Amid growing nervousness in Dublin about big tech firms downsizing their operations, attention is starting to focus on one company in particular – Meta.
The owner of Facebook, Instagram and WhatsApp is about to cut costs by 10pc, according to US reports, with staff being whittled down through reorganisation of departments.
This, says the Wall Street Journal in its scoop, will be a “prelude” to “deeper cuts”.
The reasons for this have been well aired. Meta’s big moneymakers – Facebook and Instagram – are being pummelled by the rise of TikTok.
‘Some of you might decide this place isn’t for you – and that self-selection is okay with me’
As if that didn’t hurt enough, Apple’s recently-introduced ‘ask app not to track’ feature has gutted Meta’s ad revenue by up to €10bn per year – almost all of which comes out of bottom-line profit.
And then there’s the stuttering progress of Meta’s big new thing – the Metaverse.
Despite billions of dollars spent developing the platform, there is little yet to show. The buzz – the intangible element that is often so crucial to a new technology taking sail – seems absent. These days the Metaverse is more often used as a punchline than a prophecy .
All of this has combined in Meta’s valuation falling from over €1tn last year to €380bn right now, a much steeper fall than most of its big tech peers. Meta’s top brass are very, very worried.
“If I had to bet, I’d say that this might be one of the worst downturns we’ve seen in recent history,” Mark Zuckerberg told a staff meeting during the summer, according to leaked audio.
To what extent can the Irish base weather this storm?
So far, there are no signs of any of Meta’s 3,000 staff being laid off. However, there are multiple reports of some contractors – which make up around half of the 6,000 people ultimately employed by the tech giant – having their contracts discontinued or their roles transferred.
‘There are probably a bunch of people at the company who shouldn’t be here’
The net result may be a smaller overall employment footprint for Meta in Dublin.
“Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg said, according to that leaked audio.
“Part of my hope by raising expectations and having more aggressive goals, and just kind of turning up the heat a little bit, is that I think some of you might decide that this place isn’t for you – and that self-selection is okay with me.”
How deep will these cuts go? Could the company move on from “self-selection” and contractors to staff – whether that’s ‘reorganisation’, ‘transfers’, or straightforward redundancies?
Or could it be even more fundamental than that? Is Meta having an existential crisis that could threaten its core presence here, despite its fancy new headquarters in Ballsbridge?
Despite its popularity, WhatsApp makes almost no money for Meta in Europe
Hiring freezes and layoffs are not unusual in the tech industry – even if Dublin has been on one of the longest bull runs in the State’s history. What matters is that the basic conditions for rising with the rebound are still present.
As the boss of Dublin’s biggest tech employer, Google’s Adaire Fox-Martin, explains today (see interview, page 4), Dublin still has enough infrastructural and earned advantages to largely see it through whatever downturn occurs.
But that logically only extends to companies whose offerings are still popular, relevant, and bringing in money. Does this still include Meta?
In many parts of our lives, yes. WhatsApp seems as unassailable as ever – over 70pc of us use it, mostly every day. It is Ireland’s national texting and communications utility.
Ironically, WhatsApp makes almost no money for Meta in Europe, because it is not allowed to substantially monetise the encrypted messaging service with any cross-referenced data to Facebook or Instagram.
Facebook still has a core audience, even if that is now increasingly older adults.
Of Meta’s main platforms, it is Instagram that looks in trouble. Under siege by TikTok, it is desperately trying to adapt to the Chinese social platform’s basic approach – pushing viral videos instead of content from friends and family.
Meta’s challenge is that this is annoying at least as many people – who want to see their friends and family – as it is delighting. The emerging numbers don’t look great.
If it means bold steps in reorganising the company, Zuckerberg won’t be shy in doing it
So the coming months are going to be a pivotal time for Meta in Dublin. If its business doesn’t show signs of picking up soon, there will be a lot of pressure on the company to keep cutting.
This isn’t because Zuckerberg is beholden to investors (he still controls most of the company’s shares). It’s because he’s too savvy to become irrelevant. He will have no intention of being seen as a Nokia or a MySpace, clueless about his firm’s own declines.
The time to get really aggressive, he’s saying, is now. And if that means bold steps in reorganising the company – from its regional locations to its staff activity – he won’t be shy in doing it.
Of course, there are other factors at play. Because of housing shortages, Dublin is becoming a difficult place to work and live for some – including parts of Meta’s employee ecosystem.
Its facility to allow staff work from other European countries may yet prove to be a significant factor in the overall numbers employed here. But that problem faces most tech firms.
Let’s see whether Meta ends up pruning more than its rivals.