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Tag: Mark Zuckerberg

  • Zuckerberg weighed naming Cambridge Analytica as a concern in 2017, months before data leak was revealed | CNN Business

    Zuckerberg weighed naming Cambridge Analytica as a concern in 2017, months before data leak was revealed | CNN Business

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    CNN
     — 

    Mark Zuckerberg considered disclosing in 2017 that Facebook

    (FB)
    was investigating “organizations like Cambridge Analytica” alongside Russian foreign intelligence actors as part of an election security assessment before ultimately removing the reference at his advisers’ suggestion, according to a 2019 deposition conducted by the Securities and Exchange Commission and reviewed by CNN.

    The omitted reference provides insight into Zuckerberg’s thinking on Cambridge Analytica in the critical months before press reports would reveal that the data analysis firm affiliated with Donald Trump’s 2016 presidential campaign had improperly gained access to tens of millions of Facebook users’ personal information. The data leak prompted a global outcry that led to hearings, an apology tour from Zuckerberg and Facebook’s $5 billion privacy settlement with the US government.

    The deposition transcript suggests that in 2017, Zuckerberg considered Cambridge Analytica a potential election concern on par with Russian election meddling efforts even though he said he did not know about the data leak first discovered by Facebook staffers in 2015. It also points to how Facebook staffers had opportunities to brief Zuckerberg on that leak, but chose not to, prior to reports about the incident that surfaced in 2018.

    Zuckerberg’s remarks in the deposition offer the clearest picture yet of what Zuckerberg knew about Cambridge Analytica, and when. The timeline of events has previously been scrutinized intensely by US lawmakers, state attorneys general and investors who have sued Facebook, now known as Meta, for allegedly breaching its fiduciary duties in connection with the data leak incident.

    Meta declined to comment on the release of the transcript, saying its case with the SEC involving the deposition had been settled for more than three years. The settlement in 2019 for $100 million resolved US government allegations that Facebook had misled investors for years after staffers first discovered the data leak.

    The SEC deposition transcript was released Tuesday by the Real Facebook Oversight Board, a watchdog group, that had obtained the document via a public records request. The transcript was first reported on Tuesday by Reuters, which had obtained the document through a separate records request.

    “This transcript reveals that something changed between January 2017 and September 2017 for Zuckerberg to deem Cambridge Analytica a threat commensurate with Russian Intelligence,” said Zamaan Qureshi, policy advisor at the Real Facebook Oversight Board. “But for reasons the Facebook CEO has still not disclosed, the world would only learn about Cambridge Analytica in March 2018.”

    In September 2017, Zuckerberg released a public statement about Facebook’s efforts to safeguard election integrity, saying the company would look into the impact that foreign actors, “Russian groups and other former Soviet states,” and “organizations like the campaigns” had on Facebook during the 2016 elections.

    But according to the court documents, Zuckerberg had originally proposed naming Russian foreign intelligence and Cambridge Analytica in the same breath.

    “We are already looking into foreign actors including Russian intelligence, actors in other former Soviet states and organizations like Cambridge Analytica,” Zuckerberg initially wrote, according to the draft the SEC produced in the deposition and that Zuckerberg testified was authentic.

    Zuckerberg testified that the reference to Cambridge Analytica was removed after a staffer recommended against naming specific organizations. “This was not something I think was particularly important to the overall communication,” he said, according to the transcript. “So I think when people raised this, I just took it out.”

    The testimony suggests he became aware of Cambridge Analytica around the same time as the general public, through press reporting around the 2016 election on the firm’s marketing claims. But it also suggests that he was kept in the dark about the Cambridge Analytica-linked data leak that predated the election and would eventually lead to Facebook’s broader reckoning with regulators and policymakers.

    The Cambridge Analytica saga began with a psychology professor who harvested data on millions of Facebook users through an app offering a personality test, then gave it to a service promising to use vague and sophisticated techniques to influence voters during a high-stakes election where the winning presidential candidate won narrowly in several key states.

    A 2020 report by the UK Information Commissioner’s Office later cast significant doubt on Cambridge Analytica’s capabilities, suggesting many of them had been exaggerated. But the improper sharing of Facebook data triggered a cascade of events that has culminated in numerous investigations and lawsuits.

    After hearing about Cambridge Analytica’s claims that it could use personal data to build “psychographic profiles” of voters who could then be targeted with effective political advertising, Zuckerberg began asking subordinates whether the firm’s marketing had any merit.

    In one January 2017 email produced by the SEC, Zuckerberg asked staffers to “explain to me what they actually did from an analytics and ad perspective and how advanced it was.”

    Explaining his thought process further, Zuckerberg testified: “Like, are these folks actually doing anything novel? Or are they just talking about data in a puffed-up way …. My understanding from those conversations is that, to summarize it very quickly, it was much closer to the latter.”

    But even though Facebook as an organization knew by that point, in 2017, that Cambridge Analytica had obtained Facebook users’ personal information in violation of the platform’s policies, that incident was never raised to Zuckerberg as a piece of potentially relevant context, according to the deposition. Following Facebook’s discovery of the leak, the company required Cambridge Analytica to delete the data it had improperly obtained through a third party and ordered the firm to sign a certification indicating its compliance.

    Zuckerberg testified that he did not get “fully up to speed” on the 2015 data leak, and Facebook’s response to it, until March 2018, when public reports about the incident emerged.

    In the deposition, Zuckerberg explained that he was not briefed earlier likely because Facebook considered the 2015 incident a “closed case until 2018, when new allegations came up that suggested that maybe Cambridge Analytica had lied to us” about having deleted the Facebook data. (The UK ICO’s report later found that Cambridge Analytica did appear to take some steps toward deleting the data, but it also expressed doubts about whether those steps were effective enough.)

    Zuckerberg reaffirmed in his testimony that had Facebook moved more swiftly to implement an existing and separate plan restricting app developers’ access to Facebook information, the data leak could likely have been avoided from the start.

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  • Frustrated virtual reality pioneer leaves Facebook’s parent

    Frustrated virtual reality pioneer leaves Facebook’s parent

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    BERKELEY, Calif. — A prominent video game creator who helped lead Facebook‘s expansion into virtual reality has resigned from the social networking service’s corporate parent after becoming disillusioned with the way the technology is being managed.

    John Carmack cut his ties with Meta Platforms, a holding company created last year by Facebook founder Mark Zuckerberg, in a Friday letter that vented his frustration as he stepped down as an executive consultant in virtual reality.

    “There is no way to sugar coat this; I think our organization is operating at half the effectiveness that would make me happy,” Carmack wrote in the letter, which he shared on Facebook. “”Some may scoff and contend we are doing just fine, but others will laugh and say, ‘Half? Ha! I’m at quarter efficiency!’”

    In response to an inquiry about Carmack’s resignation and remarks, Meta on Saturday directed The Associated Press to a tweet from its chief technology officer and head of its reality labs, Andrew Bosworth. “”It is impossible to overstate the impact you’ve had on our work and the industry as a whole,” Bosworth wrote in his grateful tweet addressed to Carmack.

    Carmack’s departure comes at a time that Zuckerberg, Meta’s CEO, has been battling widespread perceptions that he has been wasting billions of dollars trying to establish the Menlo Park, California, company in the “metaverse” — an artificial world filled with avatars of real people.

    While the metaverse losses have been mounting, Facebook and affiliated services such as Instagram have been suffering a downturn in advertising that brings in most of the company’s revenue. The decline has been brought on by a combination of recession fears, tougher competition from other social networking services such as TikTok and privacy controls on Apple’s iPhone that have made it tougher to track people’s interests to help sell ads.

    Those challenges have caused Meta’s stock to lose nearly two-thirds of its value so far this year, wiping out about $575 billion in shareholder wealth.

    Although Carmack had only been working part time at Meta, the dismay that he expressed seems likely to amplify the questions looming over Zuckerberg’s efforts to become as dominant in virtual reality as Facebook has been in social networking since he started the service nearly 20 years ago while attending Harvard University.

    Zuckerberg began to explore virtual reality in earnest in 2014 with Facebook’s $2 billion purchase of headset maker Oculus. At the time, Carmack was Oculus’ chief technology officer and then joined Facebook after the deal closed. Before joining Oculus, Carmack was best known as the co-creator of the video game Doom.

    Federal regulators are now trying to limit Zuckerberg’s sway in virtual reality by preventing his attempt to buy Within Unlimited, which makes a fitness app designed for the metaverse.

    Carmack testified earlier this week in a trial pitting the Federal Trade Commission against Meta over the fate of the deal. Zuckerberg is expected to testify at some point in the trial, which is scheduled to resume Monday in San Jose, California.

    Despite his frustration with the way things have been going at Meta, Carmack praised its latest virtual reality headset, the Quest 2, in his resignation letter. He described the headset as “”almost exactly what I wanted to see from the beginning” of his Oculus tenure.

    “It is successful, and successful products make the world a better place,” Carmack said of the Quest 2. “It all could have happened a bit faster and been going better if different decisions had been made, but we built something pretty close to The Right Thing.”

    But Carmack ended his letter with this entreaty: “Maybe it actually is possible to get there by just plowing ahead with current practices, but there is plenty of room for improvement. Make better decisions and fill your products with ‘Give a Damn!’”

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  • Frustrated virtual reality pioneer leaves Facebook’s parent

    Frustrated virtual reality pioneer leaves Facebook’s parent

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    BERKELEY, Calif. — A prominent video game creator who helped lead Facebook‘s expansion into virtual reality has resigned from the social networking service’s corporate parent after becoming disillusioned with the way the technology is being managed.

    John Carmack cut his ties with Meta Platforms, a holding company created last year by Facebook founder Mark Zuckerberg, in a Friday letter that vented his frustration as he steeped down as an executive consultant in virtual reality.

