Waves of layoffs at Amazon, Meta, Snapchat… the tech giants in turmoil?

This represents just under 1% of the group’s current payroll. Amazon is preparing to lay off about 10,000 employees, according to New York Times, in an article published on Monday, November 14. The tech giant had nearly 1.54 million employees worldwide as of September. This does not count seasonal workers, who are recruited during periods of increased activity such as year-end celebrations. According to information from the American daily, the positions targeted by the workforce reductions are located in the department of electronic devices equipped with the voice assistant Alexa or even Kindle readers and human resources.

If the number of 10,000 job cuts is confirmed, it will be the largest social plan in the company’s history. Contacted on Monday, November 14 by AFP, Amazon did not immediately react. Last Wednesday, Meta, the parent company of the Facebook social network, announced the loss of 11,000 jobs, or about 13% of its workforce.

We face an unstable macro-economic environment, increased competition, advertising targeting problems.

Mark Zuckerberg, boss of Meta at the end of October, during the analyst conference.

At the end of August, Snapchat cut about 20% of its workforce, or more than 1,200 employees. Twitter, which was recently acquired by Elon Musk, for its part has laid off nearly half of its 7,500 employees.

Advertisers are cutting spending in the face of global inflation

The business model of the major platforms is based on advertising. Faced with inflation and rising interest rates, brands and companies are cutting back on social media advertising spending.

If brands and companies spend less money on advertising, the revenues of GAFAM (acronym for Google, Apple, Facebook, Amazon and Microsoft) automatically decrease. And with competition from other platforms, starting with TikTok, advertisers are moving to other platforms as well. Thus, Meta saw its net income dilute to 4.4 billion dollars in the third quarter (-52% over a year).

To (re)see: United States: Facebook in all chaos has become “Meta”

We face an unstable macro-economic environment, increased competition, ad targeting issuestried to explain Mark Zuckerberg at the end of October at a conference.

This situation contrasts during the pandemic, where the technology sector benefited the most. “Meta is facing harsh post-pandemic realities, like many other companies”, commented Debra Aho Williamson through AFP, principal analyst ofInsider Intelligence, a social media marketing research institute.

Meta acquired and started new projects believing that advertising revenue would remain high.

Debra Aho Williamson, Insider Intelligence Principal Analyst.

Shareholders are wary of GAFAM’s new investments

Meta believes that e-commerce will continue to grow over time”, argues Debra Aho Williamson. “He hires and starts new projects believing that ad revenue will remain high“, he added. In one year, Meta lost almost 600 billion dollars in market capitalization.

To (re)read: What are “metavers”, Facebook’s new web experience?

The company has been troubling the markets since the beginning of the year. It announced for the first time that it has lost users to its original social network, Facebook.

The expensive investments to build the metaverse, presented as the future of the Internet, also do not reassure investors. They doubted the group’s ability to make huge profits from this parallel universe. But saving isn’t just about investors. In the face of rising inflation, customers, too, are more cautious about their technology consumption basket.

Macroeconomic uncertainty is forcing Amazon Web Services customers to take more control of their costs.

Brian Olsavsky, CFO of Amazon.

Internal issues for each company

Amazon’s social plan is also linked to a drop in demand for some of its additional services. The new IT activity service (cloud), Amazon Web Services (AWS), has so far shown outrageous growth and profitability. It saw its revenue rise more modestly this summer, climbing 27%, compared to 39% last year.

Macroeconomic Uncertainty Forces AWS Customers to Take More Cost Control“, Brian Olsavsky recalled during the presentation of the group’s results at the end of October.. And Amazon gets most of its profits from this business. The cloud is about 12% of its total turnover, but alone generates half of the revenues.

For Twitter, it is rather the arrival of its new leader, Elon Musk, that is behind the massive departure from the company. The unique entrepreneur actually advocates a vision of freedom of expression that requires relaxing the rules of moderation, to make it a platform where everything can be said. A policy not to the liking of all its employees. Many chose desertion.

To (re)see: Elon Musk, new boss of Twitter: a project and fears

They are not the only ones who should be concerned about this change. The new EU law has just announced the introduction of a law that aims to further regulate the activity of the platforms of the web giants, the application of which must be run “around summer 2023“. In particular, it will force the platforms to remove any illegal content as soon as it is known. Should the tech prepare for a new crisis in its model?

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