AILSA CHANG, HOST:
Well, here is some news that would be a top headline on any other day - Facebook parent company Meta has laid off 11,000 workers. That is the biggest staff reduction in the company's almost two-decade history. It's also the latest sign that the tech industry is in the middle of a major economic slowdown.
NPR tech reporter Bobby Allyn joins us now to explain more. Hey, Bobby.
BOBBY ALLYN, BYLINE: Hey, Ailsa.
CHANG: Hey. So when I saw that - 11,000 workers - I was like, that's huge. Like, what is happening at Meta right now?
ALLYN: It's a big number. It's 13% of Meta's staff. They're learning today that their jobs have been eliminated. Mark Zuckerberg wrote to staff and said, you know, he's taking personal responsibility for the cuts. He said that during the pandemic, the company just got really overly excited. They got overly aggressive with hiring, assuming that the good times would keep chugging along. But then - boom - the tech industry was hit with a big nosedive. And Zuckerberg wrote that the layoffs have been one of the most difficult decisions in the company's history. He wrote to employees, quote, "I got this wrong, and I take responsibility for that."
CHANG: Well, OK. Meta will now be a smaller operation after these layoffs. What do you think is next for the company, then?
ALLYN: Yeah. Meta is going to have a reduced head count, as you mentioned, but let's not kid ourselves here, Ailsa. It's a massive company still, right? I mean, even after these layoffs are completed, Meta will still have some 70,000 employees and be one of the most valuable companies in the world. In his note to employees, Zuckerberg said the focus is going to be moving away from social media, and, instead, the company is going to be training its attention on virtual reality research and development to build out its own version of what he calls the metaverse.
Right now, Reality Labs, which is the division of Meta that's really focused on the metaverse, is losing billions of dollars every quarter. But metaverse die-hards think it's just going to take time for it to really catch on. Analysts I've talked to say this is a high-risk gamble that Zuckerberg is really pinning his legacy on. If it pans out, these money-losing bets could be seen as really smart. But if virtual reality headsets never become mainstream, guess what? The company is in for some more trouble ahead.
CHANG: Right. OK. Well, this slowdown in tech - I mean, it goes far beyond Meta, right? Like, what's happening elsewhere in Silicon Valley right now?
ALLYN: Yeah, it sure does. Most big social media companies that are reliant on ads are being forced to pull back because advertising dollars online are just drying up. For Meta, the decline has been really bruising, though. I mean, its stock dropped 70% so far this year.
CHANG: Wow.
ALLYN: But the pain is widespread. Snap has laid off 20% of its staff. Twitter, under new owner Elon Musk, canned half of its staff. Salesforce recently announced layoffs. YouTube is experiencing a slowdown. Apple and Amazon said they are freezing hiring. So a lot of gloomy news. But this is far from the dot-com-era bust the tech industry experienced some two decades ago. In terms of there being, like, a complete industry implosion, we're not seeing that...
CHANG: That's good.
ALLYN: ...Though this is still a striking reversal, right? I mean, for years and years, the story out of Silicon Valley was relentless growth, breakneck hiring, and now that narrative, Ailsa, is changing.
CHANG: That is NPR's Bobby Allyn. Thank you, Bobby.
ALLYN: Thanks so much. Transcript provided by NPR, Copyright NPR.
