Twitter, Meta, Amazon and more... Why are tech titans laying off employees?

After Meta and Twitter, now Amazon has become the latest tech giant to announce a cut in workers. The company has announced that it looking to lay off around 10,000 workers. As Debarghya Das, a founding engineer at Glean, tweeted:

It seems that tech companies that were titans yesterday are in crisis today. But how did this happen? And what happens next? Let’s take a closer look: How did this happen? The seeds for this current crisis were also sown during the early days of the COVID-19 pandemic hen many consumers were forced to stay home and work on their phones and computers. The tech giants, witnessing a giant financial boom, then went on a hiring spree. As normalcy has returned, revenue is down. As Menlo Ventures partner Matt Murphy explained to Business Insider, “It always happens in cycles like this that sometimes companies don’t do layoffs significantly enough, but rather slow down on hiring and hope that normal churn might rightsize them.” “Coming out of Q3, which was much more difficult than Q2, it became much more obvious how many headwinds there were, and start-ups realized they can’t grow out of this with the staff they have and actually have to lay people off.” These current lay-offs are a combination of lower than expected earnings for companies of late as well as consumers holding back their spending due to the looming threat of a recession, experts say. Dan Wang, an associate professor at the Columbia Business School, told Business Insider,  “When they cut costs, the first thing to go is typically labour costs and also advertising and marketing. So when it comes to forecast what their numbers will look like, it’ll depend on how they have seen the trend in advertising spending on their platforms. When that doesn’t look good, then they have to accommodate those expectations by adjusting the workforces.” Amazon – 10,000 cuts planned As per The New York Times, if Amazon does indeed follow through with its 10,000 cuts, that would be the biggest layoff in the company’s history. The move comes after Amazon has reportedly witnessed a few quarters without profits. The newspaper, citing anonymous sources, said those in the devices group including the one responsible for the Alexa voice assistant, along with the retail division and human resources, will be targeted. [caption id=“attachment_11634391” align=“alignnone” width=“640”] Amazon has planned 10,000 job cuts. News18 (Representational Image)[/caption] The New York Times reported that “Amazon’s growth slowed to the lowest rate in two decades, as the bullwhip of the pandemic snapped” after its “most profitable era on record” during the COVID-19 pandemic years, which saw exponential growth in online consumer spending. The Wall Street Journal further reported that the Jeff Bezos company, after a months-long review, also urged employees in unprofitable units to look for ‘other opportunities within the company.’ The move comes just days after Amazon earlier in November cut 150 workers. The company also implemented a hiring freeze that will last the “next few months,” Amazon’s senior-vice pMuresident Beth Galetti was quoted as saying by The Week. The company previously warned of a slowdown in growth for the busy holiday season, a period when it used to generate the highest sales. Amazon said this was because consumers and businesses have less money to spend due to rising prices. Twitter lays off half workforce Twitter last week laid off around half its workforce of 7,500 employees including vast swathes of its communications team, human rights team, machine learning and algorithmic team. In India alone 90 per cent of the staff was laid off. The company is making these moves under its new CEO Elon Musk, whose time at the helm has seen chaos and confusion within company ranks. Musk, who paid an astounding $44 billion dollars for the social media company, is under severe pressure to cut costs and start making money. Unfortunately for Musk, the social media company has only been profitable for two years of its existence. Even more unfortunate is that Musk, the world’s richest man, has taken out $13 billion in loans to finance his purchase – leaving him to service a $1 billion dollar yearly debt. Musk recently claimed the job cuts were necessary as the company was losing $4 million a day and that he had sold $4 billion of stock in Tesla. While Musk has blamed “activist groups pressuring advertisers” for a “massive drop in revenue” – advertising comprised 90 per cent of Twitter’s revenue – brands have stopped purchasing advertisements or outright fled the platform over Musk’s erratic behaviour. Twitter’s botched and confusing rollout and rollback of its verification for $8 dollars hasn’t help matters either. One account that imitated Pfizer-Lilly – with blue checkmark in tow – tweeted that “insulin is free” and caused Eli Lilly’s stock price to tumble by 4.37 per cent and left executives within the company enraged. Meta cuts 13% of staff Meanwhile, Meta CEO Mark Zuckerberg in a letter to employees last week said the company has cut 13 per cent of its workforce. Zuckerberg, explaining the job cuts of around 11,000 people to his employees, wrote he had decided to hire aggressively, anticipating rapid growth even after the pandemic ended. [caption id=“attachment_11581841” align=“alignnone” width=“640”] Facebook parent Meta plans to begin mass layoffs this week. News18[/caption] “Unfortunately, this did not play out the way I expected,” Zuckerberg