    “There is no way to sugar coat this; I think our organization is operating at half the effectiveness that would make me happy,” Carmack wrote in the letter, which he shared on Facebook. “”Some may scoff and contend we are doing just fine, but others will laugh and say, ‘Half? Ha! I’m at quarter efficiency!’”

    In response to an inquiry about Carmack’s resignation and remarks, Meta on Saturday directed The Associated Press to a tweet from its chief technology officer and head of its reality labs, Andrew Bosworth. “”It is impossible to overstate the impact you’ve had on our work and the industry as a whole,” Bosworth wrote in his grateful tweet addressed to Carmack.

    Carmack’s departure comes at a time that Zuckerberg, Meta’s CEO, has been battling widespread perceptions that he has been wasting billions of dollars trying to establish the Menlo Park, California, company in the “metaverse” — an artificial world filled with avatars of real people.

    While the metaverse losses have been mounting, Facebook and affiliated services such as Instagram have been suffering a downturn in advertising that brings in most of the company’s revenue. The decline has been brought on by a combination of recession fears, tougher competition from other social networking services such as TikTok and privacy controls on Apple’s iPhone that have made it tougher to track people’s interests to help sell ads.

    Those challenges have caused Meta’s stock to lose nearly two-thirds of its value so far this year, wiping out about $575 billion in shareholder wealth.

    Although Carmack had only been working part time at Meta, the dismay that he expressed seems likely to amplify the questions looming over Zuckerberg’s efforts to become as dominant in virtual reality as Facebook has been in social networking since he started the service nearly 20 years ago while attending Harvard University.

    Zuckerberg began to explore virtual reality in earnest in 2014 with Facebook’s $2 billion purchase of headset maker Oculus. At the time, Carmack was Oculus’ chief technology officer and then joined Facebook after the deal closed. Before joining Oculus, Carmack was best known as the co-creator of the video game Doom.

    Federal regulators are now trying to limit Zuckerberg’s sway in virtual reality by preventing his attempt to buy Within Unlimited, which makes a fitness app designed for the metaverse.

    Carmack testified earlier this week in a trial pitting the Federal Trade Commission against Meta over the fate of the deal. Zuckerberg is expected to testify at some point in the trial, which is scheduled to resume Monday in San Jose, California.

    Despite his frustration with the way things have been going at Meta, Carmack praised its latest virtual reality headset, the Quest 2, in his resignation letter. He described the headset as “”almost exactly what I wanted to see from the beginning” of his Oculus tenure.

    “It is successful, and successful products make the world a better place,” Carmack said of the Quest 2. “It all could have happened a bit faster and been going better if different decisions had been made, but we built something pretty close to The Right Thing.”

    But Carmack ended his letter with this entreaty: “Maybe it actually is possible to get there by just plowing ahead with current practices, but there is plenty of room for improvement. Make better decisions and fill your products with ‘Give a Damn!’”

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  • FTC didn’t stop Facebook-Instagram. How about Meta-Within?

    FTC didn’t stop Facebook-Instagram. How about Meta-Within?

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    SAN JOSE, California — Facebook parent Meta is sparring with government regulators in federal court over its pending acquisition of a virtual reality fitness company Within Unlimited

    CEO Mark Zuckerberg is expected to testify as a witness at the trial in San Jose, California.

    At issue is whether Meta’s acquisition of the small company that makes a VR fitness app called Supernatural will hurt competition in the emerging virtual reality market. If the deal is allowed to go through, the Federal Trade Commission argues, it would violate antitrust laws and dampen innovation, hurting consumers who may face higher prices and fewer options outside of Meta-controlled platforms.

    Meta, the FTC argued in court this week, scrapped its own plans to enter the nascent VR fitness market in the summer of 2021 when it decided to buy Within. Without the competitive threat of the tech giant’s entry into the market, the agency asserts, innovation stalls, hurting end users.

    “The threat is what keeps firms going,” testified economist Hal Singer, a witness for the FTC. “If I know there is a chance that someone could come in and steal my lunch,” he said, companies will innovate and constrain pricing.

    But Meta says it had no concrete plans to create a competing app beyond the initial discussion stage, where it concluded it had no ability to do so. Mark Rabkin, a vice president at Meta who leads its VR efforts, testified that while Meta could definitely build a VR fitness app, its chances of success would be “very low.”

    “Achieving what Supernatural has achieved is remarkable and it would be very difficult for us to replicate that,” Rabkin said during a Zoom hearing Friday.

    Meta, in fact, has a history of trying — and often failing — to copy rival platforms or their features, sometimes when it’s not able to purchase a company or product outright. Meta owns Instagram, which has a Stories feature, for instance, that is very similar to the Story feature on Snapchat. Meta also briefly redesigned Instagram this year to make it look more like rival TikTok, but scrapped the change after an outcry from users, including celebrities.

    The agency and Meta also disagree on how to define the market that Within’s popular app falls into. The FTC defines it narrowly as “VR dedicated fitness apps,” while Meta’s definition includes a wider swath of competitors, many of which don’t need VR goggles to work — such as Peloton, for instance.

    “Meta has talked about how they want to make virtual reality as ubiquitous as your cellphone,” said Lee Hepner, legal counsel, American Economic Liberties Project, an organization that advocates for government action against business consolidation. “It’s the next platform for widespread communication in Meta’s eyes.”

    If the FTC can preserve and boost competition at this stage, Hepner said, there are “different paths that this market could take instead of Meta controlling the whole path, the whole forward trajectory of this market in the next several years.”

    The FTC’s challenge to Meta’s acquisition reflects agency chair Lina Khan’s aggressive stance on Big Tech and antitrust.

    The case, expected to wrap up Tuesday, is being heard by U.S. District Judge Edward Davila, who also oversaw the trial of disgraced Theranos founder Elizabeth Holmes and her partner Ramesh “Sunny” Balwani. Both were sentenced to over a decade in prison for their roles in the company’s blood-testing hoax.

    The FTC also sued this month to block Microsoft’s planned $69 billion takeover of video game company Activision Blizzard, saying it could suppress competition for Microsoft’s Xbox game console and its growing games subscription business.

    In 2020 the agency sued Meta, then called Facebook, over its acquisitions of Instagram and WhatsApp that could force a spinoff of Instagram and WhatsApp. Unraveling those deals, which were made 10 and nine years ago, respectively — and previously approved by the FTC — may be more difficult than blocking the Within purchase, which Meta and Within want to close by the end of this year.

    Under Zuckerberg’s, Meta moved aggressively into virtual reality in 2014 with its acquisition of headset maker Oculus VR. Since then, Meta’s VR headsets have become the cornerstone of its growth in the virtual reality space, the FTC noted in its suit. Fueled by the popularity of its top-selling Quest headsets, Meta’s Quest Store has become a leading U.S. app platform with more than 500 apps available to download, according to the agency.

    Meta bought seven of the most successful virtual-reality development studios, and now has one of the largest virtual-reality content catalogs in the world, the FTC says.

    “It may be true that Meta has become more effective at acquisitions than they are at product innovation,” Hepner said. “But just because they’re better at acquiring and innovating doesn’t mean that it’s legal to do that. The entire tech industry … for the past 20 years has gotten so effective at acquisitions, knowing that they won’t be challenged on it.”

    ———

    This story has been updated to correct the spelling of the FTC chair’s last name. It’s Khan, not Kahn.

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  • Elon Musk and Mark Zuckerberg Both Take Issue With Apple’s ‘Problematic’ App Store Control

    Elon Musk and Mark Zuckerberg Both Take Issue With Apple’s ‘Problematic’ App Store Control

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    Opinions expressed by Entrepreneur contributors are their own.

    Meta CEO Mark Zuckerberg has taken a stand against Apple’s control of its App Store — echoing complaints made by newly-minted Twitter owner Elon Musk.


    L: Andrew Caballero-Reynolds I Getty Images || R: Win McNamee | Getty Images

    During an interview at the New York Times‘ DealBook Summit on Wednesday, Zuckerberg took issue with Apple’s control over its App Store. “I do think Apple has sort of singled themselves out as the only company that is trying to control like unilaterally what what apps get on a device,” he said, “and I don’t think that’s a sustainable or good place to be.”

    Zuckerberg continued, “I do think it is problematic for one company to be able to control what kind of app experiences get on the device.”

    His comments come in the wake of similar criticisms from Elon Musk. In a series of tweets that also addressed what he claimed was Apple’s reduced Twitter ad buys, Musk called Apple’s control over the App Store “a serious problem.” The billionaire also said Twitter could be kicked out of the App Store without giving a reason.

    Zuckerberg didn’t address Musk’s words about Apple, but his criticisms of the company’s policies aren’t new. Two years ago, he accused Apple of blocking competitors and charging “monopoly rents” in the App Store. Musk also blasted Apple’s App Store fee—the company takes 15% to 30% of all iOS in-app purchases.

    In 2021, Apple changed its privacy policy, preventing social apps like Meta’s Facebook from targeting users with ads. As a result, companies relying on digital advertising profits have seen revenues fall, with Meta’s profits plummeting by 50 percent.

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  • Tech’s reality check: How the industry lost $7.4 trillion in one year

    Tech’s reality check: How the industry lost $7.4 trillion in one year

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    Pedestrians walk past the NASDAQ MarketSite in New York’s Times Square.

    Eric Thayer | Reuters

    It seems like an eternity ago, but it’s just been a year.

    At this time in 2021, the Nasdaq Composite had just peaked, doubling since the early days of the pandemic. Rivian’s blockbuster IPO was the latest in a record year for new issues. Hiring was booming and tech employees were frolicking in the high value of their stock options.

    Twelve months later, the landscape is markedly different.

    Not one of the 15 most valuable U.S. tech companies has generated positive returns in 2021. Microsoft has shed roughly $700 billion in market cap. Meta’s market cap has contracted by over 70% from its highs, wiping out over $600 billion in value this year.

