Meta’s announcement about the closure of a New York office combined with a previously announced hiring freeze could mean Facebook is losing its luster.
- Facebook parent company Meta Platforms has been cutting back on its expansion plans in New York, though it is continuing with plans to expand offices near Pennsylvania Station.
- The closure of the Manhattan office comes soon after CEO Mark Zuckerberg called for team reorganization and workforce cutbacks.
- The company has instituted a hiring freeze during a time of restructuring which includes cutting expenses and refocusing on priorities. This is the first major budget cut since Facebook’s founding.
Why it’s news
Restructuring teams and cutting extra expenses is sounding alarm bells for some Meta Platforms employees as it signals potential layoffs in the future.
Zuckerberg’s move to cut costs indicates that Facebook’s competition is having an effect on advertising revenue. New privacy restrictions imposed by Apple have limited Meta’s once finely targeted advertising. Social media platforms like TikTok and BeReal are drawing younger users away from Facebook.
Meta spokesman Jamila Reeves explained the closure saying, “Two twenty-five Park Avenue South has served as a great bridge space to get us to our new offices at Hudson Yards and Farley. We are working to ensure we’re making focused, balanced investments to support our most strategic long-term priorities.”
In addition to struggling ad revenue, Zuckerberg is investing in his virtual reality platform, the metaverse. Though the Facebook founder envisions this platform as the future of communication, he has admitted himself that it will lose money—not make money—for several years.
Though hiring freezes are typically implemented to prevent layoffs in the future, Meta closing the doors of this office indicates that layoffs could be around the corner.
Backing up a bit
This year has turned out to be a challenging one for Facebook. Despite dominating social media for years, it seems the company can’t keep up with the competition. At the end of 2021, Facebook lost daily users for the first time.
In February of this year, the company had its worst trading day ever as its market value was cut more than 26%.
Driving Facebook’s decline could be the simple fact that young people don’t find the social media site cool anymore.
The number of teens using Facebook has declined sharply over the last several years. A 2022 Pew Research analysis found that 32% of teens use Facebook compared to 71% in 2015.
When Facebook was founded, it had little to no competition. Now, the social media market is nearing over-saturation.
In the same way that video streaming pushed out cable and Netflix pushed out Blockbuster, without innovation, Facebook may become a symbol of a bygone era.
Meta’s stock has fallen 59% since the beginning of the year.