The Big Tech industry is suffering through a bloodbath right now. New companies constantly add their names to the list of businesses announcing mass-layoffs. A combination of market volatility and over-optimism caused by the pandemic has forced the industry to rethink its strategy for the future. Unfortunately for many staff members, that means they must now search for employment elsewhere.
Elon Musk is probably behind the most public example of mass-layoffs in the tech industry. The new self-appointed “chief twit” seems to be trying to break the record for racking up the most Twitter controversies in a month after finally buying the social media company in October.
After all, he’s got form when it comes to online controversies. Over the years, Musk has referred to a British caver who rescued children trapped children in a cave as “pedo guy” and joked that he’d take Tesla private at $420 – a reference to the weed-smoking culture.
However, the chief twit is doing so with a significantly reduced workforce. Last week he let half of the company’s staff go. He then apparently asked some of the sacked workers to come back.
Twitter is not alone among tech titans to axe workers. Social media giant Meta announced this week that it would be cutting 13% of its staff, representing roughly 11,000 employees. However, as market watchers are wont to explain, these cuts are not that difficult to understand.
“The economic downturn has hit all Big Tech companies, but social media is particularly exposed to the slowdown in advertising spending,” Laura Petrone, analyst at GlobalData, told Verdict.
The deterioration of the economy and the aftermath of Covid-19 have caused trouble for seemingly everyone in Big Tech. Combine that with ill-placed bullishness that the uptick in free-flowing venture capital and that the consumer interest tech companies enjoyed during the pandemic would continue, and you find yourself with a recipe for disaster.
Tech titans across the board are feeling the pain. From streaming service Netflix to buy-now-pay-later (BNPL) business Klarna, companies are struggling to cope with the tough market conditions. As a consequence, they’re sacking staff in droves.
“Scaling back on spending and growth by big tech has come at a time when the financial markets have been hit by an energy crisis, war, the global impact of climate change and ever-increasing costs,” Kevin Poulter, employment partner at solicitors firm Freeths, told Verdict.
As we near the end of a wobbly 2022, here are 20 tech companies that have suffered through mass-layoffs in the face of economic turmoil.
Meta, the behemoth business which has poured billions into realising Mark Zuckerberg’s metaverse vision, announced large-scale cuts to its workforce this week.
The tech titan’s mass-layoffs come after the venture’s floundering fourth-quarter earnings pushed the company’s stock back to its lowest point in six years. On top of this, the company has seen consistent challenges from rivals like TikTok and other apps, as well as a slowdown in advertisement due to Apple’s privacy changes to it iPhone operative system.
“Their advertising revenue has been their bread and butter for over a decade, so it is a big hit,” Rashid Ali, co-founder and CEO of UK metaverse company Exarta, told Verdict.
The company expanded its workforce by around 60% during the pandemic. In a note on Wednesday, Zuckerberg said those investments had been premature and that he’d been betting that the surge in online activity seen during the pandemic would continue, The Guardian reported.
“Unfortunately, this did not play out the way I expected,” he said. “Not only has online commerce returned to prior trends but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”
Shortly after completing his purchase of Twitter after a tumultuous legal battle, one of Musk’s first orders as was to lay off around 3,700 employees – around half of the workforce.
The SpaceX billionaire claimed his decision was based on Twitter making a loss of around $4m per day.
Still, if Musk is serious about turning Twitter around, axing droves of workers doesn’t help as many defenestrated staff members have voiced their dissatisfaction with the new owner across his own platform and in public.
While Musk seems to rather want to talk about how he’ll transform Twitter into a super app, the tech titan’s bungled mass-layoffs and the chaos around the overhauled blue tick verification process mean most of our attention is somewhere else at the moment.
Twitter’s mass-layoffs were not the only employee cuts Musk has enforced this year at a tech company. Back in June, the Tesla CEO announced that he would be cutting 10% of the electric carmaker’s workers.
In a company-wide email, Musk said: “Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas.
“Note this does not apply to anyone actually building cars, battery packs or installing solar. Hourly headcount will increase.”
Bad news has pummeled the BNPL industry lately. Publicly traded firms like Affirm have seen their stocks fall dramatically since the start of the year. The year has not been great for private BNPL businesses like Klarna either.
Back in 2021, the Swedish fintech firm was still riding high on the news that it had become a $45.6bn powerhouse on the back of a $639m SoftBank-led funding round. The valuation firmly cemented it as Europe’s most valuable privately-owned tech company.
However, things are not as great this year. First, Klarna announced plans to cut its global headcount by 10% in May. CEO Sebastian Siemiatkowski blamed the invasion of Ukraine, inflation increases and a likely recession for having to fire employees.
Then the fintech suffered an $800m down round that shaved Klarna’s valuation down to $6.7bn in July. In other words, Klarna fell from being Europe’s most valuable privately-owned tech company to struggle to even be ranked among the top 10.
It then added to the setbacks by announcing a second round of layoffs in September to, as COO Camilla Giesecke put it, “reflect the more focused nature of today’s Klarna”.
Klarna isn’t the only BNPL provider to have suffered this year. As mentioned earlier, Affirm has floundered in the stock markets this year.
The strain has had an impact. This week, the company cut its sales volume and revenue guidance for the rest of the year, blaming skyrocketing interest rates and plummeting Peloton sales on the gloomy forecast. Affirm has a partnership with the fitness startup.
Unsurprisingly, the company is also among the tech companies announcing mass-layoffs. In November, The Information reported that Affirm had eliminated about 1% of its total headcount. Affirm had 2,552 employees as of June 30, according to company filings.
Australian BNPL company BizPay laid off 30% of its workforce in May, quoting tougher market conditions as the reason behind it.