    In total, investors have lost roughly $7.4 trillion, based on the 12-month drop in the Nasdaq.

    Interest rate hikes have choked off access to easy capital, and soaring inflation has made all those companies promising future profit a lot less valuable today. Cloud stocks have cratered alongside crypto.

    There’s plenty of pain to go around. Companies across the industry are cutting costs, freezing new hires, and laying off staff. Employees who joined those hyped pre-IPO companies and took much of their compensation in the form of stock options are now deep underwater and can only hope for a future rebound.

    IPOs this year slowed to a trickle after banner years in 2020 and 2021, when companies pushed through the pandemic and took advantage of an emerging world of remote work and play and an economy flush with government-backed funds. Private market darlings that raised billions in public offerings, swelling the coffers of investment banks and venture firms, saw their valuations marked down. And then down some more.

    Rivian has fallen more than 80% from its peak after reaching a stratospheric market cap of over $150 billion. The Renaissance IPO ETF, a basket of newly listed U.S. companies, is down 57% over the past year.

    Tech executives by the handful have come forward to admit that they were wrong.

    The Covid-19 bump didn’t, in fact, change forever how we work, play, shop and learn. Hiring and investing as if we’d forever be convening happy hours on video, working out in our living room and avoiding airplanes, malls and indoor dining was — as it turns out — a bad bet.

    Add it up and, for the first time in nearly two decades, the Nasdaq is on the cusp of losing to the S&P 500 in consecutive years. The last time it happened the tech-heavy Nasdaq was at the tail end of an extended stretch of underperformance that began with the bursting of the dot-com bubble. Between 2000 and 2006, the Nasdaq only beat the S&P 500 once.

    Is technology headed for the same reality check today? It would be foolish to count out Silicon Valley or the many attempted replicas that have popped up across the globe in recent years. But are there reasons to question the magnitude of the industry’s misfire?

    Perhaps that depends on how much you trust Mark Zuckerberg.

    Meta’s no good, very bad, year

    It was supposed to be the year of Meta. Prior to changing its name in late 2021, Facebook had consistently delivered investors sterling returns, beating estimates and growing profitably with historic speed.

    The company had already successfully pivoted once, establishing a dominant presence on mobile platforms and refocusing the user experience away from the desktop. Even against the backdrop of a reopening world and damaging whistleblower allegations about user privacy, the stock gained over 20% last year.

    But Zuckerberg doesn’t see the future the way his investors do. His commitment to spend billions of dollars a year on the metaverse has perplexed Wall Street, which just wants the company to get its footing back with online ads.

    The big and immediate problem is Apple, which updated its privacy policy in iOS in a way that makes it harder for Facebook and others to target users with ads.

    With its stock down by two-thirds and the company on the verge of a third straight quarter of declining revenue, Meta said earlier this month it’s laying off 13% of its workforce, or 11,000 employees, its first large-scale reduction ever.

    “I got this wrong, and I take responsibility for that,” Zuckerberg said.

    Mammoth spending on staff is nothing new for Silicon Valley, and Zuckerberg was in good company on that front.

    Software engineers had long been able to count on outsized compensation packages from major players, led by Google. In the war for talent and the free flow of capital, tech pay reached new heights.

    Recruiters at Amazon could throw more than $700,000 at a qualified engineer or project manager. At gaming company Roblox, a top-level engineer could make $1.2 million, according to Levels.fyi. Productivity software firm Asana, which held its stock market debut in 2020, has never turned a profit but offered engineers starting salaries of up to $198,000, according to H1-B visa data.

    Fast forward to the last quarter of 2022, and those halcyon days are a distant memory.

    Layoffs at Cisco, Meta, Amazon and Twitter have totaled nearly 29,000 workers, according to data collected by the website Layoffs.fyi. Across the tech industry, the cuts add up to over 130,000 workers. HP announced this week it’s eliminating 4,000 to 6,000 jobs over the next three years.

    For many investors, it was just a matter of time.

    “It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” Brad Gerstner, a tech investor at Altimeter Capital, wrote last month.

    Gerstner’s letter was specifically targeted at Zuckerberg, urging him to slash spending, but he was perfectly willing to apply the criticism more broadly.

    “I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion,” Gerstner wrote.

    Microsoft's president responds to big tech layoffs

    Activist investor TCI Fund Management echoed that sentiment in a letter to Google CEO Sundar Pichai, whose company just recorded its slowest growth rate for any quarter since 2013, other than one period during the pandemic.

    “Our conversations with former executives suggest that the business could be operated more effectively with significantly fewer employees,” the letter read. As CNBC reported this week, Google employees are growing worried that layoffs could be coming.

    SPAC frenzy

    Remember SPACs?

    Those special purpose acquisition companies, or blank-check entities, created so they could go find tech startups to buy and turn public were a phenomenon of 2020 and 2021. Investment banks were eager to underwrite them, and investors jumped in with new pools of capital.

    SPACs allowed companies that didn’t quite have the profile to satisfy traditional IPO investors to backdoor their way onto the public market. In the U.S. last year, 619 SPACs went public, compared with 496 traditional IPOs.

    This year, that market has been a bloodbath.

    The CNBC Post SPAC Index, which tracks the performance of SPAC stocks after debut, is down over 70% since inception and by about two-thirds in the past year. Many SPACs never found a target and gave the money back to investors. Chamath Palihapitiya, once dubbed the SPAC king, shut down two deals last month after failing to find suitable merger targets and returned $1.6 billion to investors.

    Then there’s the startup world, which for over a half-decade was known for minting unicorns.

    Last year, investors plowed $325 billion into venture-backed companies, according to EY’s venture capital team, peaking in the fourth quarter of 2021. The easy money is long gone. Now companies are much more defensive than offensive in their financings, raising capital because they need it and often not on favorable terms.

    Venture capitalists are cashing in on clean tech, says VC Vinod Khosla

    “You just don’t know what it’s going to be like going forward,” EY venture capital leader Jeff Grabow told CNBC. “VCs are rationalizing their portfolio and supporting those that still clear the hurdle.”

    The word profit gets thrown around a lot more these days than in recent years. That’s because companies can’t count on venture investors to subsidize their growth and public markets are no longer paying up for high-growth, high-burn names. The forward revenue multiple for top cloud companies is now just over 10, down from a peak of 40, 50 or even higher for some companies at the height in 2021.

    The trickle down has made it impossible for many companies to go public without a massive markdown to their private valuation. A slowing IPO market informs how earlier-stage investors behave, said David Golden, managing partner at Revolution Ventures in San Francisco.

    “When the IPO market becomes more constricted, that circumscribes one’s ability to find liquidity through the public market,” said Golden, who previously ran telecom, media and tech banking at JPMorgan. “Most early-stage investors aren’t counting on an IPO exit. The odds against it are so high, particularly compared against an M&A exit.”

    There have been just 173 IPOs in the U.S. this year, compared with 961 at the same point in 2021. In the VC world, there haven’t been any deals of note.

    “We’re reverting to the mean,” Golden said.

    An average year might see 100 to 200 U.S. IPOs, according to FactSet research. Data compiled by Jay Ritter, an IPO expert and finance professor at the University of Florida, shows there were 123 tech IPOs last year, compared with an average of 38 a year between 2010 and 2020.

    Buy now, pay never

    There’s no better example of the intersection between venture capital and consumer spending than the industry known as buy now, pay later.

    Companies such as Affirm, Afterpay (acquired by Block, formerly Square) and Sweden’s Klarna took advantage of low interest rates and pandemic-fueled discretionary incomes to put high-end purchases, such as Peloton exercise bikes, within reach of nearly every consumer.

    Affirm went public in January 2021 and peaked at over $168 some 10 months later. Affirm grew rapidly in the early days of the Covid-19 pandemic, as brands and retailers raced to make it easier for consumers to buy online.

    By November of last year, buy now, pay later was everywhere, from Amazon to Urban Outfitters‘ Anthropologie. Customers had excess savings in the trillions. Default rates remained low — Affirm was recording a net charge-off rate of around 5%.

    Affirm has fallen 92% from its high. Charge-offs peaked over the summer at nearly 12%. Inflation paired with higher interest rates muted formerly buoyant consumers. Klarna, which is privately held, saw its valuation slashed by 85% in a July financing round, from $45.6 billion to $6.7 billion.

    The road ahead

    That’s all before we get to Elon Musk.

    The world’s richest person — even after an almost 50% slide in the value of Tesla — is now the owner of Twitter following an on-again, off-again, on-again drama that lasted six months and was about to land in court.

    Musk swiftly fired half of Twitter’s workforce and then welcomed former President Donald Trump back onto the platform after running an informal poll. Many advertisers have fled.

    And corporate governance is back on the docket after this month’s sudden collapse of cryptocurrency exchange FTX, which managed to grow to a $32 billion valuation with no board of directors or finance chief. Top-shelf firms such as Sequoia, BlackRock and Tiger Global saw their investments wiped out overnight.

    “We are in the business of taking risk,” Sequoia wrote in a letter to limited partners, informing them that the firm was marking its FTX investment of over $210 million down to zero. “Some investments will surprise to the upside, and some will surprise to the downside.”

    Even with the crypto meltdown, mounting layoffs and the overall market turmoil, it’s not all doom and gloom a year after the market peak.

    Golden points to optimism out of Washington, D.C., where President Joe Biden’s Inflation Reduction Act and the Chips and Science Act will lead to investments in key areas in tech in the coming year.

    Funds from those bills start flowing in January. Intel, Micron and Taiwan Semiconductor Manufacturing Company have already announced expansions in the U.S. Additionally, Golden anticipates growth in health care, clean water and energy, and broadband in 2023.

    “All of us are a little optimistic about that,” Golden said, “despite the macro headwinds.”

