Big Tech ‘tightens belts’

The announcement comes as many technology giants (Big Tech) have stopped hiring in recent months due to a drop in advertising revenue because of the risk of a global recession.

Meta refactoring

According to Bloomberg News, during a meeting on September 29, Meta CEO Mark Zuckerberg said that the uncertain macroeconomic environment was the reason the company was forced to restructure. ” I was hoping the economy would stabilize more clearly at this point, but what’s going on shows that this hasn’t happened yet ,” Zuckerberg told employees.

In June 2022, Meta decided to shrink at least 30% of its engineering recruitment plan this year.

Meta’s Q2 performance report for July 2022 confirms weak advertising demand due to the unstable macroeconomic situation. Meta said that restructuring will be focused by the company in the third quarter of 2022 to reduce overall costs to adapt to increasingly challenging business environments and continue to invest in key products.

” Our plan is to steadily reduce headcount over the next year ,” Mr. Zuckerberg detailed. long-term initiatives “. According to Zuckerberg, Meta will reduce spending for most teams. Teams, in turn, will have to adjust to shrinking staffing.

General situation

Alphabet, the parent company of Google, announced a hiring freeze from July 20. Alphabet’s July performance report showed that while net income hit $16 billion in the second quarter of 2022, and quarterly revenue rose 13% to $69.7 billion, the results fell short of expectations. After rising 65% in 2021, Alphabet’s stock is down 34% this year, and the company’s major platforms like Google and YouTube are both expected to see a sharp drop in ad revenue.

Google CEO Sundar Pichai said the company needed drastic cost-cutting measures to increase business efficiency by more than 20%. On September 29, Alphabet announced that it was shutting down its Stadia digital game service, an ambitious project dating back to 2019 but disappointing, in an effort to cut costs.

Apple also said it will reduce hiring from 2023. Bloomberg’s sources also said that Apple abandoned plans to increase production of iPhone 14 this year due to demand not as high as expected.

Other tech companies have also announced hiring freezes or reductions, while avoiding the use of the word “fire”. If Meta’s restructuring results in layoffs, it will be the first of the tech giants to do so amid a bleak global economy.

According to The Guardian, after the “great victory” period during the COVID-19 epidemic, big technology companies have started to face many difficulties in recent months. The business model of Google, Snapchat, TikTok, Facebook … has in common is based on selling advertising.

In the context of record inflation in many countries, small and medium enterprises – the main customers of social networking companies – are facing many difficulties, their spending on advertising and marketing is not as much as before. this.

Forecasts show that ad spend across all channels and markets will fall by about $90 billion between 2022 and 2023, leading to a multi-billion dollar drop in advertising revenue for social media companies.