wrote. “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.” Meta’s rationale is the same as the other companies   – it hired too many employees too quickly and revenue has tanked. But then there is its massive investment in the ‘metaverse’ – approximately $10 billion a year – a gamble that has left some investors spooked. “In its earnings report last month, Meta disclosed that Reality Labs, the part of the company working on the metaverse, had $3.67 billion in operating losses. Reality Labs also experienced its lowest revenue since the final quarter of 2020. The company expects the operating losses for Reality Labs to increase next year,” The New York Times reported. While Zuckerberg has claimed the metaverse,  an immersive digital universe, will eventually replace smartphones as the primary way people use technology, not all are convinced. Spooked investors have sent company shares tumbling more than 71 per cent since the beginning of the year and the stock now trades at levels last seen in 2015. An economic slowdown and a grim outlook for online advertising — by far Meta’s biggest revenue source — have contributed to Meta’s woes as well. 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 is tied to broader economic and technological forces. Intel eyes workforce cut Intel has vowed to cut costs in the face of a slump in demand in computers and sagging profits, Bloomberg reported. Macroeconomic headwinds have muddied the outlook for the PC and data center market, both big markets for Intel. The company said it will save $3 billion next year by cutting jobs and slowing spending on new plants. While the company has not confirmed the job cuts, Bloomberg reported 20 per cent of staff are facing the chopping block. Intel’s Habana Labs laid off around 10 per cent of the workforce, or 100 people, in October, as per the report. Chief Executive Pat Gelsinger told Reuters  “people actions” would be part of a cost reduction plan. “The amount that we can do with respect to people costs is a minority of our overall cost structure. So driving efficiency in the factory network is way more important to our economics than people cost,” Gelsinger told Reuters, adding that adjustments to flexible workforces can be “quite immediate”. The adjustments would start in the fourth quarter, he said, but did not specify how many employees would be affected. Intel had 110,600 employees in late 2020, just before Gelsinger took the helm. That has ballooned to 131,500 by early October. Snap cuts a fifth of employees It was the tech news website The Verge that first reported that Snap, the southern California-based company, would be making steep cuts to its approximately 6,400 staff. In August, Snap indeed laid off a fifth of its employees. That came as the troubled messaging app attempted to dig itself out of a hole amid competition and revenue woes, as well as recent quarterly losses. A hit with young internet users in its early days, Snapchat has remained a small player in the social networking space as competition from other apps, such as TikTok, has grown ever more intense. “We must now face the consequences of our lower revenue growth and adapt to the market environment,” Snap CEO Evan Spiegel said in a note to employees Wednesday announcing the decision “to reduce the size of our team by approximately 20 percent.” In July, the company reported that quarterly losses nearly tripled to $422 million amid conditions “more challenging” than expected. Restructuring, Spiegel said, would focus on “three strategic priorities: community growth, revenue growth and augmented reality” with unrelated projects to “be discontinued or receive substantially reduced investment.” Snap said it would discontinue its Snap Originals show programming, third-party app integration known as Minis, its games, and its lightweight drone offering called Pixy. It also said it was “winding down” its standalone geolocation app Zenly and music creation app Voisey, which it acquired through takeovers. Like other social networks, Snap has taken a hit as advertisers have tightened their belts, as well as from new privacy changes by Apple that have bitten into firms’ sales of costly but highly-targeted ads. “The company is facing layoffs as it works to restructure its ad business and cut costs,” said Insider Intelligence principal analyst Jasmine Enberg. “Even so, I wouldn’t count Evan Spiegel out.” Snap has a growing and loyal user base, and is well-positioned to capitalize on advertising and commerce in its augmented reality offerings over the long term, the analyst reasoned. Enberg expected Snapchat to end this year with nearly $5 billion in net ad revenue worldwide in a 43 percent increase from 2021. Insider Intelligence projected that the ranks of Snapchat users would be up more than 10 percent to 493.7 million by the end of this year. “We are encouraged by stabilizing user trends, as well as the large shopping and e-commerce advertising opportunity, healthy margins, and perspective and experience from recent upgrades to the management team,” Baird analysts said of Snap in a note to investors. Snap announced a new chief operating officer, Jerry Hunter, who is being promoted from senior vice president of engineering. Google executive Ronan Harris will become president of the company’s Europe, Middle East and Africa division in October. Robinhood axes 32% of staff Robinhood, the commission-free brokerage app also in August announced a 23 per cent reduction in headcount – that on top of the nine per cent of