The revolving door at Twitter has been even more ungainly.
Within days of taking over Twitter, the world’s richest man Elon Musk culled two-thirds of the design department, citing huge losses in the area of US$4 million a day. But just as quickly as they were fired, employees have been asked to return. According to Bloomberg, dozens of staff have been contacted and told they were let go by mistake.
It’s not something to be celebrated. There are real people suffering real job and money losses. The problem appears to be that these companies believed the huge growth in buy-in and postings during Covid would continue after the pandemic eased.
Tech companies hired rapidly during the pandemic as locked-down populations sought to replace face-to-face contact with online interactions.
Zuckerberg has admitted he made the decision to hire aggressively, anticipating rapid growth even after the pandemic ended. “Unfortunately, this did not play out the way I expected,” Zuckerberg said in a 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.”
Zuckerberg had been attempting to move beyond social media but these efforts seem to have failed to ignite investor interest. Meta poured over $10 billion a year into the “metaverse” in its biggest foray outside of social media. Zuckerberg had predicted the metaverse, an immersive digital universe, will eventually replace smartphones as the primary way people use technology.
Meanwhile, competition from TikTok is also a growing threat as younger people flock to the video sharing app instead of Instagram.
An economic slowdown and a grim outlook for online advertising — by far Meta’s biggest revenue source — have contributed to Meta’s woes as well. Meta recently posted its first quarterly revenue decline in history, followed by another, bigger decline.
Beyond being an interesting spectacle, none of this would matter to your everyday New Zealander, except - as Herald technology journalist Chris Keall pointed out this week - many of our KiwiSaver funds have ridden the tech stock boom.
We are also exposed via the NZ Super Fund’s multibillion-dollar holdings in various US tech giants, from its US$1.56 billion stake in Apple to its US$1.24b holding in Microsoft to its substantial stakes in the likes of Meta, Amazon, Alphabet and Tesla.
It’s estimated that, globally, the average person uses social media for two hours and 35 minutes every day. Changes in the fortunes of those providing these platforms should be something to give more than a passing glance to.
