According to The Wall Street Journal, thousands of Meta employees will find out that they're being laid off on Wednesday morning. Over 87,000 people work at Meta. Cutting even a small percentage would result in not only the largest round of layoffs in Meta's history, but potentially the largest in a year that has already seen tens of thousands of tech jobs eliminated elsewhere.
Meta shares rose Monday following the Journal's initial report. Investors are eager for cuts–there's blood in the water. Through a quirk of timing, Mark Zuckerberg has been dealt a relatively easy hand; mass layoffs will be destabilizing for the individuals and teams they affect, but the move might be hailed as especially responsible and prudent when compared to the fiasco unfolding at Twitter. If the layoffs are accompanied by even a trace of solemnity, then Meta leadership may even be applauded for them. Jim Cramer might shed a tear of joy.
There is one way that Meta could lay off thousands and end up further enraging those calling for slashed headcounts: if it's too generous in insulating Reality Labs from the cuts.
That's not beyond the realm of possibility. With Zuckerberg in control and convinced that the metaverse is the company's future, Reality Labs teams might reasonably hope to at least stay flat in 2023. Even if Meta didn't prepare for a situation this bleak as it began making years-long plans for pumping tens of billions into the division, is it really hard to imagine that Zuckerberg might think that a cap in hiring and spending would be enough of a concession for now? That the critics are off base and that Meta should focus cuts elsewhere for the sake of its future?
If anything, I have a harder time coming up with reasons why Meta might pick this or that Reality Labs initiative as part of a sacrifice to shareholders. Last week I mentioned that the Quest 3 is too close at hand to make pulling back on existing plans through 2023 (continued development, production, a marketing campaign, assembling a launch lineup) feel remotely reasonable. Horizon Worlds, similarly, needs a broad team and ample funding if it has any hope of reversing the tide of jokes and avoiding a repeat of Facebook Spaces. If Meta does impose cuts on Reality Labs, my guess is they won't be to anything quite so prominent.
Meta might instead scale back some of the longer-term Reality Labs ambitions. It's not that there's anything it could or should cut without trepidation. After all, recent decisions to drop certain lines of research and development show that Meta has been at least a bit concerned with where Reality Labs money is going. To use the ongoing work on neural interfaces as an example, Meta's bet is that spending however much it takes to make the tech viable will lead to a sea change in computing that's worth far more than what it cost to get there (so long keyboards and touchscreens, hello Meta wristbands). Similar reasoning justifies the funding for AR glasses, haptic gloves and eerily realistic avatars. The argument against scaling back or cutting anything in Reality Labs is that it could lead to Meta missing out on the Next Big Thing.
Given that controlling computing's next wave is basically the division's raison d'etre, tomorrow's layoffs could close off a few of Meta's potential futures depending on where they land.