Meta layoffs: Tech’s tough week signals start of ‘stormy winter’

Top seven tech firms have lost $3 trillion in combined market cap over the last year

An upside-down thumbs up or ‘Like icon at the Facebook main campus in Menlo Park, California, 15 May, 2012 (Getty)

The latest round of mass layoffs from Meta and Salesforce today brings the total number of tech employees who have lost their jobs this year to around 60,000. That’s a group of high-skilled workers the size of Canterbury’s population – or the capacity of London Stadium – that are now unemployed.

The two companies join Twitter, Microsoft, Netflix, Snap and nearly a dozen more high-profile tech firms in slashing their workforce, while companies like Amazon and Apple have announced that they will be temporarily closing their doors to new hires.

It means that many of those impacted will struggle to find employment in a similar role, at least in the near future. Broader trends suggest that some will even be forced to look for work in entirely unrelated fields.

Meta CEO Mark Zuckerberg blamed the cull on the pandemic, claiming that he thought the boom in e-commerce brought about by people staying at home during lockdowns would last indefinitely. “Unfortunately, this did not play out the way I expected,” he told employees.

He was not the only tech boss to make this excuse. Stripe CEO Patric Collison said he had been “much too optimistic about the internet economy’s near-term growth”, while newly crowned Twitter boss Elon Musk blamed “revenue challenges”.

If you look at previous mass lay-offs in the tech sector, the sackings may offer hope of a rejuvenation of the space. When Nokia saw its dominance of the mobile phone market collapse, the result was a thriving start-up scene in Finland fuelled by those let go.

But this isn’t just one company. The job losses reflect a brutal year for the global economy, with rising interest rates, soaring inflation, reduced investment budgets and stagnating growth. Recent quarterly reports from the leading tech giants revealed just how hard this has hit stocks, with the top seven companies losing an astonishing $3 trillion in combined market cap over the last year.

The dominance of tech companies on the Nasdaq and other stock exchanges means the overall economy has also taken a heavy hit, as analysts predict an approaching global recession. Pierre-Olivier Gourinchas, a leading French economist and director of research at the International Monetary Fund recently warned that “storm clouds” were gathering as winter approaches.

“This year’s shocks will reopen economic wounds that were only partially healed post-pandemic,” he wrote in a blog post for the IMF. “In short, the worst is yet to come”.