Why are Facebook, Twitter and Amazon laying off thousands of employees?

The massive layoffs of several US tech companies have grabbed the headlines in recent weeks. Half, the company that owns Facebook, Instagram and WhatsApp, has announced it will lay off 11,000 workers (13% of the workforce). It is the first massive cut in the company’s 18-year history.

Mark Zuckerberg’s company joins other companies such as Twitter or Amazon, giants of social networks and digital commerce, which in recent days have also announced massive layoffs. In the case of Twitter, Elon Musk has finally bought the social network and one of the first steps taken was to announce the layoff of half the workforce (nearly 3,700 people worldwide).

The layoffs have also reached Amazon, a company that employs around 1.5 million people and is considered one of the largest employers in the United States. According to US media, the tech company plans to lay off around 10,000 workers starting this week.

These are the most well-known companies, but other tech companies are also laying off some of their staff due to a significant drop in revenue. This is the case of the car sharing company Lyft, the social network Snap or the e-commerce company Shopify.

market decline

These companies have experienced a boom positive during the coronavirus pandemic, thriving financially. Citizens used to spend a lot of time cooped up at home, and due to the amount of free time they had, they started using social networks and shopping apps more than ever before. on line.

In the case of Meta, for example, the company went on a hiring surge during the pandemic, hiring more than 27,000 employees between 2020 and 2021 and another 15,000 in the first nine months of 2022.

However, once the pandemic was over, the situation changed: people stopped spending so much time indoors using their mobile phones and previous shopping trends (going to shops in person, for example) returned.

As a result, the benefits of recent months have not been as positive and several companies have announced a decline in their economic performance. Other factors have added to the post-pandemic situation, such as the economic recession and inflation, increased competition or declining advertising revenues.

The failed bid for the metaverse

In October 2021, Mark Zuckerberg announced the birth of Meta (bringing together Facebook, Instagram and WhatsApp) and his commitment to the metaverse, a virtual and collective universe very similar to reality but without its physical limits.

In this universe, people interact via avatars, which can be customized by buying clothes with virtual money. In the metaverse, users can perform all kinds of social interactions: chat with friends, attend events such as concerts, and even business meetings.

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Laura Cuesta

In the development of the metaverse, the company has invested large sums of money. However, the economic results are not entirely positive. According to a announcement issued by Meta, the company had third-quarter revenues of $27,714 million, 4% less than in the same period a year earlier. This caused the stock market value of the company to drop.

This situation is directly affecting Zuckerberg, who is currently at number 25 in the rankings Bloomberg Index of Billionaires with assets of $43 billion. This is a very low position considering that it reached sixth position at the beginning of the year, with assets of over 125,000 million.

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