    WATCH: There’s more pain ahead for tech

    There's more pain ahead for tech, warns Bernstein's Dan Suzuki

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  • Stop the killer robots! Musk-backed lobbyists fight to save Europe from bad AI

    Stop the killer robots! Musk-backed lobbyists fight to save Europe from bad AI

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    Press play to listen to this article

    Voiced by artificial intelligence.

    A lobby group backed by Elon Musk and associated with a controversial ideology popular among tech billionaires is fighting to prevent killer robots from terminating humanity, and it’s taken hold of Europe’s Artificial Intelligence Act to do so.

    The Future of Life Institute (FLI) has over the past year made itself a force of influence on some of the AI Act’s most contentious elements. Despite the group’s links to Silicon Valley, Big Tech giants like Google and Microsoft have found themselves on the losing side of FLI’s arguments.

    In the EU bubble, the arrival of a group whose actions are colored by fear of AI-triggered catastrophe rather than run-of-the-mill consumer protection concerns was received like a spaceship alighting in the Schuman roundabout. Some worry that the institute embodies a techbro-ish anxiety about low-probability threats that could divert attention from more immediate problems. But most agree that during its time in Brussels, the FLI has been effective. 

    “They’re rather pragmatic and they have legal and technical expertise,” said Kai Zenner, a digital policy adviser to center-right MEP Axel Voss, who works on the AI Act. “They’re sometimes a bit too worried about technology, but they raise a lot of good points.” 

    Launched in 2014 by MIT academic Max Tegmark and backed by tech grandees including Musk, Skype’s Jaan Tallinn, and crypto wunderkind Vitalik Buterin, FLI is a nonprofit devoted to grappling with “existential risks” — events able to wipe out or doom humankind. It counts other hot shots like actors Morgan Freeman and Alan Alda and renowned scientists Martin (Lord) Rees and Nick Bostrom among its external advisers.

    Chief among those menaces — and FLI’s priorities — is artificial intelligence running amok.

    “We’ve seen plane crashes because an autopilot couldn’t be overruled. We’ve seen a storming of the U.S. Capitol because an algorithm was trained to maximize engagement. These are AI safety failures today — as these systems become more powerful, harms might become worse,” Mark Brakel, FLI director of European policy, said in an interview.

    But the lobby group faces two PR problems. First, Musk, its most famous backer, is at the center of a storm since he started mass firings at Twitter as its new owner, catching the eye of regulators, too. Musk’s controversies could cause lawmakers to get skittish about talking to FLI. Second, the group’s connections to a set of beliefs known as effective altruism are raising eyebrows: The ideology faces a reckoning and is most recently being blamed as a driving force behind the scandal around cryptocurrency exchange FTX, which has unleashed financial carnage. 

    How FLI pierced the bubble

    The arrival of a lobby group fighting off extinction, misaligned artificial intelligence and killer robots was bound to be refreshing to otherwise snoozy Brussels policymaking.

    FLI’s Brussels office opened in mid-2021, as discussions about the European Commission’s AI Act proposal were kicking off.

    “We would prefer AI to be developed in Europe, where there will be regulations in place,” Brakel said. “The hope is that people take inspiration from the EU.”

    A former diplomat, the Dutch-born Brakel joined the institute in May 2021. He chose to work in AI policy as a field that was both impactful and underserved. Policy researcher Risto Uuk joined him two months later. A skilled digital operator — he publishes his analyses and newsletter from the domain artificialintelligenceact.eu — Uuk had previously done AI research for the Commission and the World Economic Forum. He joined FLI out of philosophical affinity: like Tegmark, Uuk subscribes to the tenets of effective altruism, a value system prescribing the use of hard evidence to decide how to benefit the largest number of people.

    Since starting in Brussels, the institute’s three-person team (with help from Tegmark and others, including law firm Dentons) has deftly spearheaded lobbying efforts on little-known AI issues.

    Elon Musk is one of the Future of Life Institute’s most prominent backers | Carina Johansen/NTB/AFP via Getty Images

    Exhibit A: general-purpose AI — software like speech-recognition or image-generating tools used in a vast array of contexts and sometimes affected by biases and dangerous inaccuracies (for instance, in medical settings). General-purpose AI was not mentioned in the Commission’s proposal, but wended its way into the EU Council’s final text and is guaranteed to feature in Parliament’s position.

    “We came out and said, ‘There’s this new class of AI — general-purpose AI systems — and the AI Act doesn’t consider them whatsoever. You should worry about this,’” Brakel said. “This was not on anyone’s radar. Now it is.”

    The group is also playing on European fears of technological domination by the U.S. and China. “General-purpose AI systems are built mainly in the U.S. and China, and that could harm innovation in Europe, if you don’t ensure they abide by some requirements,” Brakel said, adding this argument resonated with center-right lawmakers with whom he recently met. 

    Another of FLI’s hobbyhorses is outlawing AI able to manipulate people’s behavior. The original proposal bans manipulative AI, but that is limited to “subliminal” techniques — which Brakel thinks would create loopholes. 

    But the AI Act’s co-rapporteur, Romanian Renew lawmaker Dragoș Tudorache, is now pushing to make the ban more comprehensive. “If that amendment goes through, we would be a lot happier than we are with the current text,” Brakel said.

    So smart it made crypto crash

    While the group’s input on key provisions in the AI bill was welcomed, many in Brussels’ establishment look askance at its worldview.

    Tegmark and other FLI backers adhere to what’s referred to as effective altruism (or EA). A strand of utilitarianism codified by philosopher William MacAskill — whose work Musk called “a close match for my philosophy” — EA dictates that one should better the lives of as many people as possible, using a rationalist fact-based approach. At a basic level, that means donating big chunks of one’s income to competent charities. A more radical, long-termist strand of effective altruism demands that one strive to minimize risks able to kill off a lot of people — and especially future people, who will greatly outnumber existing ones. That means that preventing the potential rise of an AI whose values clash with humankind’s well-being should be at the top of one’s list of concerns.

    A critical take on FLI is that it is furthering this interpretation of the so-called effective altruism agenda, one supposedly uninterested in the world’s current ills — such as racism, sexism and hunger — and focused on sci-fi threats to yet-to-be-born folks. Timnit Gebru, an AI researcher whose acrimonious exit from Google made headlines in 2020, has lambasted FLI on Twitter, voicing “huge concerns” about it.

    “They are backed by billionaires including Elon Musk — that already should make people suspicious,” Gebru said in an interview. “The entire field around AI safety is made up of so many ‘institutes’ and companies billionaires pump money into. But their concept of AI safety has nothing to do with current harms towards marginalized groups — they want to reorient the entire conversation into preventing this AI apocalypse.”

    Effective altruism’s reputation has taken a hit in recent weeks after the fall of FTX, a bankrupt exchange that lost at least $1 billion in customers’ cryptocurrency assets. Its disgraced CEO Sam Bankman-Fried used to be one of EA’s darlings, talking in interviews about his plan to make bazillions and give them to charity. As FTX crumbled, commentators argued that Effective Altruism ideology led Bankman-Fried to cut corners and rationalize his recklessness. 

    Both MacAskill and FLI donor Buterin defended EA on Twitter, saying that Bankman-Fried’s actions contrasted with the philosophy’s tenets. “Automatically downgrading every single thing SBF believed in is an error,” wrote Buterin, who invented the Ethereum blockchain, and bankrolls FLI’s scholarship for AI existential risk research.

    Brakel said that the FLI and EA were two distinct things, and FLI’s advocacy was focused on present problems, from biased software to autonomous weapons, e.g. at the United Nations level. “Do we spend a lot of time thinking about what the world would look like in 400 years? No,” he said. (Neither Brakel nor the FLI’s EU representative, Claudia Prettner, call themselves effective altruists.)

    Californian ideology

    Another critique of FLI’s efforts to stave off evil AI argues that they obscure a techno-utopian drive to develop benevolent human-level AI. At a 2017 conference, FLI advisers — including Musk, Tegmark and Skype’s Tallinn — debated the likelihood and the desirability of smarter-than-human AI. Most panelists deemed “superintelligence” bound to happen; half of them deemed it desirable. The conference’s output was a series of (fairly moderate) guidelines on developing beneficial AI, which Brakel cited as one of FLI’s foundational documents.

    That techno-optimism led Emile P. Torres, a Ph.D. candidate in philosophy who used to collaborate with FLI, to ultimately turn against the organization. “None of them seem to consider that maybe we should explore some kind of moratorium,” Torres said. Raising such points with an FLI staffer, Torres said, led to a sort of excommunication. (Torres’s articles have been taken down from FLI’s website.)

    Within Brussels, the worry is that going ahead, FLI might change course from its current down-to-earth incarnation and steer the AI debate toward far-flung scenarios. “When discussing AI at the EU level, we wanted to draw a clear distinction between boring and concrete AI systems and sci-fi questions,” said Daniel Leufer, a lobbyist with digital rights NGO Access Now. “When earlier EU discussions on AI regulation happened, there were no organizations in Brussels placing focus on topics like superintelligence — it’s good that the debate didn’t go in that direction.”

    Those who regard the FLI as the spawn of Californian futurism point to its board and its wallet. Besides Musk, Tallinn and Tegmark, donors and advisers include researchers from Google and OpenAI, Meta co-founder Dustin Moskovitz’s Open Philanthropy, the Berkeley Existential Risk Initiative (which in turn has received funding from FTX) and actor Morgan Freeman. 

    In 2020 most of FLI’s global funding ($276,000 out of $482,479) came from the Silicon Valley Community Foundation, a charity favored by tech bigwigs like Mark Zuckerberg; 2021 accounts haven’t been released yet. 

    Brakel denied that the FLI is cozy with Silicon Valley, saying that the organization’s work on general-purpose AI made life harder for tech companies. Brakel said he had never spoken to Musk. Tegmark, meanwhile, is in regular touch with the members of the scientific advisory board, which includes Musk. 

