Meta is decreasing its workforce by around 12.6 percent in a layoff that will affect 11,000 of its employees, making it the largest tech layoff this year.

Meta CEO Mark Zuckerberg said this in an internal memo obtained by Reuters:

“Not only has online commerce returned to [pre-covid] prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” Zuckerberg said. “I got this wrong, and I take responsibility for that.”

Meta plans to cut discretionary spending and extend its hiring freeze through the first quarter, Reuters maintains. Laid off Meta employees are said to receive 16 weeks of base pay plus two additional weeks for every year of service, as well as all remaining paid time off, as a part of the severance package.

It’s not certain what percentage of layoffs will affect those working in Reality Labs. We’ve reached out to Meta for further comment and will update this if/when we hear back.

Trouble in XR Paradise?

Meta’s most recent quarterly earnings spelled trouble when it was released last month. Close to celebrating its first year after rebranding from Facebook to become a self-described ‘metaverse’ company, Meta battled slumping revenues across multiple divisions, not least of which was its XR centerpiece Reality Labs, which took an expected hit that didn’t sit right with investors.

While Meta has been aggressively spending on its XR division over the past few years, its recent shift away from Facebook amid all-time low revenues and record inflation has made layoffs almost a guarantee to keep stock prices from plummeting further.

Back in May, Reuters reported that hiring freezes would affect Reality Labs, which has added more than 13,000 employees last year and nearly 6,000 in the first quarter this year.

Zuckerberg warned at the time that Reality Labs probably wouldn’t truly profit for at least decade. In the meantime, the Meta’s XR efforts has cost the company $10.2 billion in 2021 and another $3 billion in the first quarter this year.

Meanwhile, Meta has just released its $1,500 Meta Quest Pro mixed reality headset for prosumers and business, and plans to release a consumer-focused follow-up, likely dubbed Quest 3, sometime in 2023.