Meta Platforms' decision means it will rethink its internal silicon chip aspirations, or if other companies will follow suit. Regardless, Facebook's decision isn't likely to ease worried workers minds.
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