Meta trims metaverse ambitions in the face of economic downturn
Meta has announced its first major hiring freeze, in a move that signals market jitters about both the underlying performance of the social media giant and its future metaverse direction.
Meta’s founder Mark Zuckerberg announced the freeze in a company Q&A
The company, which rebranded as ‘Meta’ last year to demonstrate its focus on the new opportunities of the metaverse, warned its staff to brace for an economic downturn. As part of that shift in sentiment, company founder Mark Zuckerberg stated that the company would be amending its goal of hiring 10,000 engineers, reducing that target to between 6,000 and 7,000.
Zuckerberg seems to be approaching a reduction in headcount using a social Darwinist approach, stating: “Realistically, there are probably a bunch of people at the company who shouldn’t be here.
“Part of my hope by raising expectations and having more aggressive goals, and just kind of turning up the heat a little bit, is that I think some of you might decide that this place isn’t for you, and that self-selection is OK with me.”
The audio, obtained by Reuters, also suggests that Meta is bracing for a significant downturn in financial and economic activity, which Zuckerberg has blamed on the war in Ukraine.
The company’s hope is that metaverse advertising will come to generate a significant amount of its revenue. For the moment it is largely concentrating on co-creating and hosting branded content experiences, as with the Fender and BMW experiences launched during Cannes.
The shift in focus to the metaverse follows a series of hits to the overall viability of Facebook’s advertising capabilities. A newfound focus on user privacy and increased attention on the role of social media to spread dis- and misinformation during the pandemic has forced the company’s hand.
In addition, the company announced it was pulling support for its cryptocurrency wallet Novi. While the collapse of the crypto market is undoubtedly a factor, it is also worth noting that Meta's ambitions for Novi were curtailing before its launch. Given that cryptocurrencies are seen as integral to the web3 infrastructure that was part of the overall appeal of the metaverse, that will have impacted Meta's approach to monetisation of virtual platforms as well.
Despite that, the company’s report for the first quarter of 2022 was mostly positive. This latest shift in the scale of its metaverse ambitions is likely an attempt to rightsize in the face of increased headwinds.