Meta chief Mark Zuckerberg acknowledged his company’s spending on artificial intelligence has contributed to layoffs at Meta, according to a recording of an internal Thursday meeting reported by The Wall Street Journal, providing details on the company’s capital expenditures and AI investments.
Zuckerberg made the comments about the layoffs during a Thursday meeting.
Photo by Alex Wong/Getty Images
Key Takeaways
- Zuckerberg said “compute and infrastructure” and “people oriented things” were the main drivers of cost at Meta, acknowledging the company’s increasing investments in AI and saying, “that means that we do need to take down the size of the company somewhat,” according to the Journal.
- Meta is slated to reduce its workforce by 10% soon, cutting 8,000 employees to offset its spending on AI, according to multiple outlets.
- Zuckerberg also told employees Meta could reduce team sizes to take into account the speed and efficiency of AI tools to take care of work, noting, “If a team used to take 50 or 100 people and now it takes 10, having 50 or 100 people on that team can actually be counterproductive going forward so I think we need to fix that.”
- The Meta CEO said the reduction of team sizes does not necessarily equate to laying people off, adding AI can help employees “spin up more new projects.”
Tangent
Zuckerberg said Meta’s ad business experienced a “trajectory change” after the U.S. launched strikes against Iran in late February that sent oil prices surging. He noted consumers spending more on gas due to rising oil prices would mean they spend less on “things that they would just buy that are just kind of discretionary things that the advertising might serve,” he said, according to the Journal.
Big Number
$125 billion to $145 billion. That is Meta’s latest capital expenditure guidance shared in its first quarter earnings report Thursday, marking an increase from its previous $115 billion to $135 billion range. Tech giants including Meta, Amazon and Google are on track to spend $750 billion on AI this year—commitments that have spooked investors and led to a poor run of trading for Meta shares, which closed down nearly 9% on Thursday.
Key Background
Meta’s job cuts are slated to begin May 20 as the company also ditches plans to fill 6,000 open roles. In a memo first reported by Bloomberg, Janelle Gale, Meta’s chief people officer, told employees the layoffs were being put in place as part of a “continued effort to run the company more efficiently and to allow us to offset the other investments we’re making.” Meta’s capex spending has rocketed as it strikes AI partnerships and pushes for proprietary AI development, and could potentially double its $72.2 billion in capex spending it made in 2025. The company launched Muse Spark, a highly anticipated AI model it has claimed can compete with or outperform models developed by competitors like OpenAI, Google and Anthropic. Meta has AI training and infrastructure deals likely worth billions of dollars with companies such as Amazon and Nvidia.
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