full-time staff laid off earlier this year. The company also said it would change its organisational structure to drive greater cost discipline. As per NPR, CEO Vlad Tenev wrote in a blog post that the first staff reduction a few months ago “did not go far enough.” “As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me,” he wrote. “In this new environment, we are operating with more staffing than appropriate.” Stripping out restructuring charges, it made a loss of 32 cents per share, versus analyst estimates of a loss of 37 cents per share according to Refinitiv IBES data. Analysts welcomed Robinhood’s bid to get its expenses under control, suggesting the move could be positive for the company’s flailing stock. “We believe these cost reductions will likely drive the company to profitability in the near term and could drive shares higher,” Goldman Sachs analysts wrote in a note. Shares of Robinhood, which were sold at $38 a share in its initial public offering last year, have shed more than 70 per cent since the company’s debut on NASDAQ. In common with other high-growth tech firms, Robinhood has yet to turn a profit since its market debut. The company posted a net loss of $295 million for the second quarter. Stripe and Lyft cut over 10% employees each Stripe, the digital payment giant valued at $95 billion in its last funding round, in November announced it was reducing headcount by around 14 per cent. Its move came startups trying to navigate a tough investment market rush to rein in costs. After the job cuts, Stripe will have about 7,000 employees, according to an email to employees from founders Patrick and John Collison on Thursday. US technology stocks have been crushed this year as tightening monetary policy and worries of a looming recession soured investor sentiment. That has also spilled over into the venture capital market, where jittery investors concerned about overpaying have avoided signing big checks for startups. The pain has been more acute for companies seeking late-stage funding as it becomes tougher to justify higher valuations. The layoffs come months after Stripe cut its internal valuation by 28 per cent, according to a report. “We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” Stripe’s founders said in the email, adding that they had overhired and grew operating costs too quickly. Meanwhile, Lyft in November also said it would lay off 13 per cent of its workforce, or about 683 employees, in the ride-hailing firm’s latest cost-cutting step to cope with a weakening economy. The move follows a hiring freeze earlier this year and 60 job cuts in July. As decades-high inflation hits consumer spending and drives up costs for businesses, companies across sectors are cutting jobs and downsizing their operations to preserve profits. Lyft’s latest move is expected to result in a charge of between $27 million and $32 million in the fourth quarter. The company, which is slated to report third-quarter results on Monday, said the layoffs would not have an impact on its previously issued forecast for the period. “The announced reduction in force is a proactive step as part of the company’s annual planning to ensure the company is set up to accelerate execution and deliver strong business results in Q4 of 2022 and in 2023,” Lyft said in a statement. Salesforce poised to cut 2,500 employees The software company Salesforce is slated to lay off at least 2,500 employees, the website Protocol reported. Meanwhile, hundreds of others are likely to be put on a 30-day review, with the aim to let them go after a month, the report said. Salesforce told CNBC, “Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition.” The company added that it had 73,541 people on its payroll earlier this year. As per Protocol, The company previously laid off roughly 90 contract workers and implemented a hiring freeze through January 2023. “Investors are increasingly demanding a greater return from Salesforce, which has always funneled its profits toward growth, including spending billions to acquire companies like Slack and Tableau,” it reported. Netflix cuts 450 staff The once dominant global streamer has cut around 450 of its workforce this year. The streaming company has come under pressure in recent months as inflation, the war in Ukraine and fierce competition weigh on subscriber growth. [caption id=“attachment_11448451” align=“alignnone” width=“640”] Netflix has launched a new ad-based tier.[/caption] The company has even introduced a cheaper, ad-supported subscription tier – which it once swore it would never do. In June, the company cut 300 employees, or about four per cent of its workforce, in the second round of job cuts aimed at lowering costs. That came after the streaming giant lost subscribers for the first time in more than a decade. “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth,” Netflix said in a statement. In May, the company cut 150 jobs mostly in the United States – approximately two per cent of the company’s workforce in the United States and Canada. “These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues,” the company said in a statement. “We’re working hard to support them through this very difficult transition.” “We’re trying to be smart about it and prudent in terms of pulling back on some of that spend growth to reflect the realities of the revenue growth of the business,” Netflix Chief Financial Officer Spencer Neumann told investors during the company’s earnings call. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.