Meta News: Meta raises recession concerns as Big Tech firms face global roadblocks

Things are getting tougher for Silicon Valley-based big tech companies as global macroeconomic headwinds continue to impact their performance and growth prospects.

After Sundar Pichai, META CEO Mark Zuckerberg has also flagged concerns about the macroeconomic environment, as fears of a recession in the US loom large.

Zuckerberg’s remarks came after Meta reported a first-ever annual decline in revenue for the second quarter (Q2) — down 1% to $28.8 billion — which the company said could fall further in the third quarter. The company expects third-quarter revenue in the range of $26-$28.5 billion. Overall, Meta’s profit fell 36% in the quarter to $6.7 billion.

He added that the company’s family of apps is growing “even with us”. [Meta] Navigate a challenging macro environment”.

“It looks like we’ve entered an economic downturn that will have a massive impact on the digital advertising business,” he said on an earnings call with analysts following the company’s second-quarter results. “It’s always hard to predict how deep or how long these cycles will be, but I would say the situation is a quarter worse than it was before.”

He added that Meta was focused on making long-term investments that would put it in a strong position to come out of the downturn, including work on its Discovery Engine, Reel, new advertising infrastructure and Metaverse. He said the company was focused on being rigorous about measuring returns and sizing investments correctly.

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Zuckerberg’s remarks about the global economic outlook being “uncertain” follow similar concerts from Google parent Alphabet.

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Alphabet chief financial officer Ruth Porat said after the firm’s Q2 results, “Going forward, last year’s strong revenue performance continues to make a tough compass, showing year-over-year growth in advertising revenue for the remainder of the year.” Will weigh the rate.”

Facebook’s parent meta has been particularly affected by Apple’s iOS privacy update last year, which limits its ability to track users, in addition to economic uncertainty that has forced companies to reduce their advertising budgets. Moreover, the stiff competition from TikTok has made the setback worse.

Thursday’s earnings call was the last for Meta’s chief of operating Sheryl Sandberg, who in June announced her departure from the company after 14 years. Sandberg said that in addition to the continuing impact of the war in Ukraine and the normalization of e-commerce after the peak of the pandemic, the company faces new challenges.

“These remain turbulent times for the global economy,” she said. “There are also new challenges with rising inflation and uncertainty around an impending slowdown. We know that the recession has put pressure on marketers to ensure that their advertising budgets are spent as smartly as possible.”

Although Meta said its workforce rose 32% from a year ago to 83,553, Zuckerberg said the firm would reduce its workforce next year.

“I want to give our leaders the ability within their teams to decide where to double down, where to backfill and where to restructure teams,” he told analysts during the quarterly earnings call.

“The fact that we hired a lot of people earlier this year means that our year-over-year headcount growth will still be substantial for the next few quarters, but will continue to decline over time. should.” “Now this is an era that calls for greater intensity, and I hope we will do more with fewer resources.”

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Alphabet chief executive Sundar Pichai made similar remarks about slowing hiring earlier this month, when he said in a memo to his employees, “We are not free from economic constraints. ”

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