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Story outline
■ Last December, Meta India opened its first standalone office in Asia at Gurugram
■ Meta’s revenues for the July-September quarter of 2022 dropped 4% to $27.7 billion
In a statement shared with Meta employees, co-founder and chief executive officer Mark Zuckerberg said that going ahead, the company would make further cuts on discretionary spending and extend the freeze on fresh hiring until March 2023.
Zuckerberg’s note said as more people stayed online during the Covid-19 pandemic, Meta expanded its investments since it hoped the trend would continue post-pandemic as well.
“Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that,” he said.
India Impact
People in the know, told ET, that the impact of this global announcement may not be “very significant” at Meta India. Further details are likely to be available over the next week, they added.
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In response to ET’s queries on the issue, a spokesperson for Meta India said that the company would not be “providing details on specific team impact”.
Last December, Meta India opened its first standalone office in Asia at Gurugram. The new facility, spread over 130,000 sq ft, houses all three platforms - Facebook, Instagram and WhatsApp.
Earnings decline
Meta’s revenues for the July-September quarter of 2022 dropped 4% to $27.7 billion, while global net income dropped 52% to $4.4 billion. The company also spent more during this period, an increase of 19% year-on-year.
Social media companies, including Meta, had enjoyed a financial boost during the pandemic-led lockdown as digital adoption spiked, stoking greater advertising. But as the lockdowns ended and people ventured out again, revenue growth (from advertising) began to falter. It was also impacted by the change in Apple's policies which restricted digital advertising for companies like Meta and Facebook.
An economic slowdown and a grim outlook for online advertising — by far Meta’s biggest revenue source — have contributed to Meta's woes. This summer, Meta posted its first quarterly revenue decline in history, followed by another, bigger decline in the fall. Some of the pain is company-specific, while some are tied to broader economic and technological forces.
Analysts also pointed to a “fatigue with the digital lifestyle.”
“Some people are also not happy with the content being thrown up by the algorithm on Facebook and it could be the reason why they are moving away. It is all resulting in lesser revenues through advertising for these giants,” Faisal Kawoosa, Chief Analyst at Techarc told ET.
Last week, Twitter announced widespread layoffs under its new owner, billionaire Elon Musk, who sent out about half of its 7,500 employees, in a chaotic overhaul. He tweeted that there was no choice but to cut jobs “when the company is losing over $4M/day," although he did not provide details about the losses.
Musk’s move wiped out almost the entire Twitter team in India, which had roughly 230 employees as of Friday last week. While about 180 of them were let go on that day itself, the others who have been retained “for now” will be “informed of their role” in the company soon, sources had then told ET.
In all, Twitter India is likely to retain about 12-15 employees in India for the time being, the sources said.
Meta has worried investors by pouring over $10 billion a year into the “metaverse” as it shifts its focus away from social media. Zuckerberg predicts the Metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology.
Meta and its advertisers are bracing for a potential recession. There’s also the challenge of Apple's privacy tools, which make it more difficult for social media platforms like Facebook, Instagram and Snap to track people without their consent and target ads to them.
Competition from TikTok is also a growing threat as younger people flock to the video-sharing app over Instagram, which Meta also owns.