The EconomistThe Economist

Things are looking up for Meta

04 Feb 2023 · 3 min read

In a new age of Big Tech austerity, Mark Zuckerberg is vowing to cut costs at Meta and run a far more efficient operation. Investors are liking what they hear. The Economist has the story.

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FOR MARK ZUCKERBERG, the first three quarters of last year were rough. In July 2022 his social-media empire, Meta, announced its first ever year-on-year decline in quarterly revenues. Three months later it reported another. Investors sneered at his expensive pivot from a lucrative ads business to the untested realm of the metaverse, on which Mr Zuckerberg was splurging $10bn a year. By November Meta had lost roughly three-fifths of its market value since its peak of $1.1trn in August 2021, when the covid-19 pandemic meant that much of daily life was being lived online. Shortly after he sacked 11,000 people, or 13% of its workforce. All the while, he has been fending off trustbusters and, in TikTok, a rival that has proved considerably more adept than previous challengers such as Snap or Pinterest at attracting eyeballs—and with them advertising dollars.

On February 1st Mr Zuckerberg reported another decline in sales for the last three months of 2022, of 4.5% year on year. But the drop was smaller than expected. The company also put out an optimistic forecast for the current quarter, in which it thinks revenue could reach $28.5bn. That would be more than in the first three months of 2021, before Apple introduced privacy rules for its iDevices that made it considerably harder for advertisers to track users across the internet. Costs are coming under control, Mr Zuckerberg promised, and the company would be “be more proactive about cutting projects that aren’t performing or may no longer be as crucial”. The firms said it would buy back an additional $40bn-worth of shares. To top it off, on the same day a judge in California threw out a lawsuit brought by the Federal Trade Commission (ftc) to block Meta’s acquisition of Within, a maker of a popular virtual-reality fitness app.

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