    In Brakel’s opinion, what the FLI is doing is akin to early-day climate activism. “We currently see the warmest October ever. We worry about it today, but we also worry about the impact in 80 years’ time,” he said last month. “[There] are AI safety failures today — and as these systems become more powerful, the harms might become worse.”

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    Gian Volpicelli

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  • Meta Stock Jumps 1 Percent After False Report Mark Zuckerberg Resigned

    Meta Stock Jumps 1 Percent After False Report Mark Zuckerberg Resigned

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    Opinions expressed by Entrepreneur contributors are their own.

    Meta CEO Mark Zuckerberg probably isn’t going anywhere. But on Tuesday, his company’s investors thought he was, and Meta‘s stock rose by 1%, reports the New York Post.


    NurPhoto | Getty Images

    An outlet called The Leak published a story early Tuesday in which an anonymous source said Zuckerberg would exit in 2023 due to Meta’s profit shortfall. “Information obtained by The Leak,” the article read, “suggests that Zuckerberg has decided to step down himself. The decision, per our insider source, ‘will not affect metaverse.'”

    Meta’s stock climbed 1.4% after the report was published.

    The company’s Andy Stone tweeted a terse denial of the report: “This is false.”

    As the Post noted, there are reasons to believe Zuckerberg might be reconsidering his position:

    Meta shareholders have grown restless in recent months as the company embarked on a costly shift toward metaverse technology despite a major profit slump and economic headwinds. Meta’s stock is down more than 67% so far this year.

    Earlier this month, Meta laid off 11,000 workers, or about 13% of its workforce, as part of a major cost-cutting push.

    Zuckerberg is the dominant Meta shareholder, holding more than half the shares. Given this substantial level of power and his commitment to the metaverse, it seems less than likely there’s any truth to this news.

    The Leak acknowledged Andy Stone’s denial but has not withdrawn its report.

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    Steve Huff

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  • Zuckerberg says WhatsApp business chat will drive sales sooner than metaverse

    Zuckerberg says WhatsApp business chat will drive sales sooner than metaverse

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    Meta Platforms Inc Chief Executive Mark Zuckerberg told employees on Thursday that WhatsApp and Messenger would drive the company’s next wave of sales growth, as he sought to assuage concerns about Meta’s finances after its first mass layoffs.

    Zuckerberg, addressing pointed questions at a company-wide meeting a week after Meta said it would lay off 11,000 workers, described the pair of messaging apps as being “very early in monetizing” compared to its advertising juggernauts Facebook and Instagram, according to remarks heard by Reuters.

    “We talk a lot about the very long-term opportunities like the metaverse, but the reality is that business messaging is probably going to be the next major pillar of our business as we work to monetize WhatsApp and Messenger more,” he said.

    Meta enables some consumers to speak and transact with merchants through the chat apps, including a new feature announced Thursday in Brazil.  The company did not immediately respond to a request for comment on Thursday’s internal forum.

    Zuckerberg’s comments there reflect a shift in tone and emphasis after focusing heavily on extended reality hardware and software investments since announcing a long-term ambition to build out an immersive metaverse last year.

    Investors have questioned the wisdom of that decision as Meta’s core advertising business has struggled this year, more than halving its stock price.

    In his remarks to employees, Zuckerberg played down how much the company was spending in Reality Labs, the unit responsible for its metaverse investments.

    People were Meta’s biggest expense, followed by capital expenditure, the vast majority of which went to infrastructure to support its suite of social media apps, he said. About 20% of Meta’s budget was going to Reality Labs.

    Within Reality Labs, the unit was spending over half of its budget on augmented reality (AR), with smart glasses products continuing to emerge “over the next few years” and some “truly great” AR glasses later in the decade, Zuckerberg said.

    “This is in some ways the most challenging work … but I also think it’s the most valuable potential part of the work over time,” he said.

    About 40% of Reality Labs’ budget went toward virtual reality, while about 10% was spent on futuristic social platforms such as the virtual world it calls Horizon.

    Chief Technology Officer Andrew Bosworth, who runs Reality Labs, said AR glasses need to be more useful than mobile phones to appeal to potential customers and meet a higher bar for attractiveness.

    Bosworth said he was wary of developing “industrial applications” for the devices, describing that as “niche,” and wanted to stay focused on building for a broad audience.

    Also read: Meta appoints Sandhya Devanathan as India Vice President amid massive layoffs

    Also read: Meta’s top executive Nicola Mendelsohn is excited about India. Here’s why

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  • Meta appoints Sandhya Devanathan as India Vice President amid massive layoffs

    Meta appoints Sandhya Devanathan as India Vice President amid massive layoffs

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    Mark Zuckerberg-led Meta has appointed Sandhya Devanathan as the Vice President of its India vertical – Meta India. She will take over from January 1, 2023, and will report to Meta APAC Vice President Dan Neary. Devanathan will move back to India and lead the company’s organisation and strategy in the country. She will focus on bringing the organisation’s business and revenue priorities together to help partners and clients while supporting the long-term growth of Meta’s India business. 

    The incoming Meta India Vice President will also focus on strengthening strategic relationships with leading brands, advertisers, creators, and partners to drive the behemoth’s revenue growth in India. She has over two decades of experience and an international career in areas such as banking, payments, and technology. 

    The industry veteran joined Meta in 2016 and played a significant role in building out Meta’s Singapore and Vietnam businesses and the company’s e-commerce initiatives in Southeast Asia. Devanathan led the company’s gaming vertical for APAC, one of the largest Meta verticals globally. 

    She is also an executive sponsor for Women@APAC and the global lead for Meta’s global initiative aimed at diverse representation in the gaming industry Play Forward. Besides, she is also on the global board of Pepper Financial Services. 

    “Sandhya has a proven track record of scaling businesses, building exceptional and inclusive teams, driving product innovation, and building strong partnerships,” Meta Chief Business Officer Marne Levine said on Devanathan’s appointment. 

    Devanathan’s appointment comes as global tech giants are laying off thousands of employees given the uncertain economic situation. Meta fired around 11,000 employees earlier this week and several Indians have been impacted. Zuckerberg said in a blog post that the company will provide immigration support to foreign employees. 

    Also read: ‘Some roles will no longer be required’: Amazon officially announces first round of layoffs

    Also read: Meta, Twitter layoffs: Mark Zuckerberg says he has been more thoughtful about layoffs than Elon Musk

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  • Hell Has Frozen Over.

    Hell Has Frozen Over.

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    Jeff Bezos must have hit his head pretty hard over the weekend…or perhaps he had a Dickens-esque Christmas Carol moment.


    Either way, in the past 24 hours, the Amazon founder Bezos gave away a majority of his $124 billion fortune to fight climate change and unify humanity. In addition, he awarded Dolly Parton with the Courage and Civility Award, which comes with $100 million that Dolly can donate to charities of her choice.

    Woah. So maybe bullying the 1% does work after all. After years of begging Bezos to have some compassion for us lowly Amazon shoppers, did he finally hear us? Or maybe he got tired of the accusations that he was a robot with no feelings.

    This is a huge milestone for one of the richest men in the world…one who infamously refrained from signing The Giving Pledge. The mega-rich – think Mark Zuckerberg and Warren Buffet – commit to give away most of their money to charitable causes in their lifetime.

    This may be thanks to Bezos’ girlfriend, Lauren Sánchez, who’s a journalist turned philanthropist. The pair sat down with CNN to chat about Bezos’ new “giving” persona…the first time he has ever explicitly agreed that he would donate a large sum of his money to charity.

    Or maybe it’s connected to the philanthropic acts of ex-wife MacKenzie Scott. Scott – an author and committed philanthropist – signed The Giving Pledge post-divorce and has already donated half of her $24 billion net worth to charitable organizations.

    Most likely, it’s because Amazon’s laying off 10,000 employees by the end of the week…but apparently that’s neither here nor there for Bezos.

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    Jai Phillips

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  • Silicon Valley’s greatest minds misread pandemic demand. Now their employees are paying for it. | CNN Business

    Silicon Valley’s greatest minds misread pandemic demand. Now their employees are paying for it. | CNN Business

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    CNN Business
     — 

    In the early months of the pandemic, Facebook only grew bigger and more central to our lives. With lockdowns spreading, countless people began shopping, socializing and working on Facebook and other online platforms. As CEO Mark Zuckerberg said in March 2020, usage was so high that the company was “just trying to keep the lights on.”

    Against that backdrop, Zuckerberg’s company went on a remarkable hiring spree. Facebook, which later rebranded as Meta, went from

    48,268
    staffers in March 2020 to more than 87,000 as of September of this year. In other words, it hired another Facebook’s worth of staff. And it looked like the company would only keep hiring to support its ambitious plans to build a future version of the internet called the metaverse.

    On Wednesday, however, Zuckerberg reversed course and laid off more than 11,000 employees, marking the most significant cuts in the company’s history. In a memo to staff, Zuckerberg coughed up some of the hardest words in the English language. “I got this wrong,” he wrote, “and I take responsibility for that.”

    “At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” Zuckerberg wrote. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”

    Silicon Valley operates on many myths, but one of them is the idea of the founder as a visionary who can see key trends coming years if not decades out. But Zuckerberg is one of a growing list of prominent tech leaders who are cutting costs and issuing mea culpas after failing to anticipate a whiplash in the market between 2020 and 2022.

    The tech industry, already seemingly invincible in early 2020, only grew more dominant during the pandemic while other parts of the economy were upended. Consumers shifted spending online. The Federal Reserve maintained near-zero interest rates at the time, giving tech companies easier access to capital. And private and public market valuations for tech companies only seemed to go higher.

    As the world reopened, however, many consumers have returned to their offline lives. Meanwhile, high inflation and fears of a looming recession have cut into consumer and advertiser spending, disrupting the core businesses of many of the biggest names in tech, after years of rapid growth.

