by Naomi Bang ‘23
Companies across the technology, social media, and entertainment industries will enter the new year with a significantly lighter workforce. While businesses commonly cut job positions in preparation for a new fiscal year, major companies including Meta, Twitter, Netflix, and Snap Inc. have laid off more employees than in previous years due to declining revenue, company overgrowth, and an impending recession.
In November, Facebook parent company Meta announced it would cut 11,000 employees, reducing its workforce by 13 percent. Meta announced a revenue drop and predicted decline for the next fiscal quarter while expenses rose significantly. CEO Mark Zuckerberg’s commitment to expanding the Metaverse spread the company’s income thin. Shortly after Elon Musk took over Twitter, he cut 3,700 employees, which is half of the total staff. Though these cuts primarily resulted from Musk’s own modifications of the company, Twitter has also faced dropping revenue due to the current economic conditions.
Netflix had two rounds of layoffs this year following its first subscriber loss in a decade. Its reductions constituted three percent of the workforce in preparation for slowing spending growth in the coming year. Snap Inc. laid off 20 percent of its workforce after also reporting company growth below predicted numbers. Microsoft kept a significant amount of its employees but did report its slowest revenue growth in five years this past quarter.
A total of more than 100,000 technology employees have lost their jobs in 2022. This exceeds the number of people laid off in 2020 and 2021 combined. Drastic growth and hiring during the Covid-19 pandemic era is partially to blame for the inflated numbers. Everyone was hopping on their Zoom calls, binge watching Netflix, and naturally spending more time online with lockdowns in place. More employees hired to keep up with the influx of online usage meant more employees to lay off once the industry returned to normal numbers. For example, Meta added over 15,000 employees from January to September 2022 as Zuckerberg aggressively expanded the Metaverse and must now rebalance the labor force. In short, the tech world is experiencing an inevitable recalibration as it returns to pre-pandemic conditions.
With the threat of an oncoming recession, customers are cutting back on spending and companies must find ways to reduce their budget in response to the revenue shift. The first way to economize is by cutting numbers in advertising and marketing. However, as digital advertisers have also scaled back on spending for the recession, businesses must turn to minimizing labor costs. Some companies including Meta and Amazon attempted hiring freezes throughout the year but eventually had to lay off employees. These tech companies may also be looking at each other’s behavior to assess the current economic situation which is why so many layoffs coincided.