Mark Zuckerberg Blames E-commerce Boom During Pandemic, Not AI, For Large-Scale Tech Layoffs

Meta CEO Mark Zuckerberg recently revealed that the layoffs hitting the tech industry are not due to the growth of artificial intelligence but rather the result of the companies trying to navigate the e-commerce boom during the pandemic. "Companies were simply new to the e-commerce boom and are now realizing that they can be efficient as a leaner organization," he said on the Morning Brew Daily podcast.

Since 2022, Meta has laid off more than 21,000 workers. "It was obviously really tough, we parted with a lot of talented people we cared about," Zuckerberg said. The tech industry is currently experiencing a wave of layoffs. Reportedly, more than 34,000 employees have already been laid off from major corporations such as Google and Amazon.

"I think across the economy, a lot of companies just kind of overbuilt, and then when things went back to pretty close to exactly what they were the way before, the companies realized," he added.

What began as reductions in benefits quickly escalated to job cuts, with over 262,682 workers losing their jobs in 2023. The layoffs, however, continued to increase in 2024. Reports indicate that in January 2024 alone, 23,670 workers were fired across 85 tech companies, including major players such as eBay, and Microsoft.

Even smaller tech companies like Discord experienced a 17 percent reduction in their workforce while Twitch laid off 500 employees, constituting 35% of its current staff. "It began with excessive hiring and transformed into a dedication to excel by functioning as a more streamlined company," Meta's CEO said.

Furthermore, Instagram has witnessed a surge in the reduction of its technical program managers, a role that is reportedly being scaled back across various divisions of Meta. Zuckerberg attributed this decision to companies still prioritizing efficiency. "In terms of the layoffs, I actually think that was more due to companies trying to navigate Covid," he said. "At least for us, the AI stuff was not a major driver for that."

Apple Inc., however, finds itself under less pressure than its tech counterparts to reduce staff during the current economic slowdown, and it's all due to its more efficient hiring practices from the outset. While the tech industry experienced a surge in hiring fueled by the pandemic, Apple opted for a more conservative approach, adding fewer employees compared to other major tech players. Reportedly, the company also generated significantly higher revenue per new hire than its peers.

This prudent strategy is proving advantageous now. Despite implementing hiring freezes in certain areas and maintaining stringent spending controls, particularly outside research and development, Apple has yet to resort to the large-scale layoffs witnessed at companies like Amazon.com Inc., Alphabet Inc.'s Google, and Meta Platforms Inc.

"This signals a better quality of management at Apple compared to other technology companies that clearly read the signals during the pandemic the wrong way," states Saxo Bank A/S’s Peter Garnry.