Meta girds for ‘fierce’ headwind, slower growth in 2nd half

Facebook owner Meta Platforms is bracing for a lean second half of the year as it copes with macroeconomic pressures and data privacy hits for its ads companyaccording to an internal memo seen by Reuters on Thursday.

The company must “prioritize more relentlessly” and “operate leaner, meaner, better-executing teams,” Chief Product Officer Chris Cox wrote in the memo, which appeared on the company’s internal discussion forum Workplace.

“I have to underline that we are in serious times here and the headwinds are fierce. We need to perform flawlessly in a slower-growth environment, where teams shouldn’t expect a massive influx of new engineers and budgets,” Cox wrote.

Meta did not immediately respond to a request for comment.

The memo is the latest rough prediction from Meta executives, who have already moved this year to cut costs and pause hiring for much of the company in the face of slowing ad sales and user growth.

Tech companies across the board have scaled back their ambitions in anticipation of a possible US recessionalthough the stock price decline at Meta is more severe than at competitors Apple and Google.

The world’s largest social media company lost about half of its market value this year after Meta reported that daily active users of its flagship Facebook app first quarter decline

Its austerity drive comes at a tricky time, coinciding with two key strategic pivots: one aimed at reshaping its social media products around “discovery” to face competition from short video app TikTokthe other an expensive long-term bet on augmented and virtual reality technology.

In his memo, Cox said Meta should increase the number of graphics processing units (GPUs) in its data centers fivefold by the end of the year to support the “discovery” push, which requires additional computing power to make artificial intelligence popular. posts from all over Facebook and Instagram in users’ feeds.

Interest in Meta’s TikTok-esque short video product Reels grew rapidly, Cox said, with users doubling the amount of time they spent on Reels year after year, both in the United States and globally.

About 80% of the growth since March has come from Facebook, he added.

That user engagement with Reels could be an important route to amplify the bottom line, making it important to drive ads in Reels “as soon as possible,” he added.

Mark Zuckerberg
Chief Executive Mark Zuckerberg told investors in April that executives viewed Reels as “an important part of the discovery engine’s vision.”
AP

Chief Executive Mark Zuckerberg told investors in April that executives viewed Reels as “an important part of the discovery engine’s vision,” but at the time described the short video shift as a “short-term headwind” that would gradually increase revenue as advertisers became more familiar with the format. .

Cox said Meta also saw opportunities for revenue growth in business messaging and in-app shopping tools, the latter of which, he added, could “reduce signal loss” caused by Apple-led privacy changes.

He said the company’s hardware division was “laser-focused” on the successful launch of its mixed-reality headset, codenamed “Cambria,” in the second half of the year. Meta also focused on linking accounts to its virtual reality products and traditional social media apps, he said.

Zuckerberg will talk more about the company’s priorities and prospects during the company’s next Q&A, he said. The weekly session will take place on Thursday.

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