Tech Layoffs Reflect Growing Frustration With Social Media, Industry Analysts Say
The massive layoffs that have rocked the tech sector in recent days have been the subject of widespread speculation in the mainstream media, with some industry and media sources attributing the announced layoffs and staff reductions to economic factors. adverse events, such as inflation and rising interest rates. But the real reasons go far beyond a momentary economic downturn or a “hiccup,” industry experts told The Epoch Times.
In addition to facing a growing threat of censorship of vaguely defined “hate speech”, the industry may have reached a turning point where consumers have become disillusioned with the online experience, and what was once seen as perennially popular services and products has lost its luster, experts say.
The layoffs have hit the tech workforce hard, with companies long considered blue-chip industry players less susceptible to economic headwinds than others announcing layoffs unprecedented in their history. Last month, for example, Amazon announced the layoff of 18,000 employees, far exceeding projections made in November of 10,000 potential staff cuts. On January 18, Microsoft announced that it planned to lay off 10,000 employees amid falling revenue.
On Tuesday, PayPal posted a notice on its website of an “update on our transformation,” in which Chairman and CEO Dan Schulman shared “the challenging news that we will be reducing our global workforce. of approximately 2,000 full-time employees”, and cited the need to adjust the company’s cost structure and devote more resources to “our core strategic priorities”.
Meta CEO Mark Zuckerberg, after cutting more than 11,000 jobs, or 13% of his company’s workforce, in November 2022 in a drastic move blamed on a tough economy, reportedly hinted at the possibility of further layoffs during a an earnings call earlier this week.
The mass layoffs in November were the first of their kind at the company since Facebook was founded in 2004.
Big Tech’s U-turn
It’s important to keep these numbers in perspective and not jump to conclusions about the tech industry or the economy it operates in, says Lee Vinsel, a professor in the Virginia Department of Science, Technology, and Society. Tech University in Blacksburg, Virginia.
“Microsoft laid off 10,000 people, but they had hired 40,000 the previous year, so we don’t see a major pullback from pre-pandemic baseline numbers,” Vinsel told The Epoch Times.
“Now it could come. We will have to see. A lot of the driving force behind this at Facebook, Google and other companies is that there was an economic downturn at the end of 2022, and that led to lower ad spend,” he said. -he declares.
Vinsel described major tech platforms as being heavily reliant on ads for their primary revenue and noted that in a recession, ad spend is one of the very first things companies tend to cut back on. The hiring sprees at some tech companies last year may have been undertaken in times of extreme overoptimism, he observed.
“I think a lot of what drove the exuberance was the cheap, easy money that was going around, that was invested in bad ideas that weren’t profitable, and as soon as the Federal Reserve started to raise interest rates, it’s injected a level of sobriety into the industry. They’re starting to wake up and face reality,” Vinsel commented.
After acknowledging the unfavorable macro conditions affecting the tech sector and pushing him back a bit from the overconfidence that led to hiring, Vinsel cited broader cultural factors that tech companies may not be. – be unwilling to consider. Enthusiasm for social media may simply have passed its peak.
“We see a lot of skepticism about social media these days, and it’s more anecdotal, but when I log into Facebook, and also Twitter, it seems people are disenchanted. Facebook has become a very boring. I think some people are a bit overwhelmed, in the sense that we’re at the end of a tech bubble that lasted a little over a decade. Part of what’s killing those bubbles is the end of the tech bubble. exuberance about the technology that is at the heart of these,” continued Vinsel.
Agreeing with Vinsel on the need to look beyond short-term economic factors to explain employee layoffs, Jeffrey McCall, a professor in the communications department at DePauw University in Greencastle, Indiana.
“I feel like this is more than just a short-term ‘hiccup’. It would appear that an obvious reason for the layoffs is the feared general downturn in the economy, and leaders want to get out ahead of the necessary belt-tightening that is likely to occur. Beyond that, however, there appear to be other factors at work,” McCall told The Epoch Times.
“I think there’s now a feeling that the tech industry has grown too quickly in recent years and, in a sense, ‘outgrown its cover.’ There was once the belief that technology would be a place of endless growth, and now that notion is being challenged.So the tech industry must seek out efficiencies, and managers have realized that operations can be streamlined,” he added.
Even those who weren’t thrilled about Elon Musk’s $44 billion purchase of Twitter last year have to acknowledge that Musk revealed how the platform can work with fewer employees, McCall said. Other industry players have been quick to notice Musk’s focus on efficiency and the role of automation in the tech space, he observed.
Another factor, and one that can have a far more decisive effect on the fortunes of the industry than fluctuations in interest rates, is of a cultural nature. The fanfare with which Zuckerberg promoted the next Metaverse may not have factored in growing disillusionment with this kind of experience, McCall believes.
“A cultural shift may well be occurring with regard to big tech. Audiences might start to feel that living on social media and other tech platforms might not be so satisfying. Technology takes a lot of people’s time and consumers recognize the false promise of living in a technological world,” McCall said.
The concerns that some people have expressed in the past about Instagram and its role in promoting narcissism and anxiety among young users fail to take into account the full extent of the destructiveness and distortion of social relations of social media in contemporary times, he suggested. .
“Social media creates a distorted view of the world and generally causes anxiety. There is misinformation circulating and lots of other bizarre content that ultimately makes us less human. The technology could lose its public luster in this regard,” McCall added.
life in cyberspace
What may be happening in society as a whole is simply a case of technological exhaustion, he speculated. Many users have had bad experiences on online platforms, and they cannot escape the consequences indefinitely.
“The inherent limitations of these outlets were not evident for many years, but the cultural costs – anxiety, loss of time, loss of privacy, misinformation, harassment, etc. – people immersing themselves in social media are now becoming apparent. Also, at some point, it becomes exhausting for people, even young adults, to constantly feed their social networks. It’s less exciting and it gets more complicated,” he continued.
Vinsel cautioned against jumping to conclusions, but did not rule out the possibility that major tech companies could face insolvency in the coming months.
“I’m very interested to see what happens over the next six months or so. There are signs that there might be a soft landing in the economy, and if that happens, you can imagine ad spending coming back, and maybe these companies will be fine, but we’re also seeing some signs that money is pretty tight around venture capital in Silicon Valley,” he said.
“There is a good chance that we will see a wave of bankruptcies. I think a lot of startups are hanging by a thread right now, and if it continues for the next six months or gets worse, we’re going to see something of an extinction,” Vinsel added.
Epoch Times contacted Meta, Microsoft, Google and PayPal for comment.