    Now the industry is cutting thousands of jobs.

    Last month, home fitness company Peleton — which had been embraced by investors during the pandemic — underwent its fourth round of layoffs in 2022. Last week, payment-processing giant Stripe said it was eliminating 14% of its staff. And Twitter recently announced widespread job cuts after its new owner Elon Musk bought the company for $44 billion, funded in part by debt financing.

    While Musk was largely silent regarding the mass layoffs, Twitter co-founder Jack Dorsey, who ran the company until late 2021, said in a contrite thread that he takes responsibility for the situation. “I grew the company size too quickly. I apologize for that,” Dorsey wrote.

    Twitter headquarters is seen on Friday, October 28, 2022 the day after Elon Musk aquired Twitter for $44 billion.

    Patrick Collison, CEO of Stripe, one of the most valuable startups in the world, similarly told employees that leadership takes responsibility for the pandemic-era miscalculations that resulted in people losing their livelihoods.

    “For those of you leaving: we’re very sorry to be taking this step and John and I are fully responsible for the decisions leading up to it,” Collison wrote. “We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.”

    Other big tech companies, including Amazon, Apple and Google, are now pausing or slowing hiring amid recession fears after a wave of expansion. Amazon, in particular, had seen breakneck growth during the pandemic, doubling its fulfillment centers in a two-year-period, only to shift earlier this year to focusing on “cost efficiencies.”

    The e-commerce giant is now freezing corporate hiring “for the next few months” and reportedly looking to cut costs in some of its unprofitable units. Amazon spokesperson Brad Glasser said senior leadership regularly reviews investment outlook and financial performance, adding, “As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimize costs.”

    While there have been layoffs in Silicon Valley over the years, the latest wave of cost cuts appears to be hitting every corner of the industry, including the engineers and coders who were often considered untouchable. The tech bubble may not have burst, but the bubble on top of the bubble certainly has.

    Zuckerberg said Meta’s layoffs would be spread throughout the company, including impacting both its family of apps and the Reality Labs division that is tasked with helping build the metaverse. He noted that some teams — such as recruiting — will be affected more than others.

    With Musk at the helm, Twitter slashed half its staff, including on its ethical AI, marketing and communication, search and public policy teams.

    Roger Lee, a startup founder based in San Francisco, has been closely tracking layoffs in the tech industry since the onset of the pandemic via his website Layoffs.fyi. Initially, his goal was to informally keep track of staffing reductions to help look for potential candidates to recruit for his own company, a digital 401(k) provider for small businesses. Eventually, laid-off workers began submitting their own data and compiling spreadsheets for his website to attract the attention of recruiters.

    “I did not, unfortunately, anticipate the extent to which the layoffs were going to surge,” Lee told CNN Business. With nearly two months still left to go, he said the number of tech employees laid off in 2022 has already surpassed 100,000 based on his data.

    Lee said some of the biggest trends he’s been seeing recently are major job losses across recruiting, human resources, and sales teams. While “engineers are still in better shape relative to the other roles,” Lee said his data indicate even these positions have suffered cuts in recent months.

    “No one knows how long this current period is going to last,” he said.

    Already, there’s been a clear shift in the industry’s mood. Blind, a popular online forum that lets employees at major companies commune anonymously to share interview tips and brag about compensation packages, has emerged as a sobering forum where people are posting about layoffs rather then their jobs.

    Some laid-off workers are also banding together on social media and crowdsourcing spreadsheets for recruiters. These workers have created documents featuring hundreds of names and LinkedIn profiles (as well as visa statuses) of former Twitter and Meta workers.

    While some companies may be better equipped to weather the storm than others, it’s becoming apparent that no company is completely unaffected, said Nikolai Roussanov, a professor of finance at the Wharton School of the University of Pennsylvania.

    “Tech has been clobbered so much precisely because it has been seen as very immune to fluctuations in the real economy, but in the end, nobody is immune,” Roussanov said. “And that realization, I think, is important and perhaps what contributed to these sky-high valuations coming down pretty quickly.”

    Meta’s market cap has fallen from a peak of more than $1 trillion last year to less than $300 billion. Amazon, meanwhile, has seen its market cap drop by $1 trillion from a peak last summer.

    Roussanov said current fears of a recession are not unwarranted, but in many ways, “there is a little bit of a self-fulfilling nature to this.” He added: “As these fears become more and more widespread, they slow down people’s consumption, they slow down firm investment, and that kind of snowballs on itself.”

    What’s going on in tech right now is “perhaps a taste of what’s yet to come” elsewhere, Roussanov said.

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  • From Elon Musk to Sam Bankman-Fried, a bad week for market geniuses, but was it their fault?

    From Elon Musk to Sam Bankman-Fried, a bad week for market geniuses, but was it their fault?

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    From the FTX bankruptcy and downfall of crypto “rock star” Sam Bankman-Fried to the chaos at Twitter, it has not been a good week for the geniuses of capitalism. Elon Musk’s abrupt and in some cases already reversed decisions since taking over the social media company back up his contention that so far his tenure “isn’t boring,” but also expose the type of corporate governance issues that are too often repeated to the detriment of shareholders.

    “Without a doubt, Sam Bankman-Fried is a genius,” said Yale School of Management leadership guru Jeffrey Sonnenfeld in an interview with CNBC’s “Taking Stock” on Thursday. “But what’s hard is that somebody has to be able to put on the brakes on them and ask them questions. But when they develop one of these emperor-for-life models … then you really don’t have accountability,” Sonnenfeld said.

    Few would doubt the genius of Elon Musk, or Mark Zuckerberg, for that matter, but few would put them in the same class with many companies that have failed spectacularly, though Sonnenfeld says they share the link of being allowed to operate without enough corporate oversight.

    “It’s not crazy to talk about Theranos, or WeWork, Groupon, MySpace, WebMD, or Naptster – so many companies that fall off the cliff because they didn’t have proper governance, they didn’t figure out, how do you get the best of a genius?” Sonnenfeld said.

    In the case of Bankman-Fried, who stepped down from his CEO role at FTX as the company filed for Chapter 11 bankruptcy on Friday, Sonnenfeld pointed to the lack of a board that should have been asking tough questions.

    Tom Williams | CQ-Roll Call, Inc. | Getty Images

    But boards are often unable to manage genius, Sonnenfeld said. Zuckerberg is another example. When Meta, formerly Facebook, announced it would be shifting its focus to the metaverse last year, Sonnenfeld said his board members were essentially powerless. Meta laid off 11,000 of its employees this week and announced a hiring freeze as it has faced declining revenue and increased spending on a metaverse bet that Zuckerberg has said may not pay off for a decade.

    Tesla shares have not been immune from Musk’s Twitter takeover, with the stock plummeting this week after Musk told Twitter employees on Thursday he sold Tesla stock to “save” the social network. One Wall Street analyst decided that Twitter is now a business risk to Tesla and yanked the stock from a best picks list.

    Musk (though not Tesla’s founder) and Zuckerberg oversaw the creation of two trillion-dollar companies, though both have now lost that market-cap status in stock declines caused by a variety of factors — from macroeconomic conditions to sector-specific risks, a market valuation reset for high growth companies, and also leadership decisions.

    Market research shows that founders can be a financial risk to company value over time. Founder-led companies have been found to outperform those with non-founder leaders in early year, according to a study from the Harvard Business Review that examined the financial performance of more than 2,000 public businesses, but virtually no difference appears three years after the company’s IPO. After this time, the study found that founder-CEOs “actually start detracting from firm value.”

    Major players in Elon Musk’s Twitter deal, including Fidelity Investments, Brookfield Asset Management and former Twitter CEO and co-founder Jack Dorsey, did not take a seat on the company’s board or have a voice throughout the transaction, Sonnenfeld said, which gave the deal no oversight. Musk is now splitting his time between six separate companies: Tesla, SpaceX, SolarCity/Tesla Energy, Twitter, Neuralink and The Boring Company.

    Companies led by lone geniuses need strong governance first and foremost. Sonnenfeld says having built-in checks and balances and a board that has field expertise as well as the ability to watch out for mission creep is critical to allowing these businesses to function with less risk of costly blunders.

    Tesla and Meta governance scores within ESG rankings have long reflected this risk.

    That doesn’t mean the market doesn’t need geniuses.

    “Sure, we’re better off with Elon Musk in this world as we are better off with Mark Zuckerberg,” Sonnenfeld said. “But they can’t be alone.”

    Through the recent issues, these under-fire leaders have been critical of themselves.

    FTX’s Sam Bankman-Fried tweeted Thursday morning that he is “sorry,” admitting that he “f—ed up” and “should have done better.”

    Zuckerberg said of the mass layoffs at Meta in a statement equal parts apology and unintended restatement of the governance problem, “I take full responsibility for this decision. I’m the founder and CEO, I’m responsible for the health of our company, for our direction, and for deciding how we execute that, including things like this, and this was ultimately my call.”

    Musk tweeted, “Please note that Twitter will do lots of dumb things in coming months.”

    But whether an apology or an admission from genius that it too can be dumb on occasion, Sonnenfeld says these leaders would be better off letting others do the criticizing — much sooner, and much more often.

    “They have to be managed, they have to be guided and they have to have a board that can help get the best out of themselves and not let them develop this imperial sense of invincibility,” he said.

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  • Facebook parent company Meta will lay off 11,000 employees | CNN Business

    Facebook parent company Meta will lay off 11,000 employees | CNN Business

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    New York
    CNN Business
     — 

    Facebook parent company Meta on Wednesday said it is laying off 11,000 employees, marking the most significant job cuts in the tech giant’s history.

    The job cuts come as Meta confronts a range of challenges to its core business and makes an uncertain and costly bet on pivoting to the metaverse. It also comes amid a spate of layoffs at other tech firms in recent months as the high-flying sector reacts to high inflation, rising interest rates and fears of a looming recession.

