Last Updated on 11/11/2022 by てんしょく飯
Meta (formerly Facebook), one of the four major U.S. IT companies known as “GAFA,” is suffering. The collapse of the “COVID-19 bubble” has led to continued poor performance and massive job cuts.
Having lost the tailwind of demand for nest eggs, the IT giants are being forced to change their strategies.
I made a mistake. I will take responsibility. In a statement issued on September 9, announcing the layoff of more than 11,000 employees, or about 13% of its total workforce, Mark Zuckerberg, the company’s top executive, said, “I have made a mistake. In a statement on September 9 announcing the layoffs of more than 11,000 employees, or about 13% of the company’s workforce, CEO Mark Zuckerberg acknowledged management responsibility and repeated his apology.
Meta’s final profit is expected to double in the April-June period of 2021, to $10.3 billion, due to the increased demand for online advertising in the COVID-19 disaster. doubled to $10.3 billion (¥1.5 trillion) in the April-June period of 2021. The number of monthly users of Facebook, Instagram, and other services under the company’s umbrella exceeded 3.5 billion, and in June 2021, the company’s market capitalization surpassed $1 trillion. The market capitalization surpassed $1 trillion in June 2021.
However, fears of a slowdown in the U.S. economy have led companies to curb advertising spending, and with the expectation that demand for nest eggs will continue after COVID-2019, the number of employees will be reduced from about 45,000 at the end of 2019 to about 4,000 at the end of September 2022. The company also doubled the number of employees from about 45,000 at the end of 2019 to about 87,000 by the end of September 2022. The doubling of the number of employees from 45,000 at the end of 2019 to 87,000 by the end of September 2022 has also backfired.
Soaring labor costs due to inflation (price hikes) also caught up with the company, and in the July-September period of 2022, final profits halved from the same period of the previous year, falling for the fourth consecutive quarter. Market capitalization has also fallen to about a quarter of its peak.
Meta’s advertising revenue through its services accounts for over 95% of its sales, making it one of GAFA’s most dependent on advertising. In the July-September period of 2022, sales of the business related to the “Metaverse,” a virtual space on the Internet that the company is focusing on as an alternative revenue source to advertising, also fell by half.
In October, Meta launched new goggles for the Metaverse, but at a high price. IT journalist Hiroshi Mikami points out that “it will take several years for the Metaverse business to become profitable. He believes that a change in strategy is necessary, such as making the “What’s Up” interactive application under the company’s umbrella more multifunctional.
The bursting of the COVID-19 bubble has forced IT companies to review their strategies, such as reducing their workforces. Some see this as an opportunity for Japanese companies to acquire digital talent, which is in short supply, but Tomoya Suzuki of the Nissay Institute of Advanced Industrial Science and Technology says, “There is a large difference in compensation levels between Japan and the U.S. The depreciation of the yen has also had an impact. The weak yen also makes it difficult to acquire talented people.