“Due to the uncertainty in the global markets, particularly the tech sector, and current market conditions, we’ve made the strategic decision to streamline operations and our workforce to support Bizpay’s next growth phase,” BizPay CEO David Price told the Australian Financial Review.
Home fitness company Peloton became a household name during the pandemic. However, it has fallen a long way since then.
In February, Peloton announced it would be replacing its CEO. At the same time the tech company announced a round of mass-layoffs where 2,800 jobs would be lost. The job cuts amounted to around 20% of the former pandemic darling’s corporate workforce at the time.
It didn’t stop there. Peloton has announced three more rounds of axed roles this year. The fourth and most recent one happened in October when it said it would be cutting 12% of its staff.
The cuts saw 500 jobs lost which left the exercise equipment maker with around 3,800 employees worldwide. Less than half the number of people the company had last year.
A Peloton spokesperson said: “A key aspect of Peloton’s transformation journey is optimising efficiencies and implementing cost savings to simplify our business and achieve break-even cash flow by the end of our fiscal year.”
Ecommerce company Shopify announced back in July that it had laid off 10% of its global employees. That represented around 1,000 workers in total.
CEO Tobi Lütke said at the time that the company “has to go through a reduction in workforce.” The employee cuts mostly affected those working in recruiting, sales and support.
Lütke explained that the company had been hit by a pullback in online spending after he had wrongly predicted how long the pandemic-driven ecommerce boom would actually last, CNBC reported.
This year has not been great for ride-hailing platforms either. Uber announced it was freezing hiring in May. Rival Lyft followed suit in September with a freeze of its own.
However, Lyft joined the tech companies announcing mass-layoffs in November when it announced that it had cut 13% of its staff, equating to around 700 jobs. The company noted that there would be “a probable recession sometime in the next year” and pointed to rising insurance costs on rideshares as its reasoning.
Streaming services have been hit this year too, with industry leader Netflix announcing two rounds of employee cuts this year. The streaming service announced they would be getting rid of 150 jobs back in May. It came after the platform saw its first subscriber loss in over a decade. The company then announced the cutting of a further 300 jobs in June.
“While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth,” the company said in a statement.
Snapchat’s parent company, Snap, announced in June that it would be letting 20% of its 6,400 employees go. CEO Evan Spiegel said at the time that the company had to restructure in order to deal with significant financial challenges. Noting that Snap’s year-over-year revenue growth rate for the quarter of 8% “is well below what we were expecting earlier this year.”
The picture-centric social media company also had its hardware division hit throughout the year. Early August saw the company cancel its Pixi drone after only four months on sale.
Payment processing platform Stripe announced it had laid off around 14% of its staff last week. This equates to around 1,100 employees.
In a letter to staff, CEO Patrick Collision said that the cuts were in response to nationwide inflation increases, a looming recession, less startup funding and higher interest rates.
He claimed that the challenges show “that 2022 represents the beginning of a different economic climate.”
Stripe internally valued their company at $74bn in July, a decrease from its $95bn last year.
The cryptocurrency market is one particularly hit by the pandemic. Bitcoin lost almost two thirds of its value this year.
The crypto winter has swept cold winds across the companies in the industry. Coinbase, one of the leading crypto companies, announced it would be cutting 18% of its working staff back in June. Amounting to just over 1,000 people.
CEO Brian Armstrong noted, in what is clearly a common refrain among tech companies announcing mass-layoffs, that it had been growing “too quickly” during the bull market seen during the pandemic and that Coinbase needed to manage costs. Hence the job cuts.
“These companies seem to overhire to keep up with demand when times are good and cut deep when the going gets tough,” Lewis Maleh, CEO of boutique executive recruitment firm Bentley Lewis, told Verdict.
The company lost a whopping 80% of its value in 2022.
Groupon, a global ecommerce marketplace, announced in May that it was laying off or furloughing 44% of its team. That represented roughly 2,800 people. Then, in August, it laid off over 500 of its employees.
“Our overall business performance is not at the levels we anticipated and we are taking decisive actions to improve our trajectory,” CEO Kedar Deshpande said in a statement at the time.
The company hoped that the cuts, mixed with reinvestment in marketing and initiatives to drive customers, would set them up for positive revenue by the end of 2022.
Staff at founder-investor matchmaker On Deck are another casualty of the bear market.
The tech company announced mass-layoffs to the tune of 25% of its staff in May.
“This was a decision that we did not take lightly,” co-CEOs Erik Torenberg and David Booth wrote in a blog, blaming shifting market conditions on the cuts.
Revolut rival Chime became the latest fintech to slash its workforce due to market uncertainties in November.
Layoffs aside, Chime is also not alone in being the only challenger bank to struggle Stateside. In November last year, German neobank N26 made the “disappointing” announcement that it would abandon its US operations, saying that it would be too costly for the digital lender to make its mark in the US.
Stock-trading app Robinhood cut 9% of its staff in April and then a further 23% in August.
The news came as its stock plummeted more than half in 2022, something CEO Vlad Tenev blamed on the “deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.”
In October, computer giant Microsoft confirmed mass-layoffs of its own, saying the tech titan would be letting go of less than 1% of its employees, which would reportedly impact fewer than 1,000 people. It comes as Microsoft saw its slowest revenue growth in over five years throughout its third quarter.
Software behemoth Salesforce has confirmed that is has also axed hundreds of employees. Although, the tech giant said that the mass layoffs will only affect fewer than 1,000 employees, TechCrunch reported.
Digital mortgage lender Better.com announced back in August that they would be conducting their fourth round of layoffs in just eight months.
It is unclear how many jobs were lost exactly, but company sources reported that it was “at least 250 or more.”
The company had previously come under fire for firing hundreds of employees over a Zoom call last year.
GlobalData is the parent company of Verdict and its sister publications.