In addition to the Meta Facebook group, many other major Silicon Valley tech companies have laid off jobs.
The technology industry has been driven by a real digitalization boom since the outbreak of the corona crisis. This boom came to an abrupt end in 2022. More than 50,000 jobs have been cut since the beginning of the year in the US technology sector, where Silicon Valley is important to the industry. This conclusion was reached by the American data analysis company Crunchbase.
The Facebook group Meta, which also owns Whatsapp and Instagram, laid off 11,000 employees yesterday, Wednesday. Meta follows on Twitter: Previously new Twitter boss Elon Musk, 51 – barely in office – laid off roughly half of 7,500 employees. Musk also fired 200 employees from Tesla.
Hire first, fire later
The number of employees of the Snapchat provider Snap literally exploded during the corona crisis – from 3,500 to 6,500. But now there is a cut – Snap now plans to cut 1,200 jobs again, i.e. roughly a fifth of all jobs. Netflix also had to lay off 480 of its 11,000 employees in September. And the software giant Microsoft also announced job cuts.
Another Silicon Valley giant, Google’s parent company Alphabet, has yet to announce any layoffs. Alphabet CEO Sundar Pichai (50) has already announced that layoffs cannot be ruled out. However, when asked by Blick, Google Switzerland said that no information is known about it. Google currently employs 5,000 people in Zurich.
With payments provider Stripe, hailing service Lyft, stock exchange platform Robinhood and fintech company Better to name a few, many other companies have cut jobs in Silicon Valley.
The economic downturn came faster than expected
But why has the tech industry seen such mass layoffs? The saying “He who climbs high, falls low” would be appropriate. During the digitization boom, which was supported by the corona crisis, there was a big rush of investors. Technology stocks rose. “This unusually high demand has forced the industry to hire large numbers of staff and expand rapidly,” says Sunnie Groeneveld, 34, a digital expert at consultancy Inspire 925.
But now the economic downturn follows. And that was quite a surprise with the start of the Ukrainian war. After the boom, many companies have grown generously, now they are forced to cut costs. Personnel costs are an important lever here. “The big tech companies are getting more cautious and are laying off and stopping hiring,” says Groeneveld.
Investors are leaving
And investors are also pulling back. Because they fear a drop in dividends. Over the past three months, the Nasdaq 100 index, which includes the top 100 technology stocks, has lost about a fifth of its value.
Facebook CEO Mark Zuckerberg (38) himself admitted that he overestimated the online boom at the beginning of the pandemic and therefore increased investments. Now the internet business has returned to the earlier trends.