Meta’s layoffs starting this week underscore Zuckerberg’s AI reality

When Meta CEO Mark Zuckerberg told employees of his plan to lay off 11,000 employees in late 2022, with those cuts later increasing to 21,000. He regretted admitting he had overhired during the Covid pandemic.

“I misunderstood this and I take responsibility for that,” Zuckerberg said. message to employees in November of that year as the company’s shares were in free fall. In early 2023, Zuckerberg said the cuts were necessary as part of Meta’s “year of productivity.”

After more than three years, the attitude of the top has changed dramatically with the latest round of mass layoffs starting this week. As of Wednesday, Meta is laying off its workforce by about 10%, or about 8,000 people. The company also abandoned plans to fill 6,000 open positions, according to a notice of layoffs in April.

The current downsizing follows layoffs of nearly 1,000 employees at the company’s Reality Labs unit in January and cuts that affected hundreds more employees in March, as well as a decision to move away from third-party vendors and contractors tasked with content moderation duties.

Meta, meanwhile, is ramping up its AI investments, last month raising its 2026 forecast for capital spending by up to $10 billion to $145 billion.

In announcing the impending layoffs a week before announcing the capex increase, Meta told employees that the cuts were “part of our ongoing efforts to run the company more efficiently and allow us to balance other investments we’ve made.”

There was no apology from Zuckerberg. Meta declined to comment for this story.

A new sense of fear is emerging within the company at large, according to current and former Meta employees, who asked not to be named so they can speak freely about the issue. That’s partly because more cuts are expected this year, including a possible layoffs in August, followed by another round later in the year, some of the sources said.

Finance chief Susan Li in question The first-quarter earnings report noted that executives “don’t really know what the optimal size of the company will be in the future.” Regarding AI investments, Li said: “While we are significantly increasing capacity as advances in AI continue and our teams continue to identify challenging new projects and initiatives, our experience so far has been that we continue to underestimate our computing needs.”

In the tech industry, workers watch stock prices balloon and AI startups reach huge valuations; Meanwhile, employers are simultaneously reducing the number of staff due to the rapidly developing power of artificial intelligence. There have been approximately 110,000 layoffs at 137 technology companies so far in 2026. layoffs.fyiafter about 125,000 slaughters last year.

At the current pace, cuts could approach a peak in 2023, when there will be more than 260,000 layoffs; many software and digital media companies have recovered from the Covid hiring boom.

Umesh Ramakrishnan, chief strategy officer at executive search firm Kingsley Gate, said the current trend towards AI accepting jobs is difficult for employees but welcomed by investors.

“It’s easy to tell someone, ‘Hey, listen, I made a mistake hiring more people than I should have,'” Ramakrishnan said. “The world now understands that jobs are being replaced by machines, and if you don’t, shareholders get upset.”

Cisco The latest technology giant to make such an announcement told investors last week that it would lay off fewer than 4,000 people alongside its quarterly earnings.

“The companies that will win in the age of AI will be those with the focus, urgency, and discipline to continually shift their investments to areas where demand and long-term value creation are strongest,” Cisco CEO Chuck Robbins wrote. blog postTitled “Our path forward”.

Cisco shares rose more than 13% on Thursday, their best day since 2011, after the company reported better-than-expected results and lifted its AI infrastructure guidance.

Wall Street still isn’t sold on Meta’s story, but that’s largely because the company’s AI strategy is scattered and remains largely in flux. The stock is down nearly 7% so far this year and almost 5% over the past 12 months, underperforming all of its megacap peers. Microsoft.

Whatever anxiety investors are experiencing, emotions within the company are more intense; While some longtime employees are questioning Meta’s AI efforts under AI chief Alexandr Wang, they are also weighing whether now is the time to leave for opportunities at other companies in the AI ​​race, according to current and former employees.

Data collected by Blind, an anonymous professional network that requires users to verify their employment with a work email address, reveals some of the internal malaise.

Meta’s overall rating for employees at Blind has fallen 25% from a peak in the second quarter of 2024 to this period; There was a 39% decrease in the culture rating. In every category except compensation. Meta suffered a decline in ratings and significantly underperformed its competitors Amazon, Google And neflixIt reveals blind data.

The company’s full-court press with AI included the recent launch of an employee monitoring tool that aims to collect data from employees’ actions, such as mouse movements and keystrokes, on their work computers. The Model Capability Initiative (MCI) is part of Meta’s efforts to train AI models to power digital agents that can perform a variety of coding and white-collar tasks.

Employees described the data tracking tool as “dystopian,” while some employees expressed fears that personal information could be leaked, according to messages viewed by CNBC. Sources said some Meta employees have noted that their workplace computers appear to be slower since the company launched the project, adding to their frustration.

Meta employees responded by creating an online petition calling on Zuckerberg and leadership to shut down the project.

“The collection and reuse of such data raises serious concerns about privacy, consent and trust in the workplace,” the petition states. “It should not be the norm for companies of all sizes to be allowed to exploit their employees by extracting their data without their consent for AI training purposes.”

Leo Boussioux, an assistant professor of information systems at the University of Washington’s Foster School of Business, described Meta as one of many companies currently overhauling their workforce and operations to accommodate “the fact that artificial intelligence is changing the way we work.”

It could be to increase fear or pressure by using AI-related threats and layoffs as “a type of weapon that will enable culture change,” Boussioux said. But he said it could also mean “poor management that doesn’t know how to make this more comfortable for employees.”

— CNBC’s Stephen Desaulniers and Lora Kolodny contributed to this report.

WRISTWATCH: Jim Cramer says Meta’s overall numbers are impressive.