    “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” CEO Mark Zuckerberg wrote in a blog post to employees. “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.”

    The job cuts will impact many corners of the company, but Meta’s recruiting team will be hit particularly hard as “we’re planning to hire fewer people next year,” Zuckerberg said in the post. He added that a hiring freeze would be extended until the first quarter, with few exceptions.

    In September, Meta had a headcount of more than 87,000, per a September SEC filing.

    Meta’s core ad sales business has been hit by privacy changes implemented by Apple, advertisers tightening budgets and heightened competition from newer rivals like TikTok. Meanwhile, Meta has been spending billions to build a future version of the internet, dubbed the metaverse, that likely remains years away from widespread acceptance.

    Last month, the company posted its second quarterly revenue decline and said that its profit was cut in half from the prior year. Once valued at more than $1 trillion last year, Meta’s market value has since plunged to around $250 billion.

    “I want to take accountability for these decisions and for how we got here,” Zuckerberg wrote in his post Wednesday. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

    Shares of Meta rose 5% in trading Wednesday following the announcement.

    Meta is not alone in feeling the pain of a market downturn. The tech sector has been facing a dizzying reality check as inflation, rising interest rates and more macroeconomic headwinds have led to a stunning shift in spending for an industry that only grew more dominant as consumers shifted more of their lives online during the pandemic.

    “At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” Zuckerberg wrote Wednesday. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”

    “I got this wrong, and I take responsibility for that,” he added.

    Meta’s headcount in September was nearly twice the 48,268 staffers it had at the start of the pandemic in March of 2020.

    A handful of tech companies have announced hiring freezes or job cuts in recent months, often after having seen rapid growth during the pandemic. Last week, rideshare company Lyft said it was axing 13% of employees, and payment-processing firm Stripe said it was cutting 14% of its staff. The same day, e-commerce giant Amazon said it was implementing a pause on corporate hiring.

    Also last week, Facebook-rival Twitter announced mass layoffs impacting roles across the company as its new owner, Elon Musk, took the helm.

    In addition to the layoffs, Zuckerberg said the company expects to “roll out more cost-cutting changes” in the coming months. Meta, which like other tech giants is known for its vast, perk-filled offices, is rethinking its real estate needs, he said, and “transitioning to desk sharing for people who already spend most of their time outside the office.”

    “Overall,” he said, “this will add up to a meaningful cultural shift in how we operate.”

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  • Massive layoffs at Meta indicate Silicon Valley woes

    Massive layoffs at Meta indicate Silicon Valley woes

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    Massive layoffs at Meta indicate Silicon Valley woes – CBS News


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    Mark Zuckerberg’s Meta is laying off 13% of its workforce, as Silicon Valley companies face faltering revenues and other economic woes.

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  • Meta announces layoffs for 11,000 employees

    Meta announces layoffs for 11,000 employees

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    Meta announces layoffs for 11,000 employees – CBS News


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    Meta, the parent company of Facebook and Instagram, is cutting about 13% of its workforce. Carter Evans has the details.

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  • Meta laying off more than 11,000 employees: Read Zuckerberg’s letter announcing the cuts

    Meta laying off more than 11,000 employees: Read Zuckerberg’s letter announcing the cuts

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    Meta is laying off 13% of its staff, or more than 11,000 employees, CEO Mark Zuckerberg said in a letter to employees Wednesday.

    “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” Zuckerberg said in the letter. “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.”

    Shares of Meta were up about 4% in premarket trading.

    The layoffs come amid a tough time for Facebook parent company Meta, which provided lukewarm guidance in late October for its upcoming fourth-quarter earnings that spooked investors and caused its shares to sink nearly 20%.

    Investors have been concerned about Meta’s rising costs and expenses, which jumped 19% year over year in the third quarter to $22.1 billion. The company’s overall sales declined 4% to $27.71 billion in the quarter while its operating income dropped 46% from the previous year to $5.66 billion.

    “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.” Zuckerberg said.

    He said Meta is making reductions in every organization but that recruiting will be disproportionately affected since the company plans to hire fewer people in 2023. The company extended its hiring freeze through the first quarter with a few exceptions, Zuckerberg said.

    “This is a sad moment, and there’s no way around that. To those who are leaving, I want to thank you again for everything you’ve put into this place,” he added.

    Impacted employees will receive 16 weeks of pay plus two additional weeks for every year of service, Zuckerberg said. Meta will cover health insurance for six months.

    Meta is heavily investing in the metaverse, which generally refers to a yet-to-be developed digital world that can be accessed by virtual reality and augmented reality headsets. This hefty bet has cost Meta $9.4 billion so far in 2022, and the company anticipates that losses “will grow significantly year-over-year.”

    Zuckerberg said during a call with analysts as part of its third-quarter earnings report that Meta plans to “focus our investments on a small number of high priority growth areas” during the next year.

    “That means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year,” Zuckerberg said. “In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”

    Meta counts more than 87,000 employees as of the end of September.

    Here’s Mark Zuckerberg’s letter to employees:

    “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1.

    I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.

    How did we get here?

    At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected. 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.

    In this new environment, we need to become more capital efficient. We’ve shifted more of our resources onto a smaller number of high priority growth areas — like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse. We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go.

    How will this work?

    There is no good way to do a layoff, but we hope to get all the relevant information to you as quickly as possible and then do whatever we can to support you through this.

    Everyone will get an email soon letting you know what this layoff means for you. After that, every affected employee will have the opportunity to speak with someone to get their questions answered and join information sessions.

    Some of the details in the US include:

    • Severance. We will pay 16 weeks of base pay plus two additional weeks for every year of service, with no cap.
    • PTO. We’ll pay for all remaining PTO time.
    • RSU vesting. Everyone impacted will receive their November 15, 2022 vesting.
    • Health insurance. We’ll cover the cost of healthcare for people and their families for six months.
    • Career services. We’ll provide three months of career support with an external vendor, including early access to unpublished job leads.
    • Immigration support. I know this is especially difficult if you’re here on a visa. There’s a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need. 

    Outside the US, support will be similar, and we’ll follow up soon with separate processes that take into account local employment laws.

    We made the decision to remove access to most Meta systems for people leaving today given the amount of access to sensitive information. But we’re keeping email addresses active throughout the day so everyone can say farewell.

    While we’re making reductions in every organization across both Family of Apps and Reality Labs, some teams will be affected more than others. Recruiting will be disproportionately affected since we’re planning to hire fewer people next year. We’re also restructuring our business teams more substantially. This is not a reflection of the great work these groups have done, but what we need going forward. The leaders of each group will schedule time to discuss what this means for your team over the next couple of days.

    The teammates who will be leaving us are talented and passionate, and have made an important impact on our company and community. Each of you have helped make Meta a success, and I’m grateful for it. I’m sure you’ll go on to do great work at other places.

    What other changes are we making?

    I view layoffs as a last resort, so we decided to rein in other sources of cost before letting teammates go. Overall, this will add up to a meaningful cultural shift in how we operate. For example, as we shrink our real estate footprint, we’re transitioning to desk sharing for people who already spend most of their time outside the office. We’ll roll out more cost-cutting changes like this in the coming months. 

    We’re also extending our hiring freeze through Q1 with a small number of exceptions. I’m going to watch our business performance, operational efficiency, and other macroeconomic factors to determine whether and how much we should resume hiring at that point. This will give us the ability to control our cost structure in the event of a continued economic downturn. It will also put us on a path to achieve a more efficient cost structure than we outlined to investors recently.

    I’m currently in the middle of a thorough review of our infrastructure spending. As we build our AI infrastructure, we’re focused on becoming even more efficient with our capacity. Our infrastructure will continue to be an important advantage for Meta, and I believe we can achieve this while spending less.

    Fundamentally, we’re making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we’re operating efficiently across both Family of Apps and Reality Labs. 

    How do we move forward?

    This is a sad moment, and there’s no way around that. To those who are leaving, I want to thank you again for everything you’ve put into this place. We would not be where we are today without your hard work, and I’m grateful for your contributions.

    To those who are staying, I know this is a difficult time for you too. Not only are we saying goodbye to people we’ve worked closely with, but many of you also feel uncertainty about the future. I want you to know that we’re making these decisions to make sure our future is strong.

    I believe we are deeply underestimated as a company today. Billions of people use our services to connect, and our communities keep growing. Our core business is among the most profitable ever built with huge potential ahead. And we’re leading in developing the technology to define the future of social connection and the next computing platform. We do historically important work. I’m confident that if we work efficiently, we’ll come out of this downturn stronger and more resilient than ever.

    We’ll share more on how we’ll operate as a streamlined organization to achieve our priorities in the weeks ahead. For now, I’ll say one more time how thankful I am to those of you who are leaving for everything you’ve done to advance our mission.

    Mark”

    Watch: Meta has to go back to their core advertising business and double down.

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  • Facebook owner Meta cuts 11,000 jobs—13% of workforce

    Facebook owner Meta cuts 11,000 jobs—13% of workforce

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    Facebook parent Meta is laying off 11,000 people, about 13% of its workforce, as it contends with faltering revenue and broader tech industry woes, CEO Mark Zuckerberg said in a letter to employees Wednesday.

    The job cuts come just a week after widespread layoffs at Twitter under its new owner, billionaire Elon Musk. There have been numerous job cuts at other tech companies that hired rapidly during the pandemic.

    Zuckerberg said he had made a mistake in previously moving to hire aggressively, expecting rapid growth even after the pandemic ended.

    “Unfortunately, this did not play out the way I expected,” Zuckerberg said in a prepared statement. “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.”

    Meta, like other social media companies, enjoyed a financial boost during the pandemic lockdown era because more people stayed home and scrolled on their phones and computers. But as the lockdowns ended and people started going outside again, revenue growth began to falter.

    Meta’s “train wreck”

    An economic slowdown and a grim outlook for online advertising — by far Meta’s biggest revenue source — have contributed to Meta’s woes. This summer, Meta posted its first quarterly revenue decline in history, followed by another, bigger decline in the fall.

    Meta shares have tumbled more than 70% this year, compared with 32% for the tech-heavy Nasdaq Composite index. As of late October, Meta had lost roughly $700 billion in market value, leading one Wall Street analyst to call it a “train wreck.” The company’s stock price rose 4% ahead of the start of trade on Wednesday to $100.57.

    Some of the pain is company-specific, while some is tied to broader economic and technological forces.

    Last week, Twitter laid off about half of its 7,500 employees, part of a chaotic overhaul as Musk took the helm. He tweeted that there was no choice but to cut the jobs “when the company is losing over $4M/day,” though did not provide details about the losses.

    Other large tech companies, including Amazon, Google owner Alphabet, ride-sharing player Lyft and payments provider Stripe, have either announced layoffs or paused hiring amid concerns about a potential recession next year.

    “The Meta reductions are among the largest to date of any company (not just in tech), and we think it portends additional headcount cuts to come across Corporate America,” analyst Adam Crisafulli of Vital Knowledge said in a report to investors.


    Twitter asks dozens of former employees to return days after massive layoffs

    06:11

    Meta has worried investors by pouring over $10 billion a year into the “metaverse” as it shifts its focus away from social media. Zuckerberg predicts the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology.

    Meta and its advertisers are bracing for a potential recession. There’s also the challenge of Apple’s privacy tools, which make it more difficult for social media platforms like Facebook, Instagram and Snap to track people without their consent and target ads to them. Competition from TikTok is also an a growing threat as younger people flock to the video sharing app over Instagram, which Meta also owns.

    Zuckerberg said Meta will offer laid-off workers the equivalent of 16 weeks of their base pay, plus two additional weeks for every year they’ve been with the company. Meta will also cover the cost of health insurance for them and their families.

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  • Mark Zuckerberg-led Meta to begin layoffs from today; those impacted to get four months salary

    Mark Zuckerberg-led Meta to begin layoffs from today; those impacted to get four months salary

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    Meta Platforms Inc will begin laying off employees on Wednesday morning, Chief Executive Mark Zuckerberg told hundreds of executives on Tuesday, the Wall Street Journal reported.

    Zuckerberg appeared downcast in Tuesday’s meeting and said he was accountable for the company’s missteps and his overoptimism about growth had led to overstaffing, the report added, citing people familiar with the matter.

    He described broad cuts and specifically mentioned the recruiting and business teams as among those facing layoffs, the report said, adding an internal announcement of the company’s layoff plans is expected around 6 a.m. Eastern time on Wednesday.

    The specific employees losing their jobs will be informed over the course of the morning, the report said.

    Meta’s head of human resources, Lori Goler, said employees who lose their jobs will be provided with at least four months of salary as severance, the WSJ reported, citing people familiar with the matter.

    Meta reported more than 87,000 employees at the end of September.

    The company declined to comment on the report.

    The development comes after Twitter laid off half its workforce across teams ranging from communications and content curation to product and engineering following Elon Musk’s $44 billion takeover.

    However, Bloomberg on Sunday reported Twitter was reaching out to dozens of employees who lost their jobs, asking them to return.

    Microsoft Corp also laid off around 1,000 employees across several divisions in October, according to an Axios report.

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  • Musk’s partisan tweets call into question Twitter neutrality

    Musk’s partisan tweets call into question Twitter neutrality

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    Elon Musk used his Twitter megaphone to appeal to “independent-minded voters” on Monday, urging them to vote Republican in Tuesday’s U.S. midterm elections. In doing so, the new CEO of Twitter stepped into a political debate that tech company executives have largely tried to stay out of — so their platforms wouldn’t be seen as favoring one side over the other.

    Musk, who bought Twitter for $44 billion, has expressed political views in the past, on and off the platform. But a direct endorsement of one party over another now that he owns the platform raises questions about Twitter’s ability to remain neutral under the rule of the world’s richest man.

    “Shared power curbs the worst excesses of both parties, therefore I recommend voting for a Republican Congress, given that the Presidency is Democratic,” Musk tweeted.

    It’s one thing for the CEO of Wendy’s or Chick-fil-A to endorse a political party, said Jennifer Stromer-Galley, a professor at Syracuse University who studies social media and politics. It’s a whole other thing, though, for the owner of one of the world’s most high-profile information ecosystems to do so.

    “These social media platforms are not just companies. It’s not just a business. It is also our digital public sphere. It’s our town square,” Stromer-Galley said. “And it feels like the public sphere is increasingly privatized and owned by these companies — and when the heads of these companies put their finger on the scale — it feels like it’s potentially skewing our democracy in harmful ways.”

    Musk’s comments come as he seeks to remake the company and amid widespread concern that recent mass layoffs at the social media platform could leave the company unable to deal with hate speech, misinformation that could impact voter safety and security and actors who seek to cast doubt on the legitimate winners of elections. Though Musk has vowed not to let Twitter become a “free-for-all hellscape,” advertisers have left the platform and Musk himself has amplified misinformation.

    Musk on Sunday tweeted and deleted a link to an article pushing an unfounded conspiracy theory about the attack on Paul Pelosi. The tweet from Musk, posted just three days after he took charge of the platform, raised concerns about the type of content that will be allowed on the social media site under his control.

    It’s not a secret that when it comes to tech workers and executives, the political mix tends to favor the left, with a good amount of Silicon Valley libertarianism thrown in. Facebook CEO Mark Zuckerberg, for instance has donated to candidates on both sides of the political spectrum, but in recent years he’s veered more toward Democrats. Publicly he’s stayed away from pledging allegiance to either party.

    But in their platform policies and content moderation, tech companies such as Facebook (now Meta), Google and even Twitter have taken great pains to appear politically neutral, even as they are routinely criticized — largely by conservatives but also by liberals — for favoring one side over the other.

    “Now, you might say, look, Rupert Murdoch owns Fox News and that’s his voice amplified,” said Charles Anthony Smith, a professor of political science and law at The University of California at Irvine. “But the difference is that gets filtered through a variety of different script writers and on-air personalities and all this other sort of stuff. So it’s not really Rupert Murdoch. It may be people that agree with him on things, but it’s filtered through other voices. This is an unadulterated direct contact. So it’s an amplification that is unrivaled.”

    Global feathers rustled

    Musk’s tweets could also stir up trouble in global politics outside of the U.S. elections. On Sunday, the billionaire signaled willingness to explore reversing decisions blocking some accounts of Brazilian right-wing lawmakers. The nation’s electoral court last week ordered their suspension. All are supporters of Brazil’s President Jair Bolsonaro, who on October 30 lost his reelection bid by a narrow margin to Luiz Inacio Lula da Silva. Most had aired claims of election fraud.

    Paulo Figueiredo Filho, a political analyst who often defends Bolsonaro on social media and is also the grandson of the military dictatorship’s final president, tweeted that Twitter has become a strict and spontaneous censor.

    “Your moderators are currently being more dictatorial than our own courts!” Figueiredo wrote.

    Musk responded: “I will look into this.”

    The suspended accounts include that of Nikolas Ferreira, who garnered more votes in the October race than any other candidate for a seat in the Lower House. According to orders issued by the electoral authority, Ferreira’s account and most others were blocked for sharing a live video from an Argentinian digital influencer questioning the reliability of Brazil’s electronic voting system. The video was largely shared by allies of Bolsonaro, who himself has often claimed the system is susceptible to fraud, without presenting any evidence.

    “Upsetting the far right and the far left equally”

    Twitter’s policies, as of Monday, prohibit “manipulating or interfering in elections or other civic processes.”

    In a tweet just two days after he agreed to buy Twitter in April, Musk said that for “Twitter to deserve public trust, it must be politically neutral, which effectively means upsetting the far right and the far left equally.”

    And to attract the largest possible number of advertisers and users, Big Tech has tried to go this route, with varying degrees of success. For years, it managed to succeed. But the 2016 U.S. presidential elections changed online discourse, fueling the country’s increased political polarization.

    In early 2016, a tech blog quoted an anonymous former Facebook contractor who said the site downplayed news that conservatives are interested in and artificially boosted liberal issues such as the “BlackLivesMatter” hashtag. The blog did not name the person, and no evidence was provided for their claim.

    But in the explosive political climate that preceded the election of former President Donald Trump, the claim quickly took a life of its own. There was plenty of media coverage, as well as as inquiries from GOP lawmakers, then, later, congressional hearings on the matter. In the years since, as social media companies began to crack down on far-right accounts and conspiracy theories such as QAnon, some conservatives have come to see it as evidence of the platforms’ bias.


    Krebs says Twitter turmoil creating “a very chaotic environment” for midterms

    07:14

    Musk himself is at least listening to such claims, and he’s repeatedly engaged with figures on the right and far-right who would like to see a loosening of Twitter’s misinformation and hate-speech policies.

    Evidence suggests those voices are already being heard. In an October study, for instance, researchers at the University of Pennsylvania found that “Twitter gives greater visibility to politically conservative news than it does content with a liberal bent.”

    Musk’s tweet garnered hundreds of thousands of likes and many retweets Monday on the day before the final votes are cast in thousands of races around the country. But in replies and retweets, many prominent (and not so prominent) Twitter personalities expressed criticism for the Tesla CEO — often poking fun at him. For Smith, that’s a sign Musk may not quite be a billionaire political kingmaker that some of his peers, like venture capitalist Peter Thiel, are aspiring to be.

    “I wonder if we’re we’re having the emergence of a new type of billionaire, the ones who want to decide what happens and get credit for deciding what happens,” Smith said. “So this more like an oligarchy approach than the old school billionaires who would drop lots of money but then they didn’t want anybody to know their names.”

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