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Meta warns of budget cuts, Google plans a hiring slowdown, and Snapchat is trying out a desktop option for the first time during the economic downturn.
M ark Zuckerberg came with bad news. In a meeting with employees in July, the Meta CEO, who has turned his company’s focus, and investments, toward the metaverse, told staff to prepare for one of the “worst downturns that we’ve seen in recent history,” as Reuters reported. Employees used to bountiful resources would need to work with less, and those unable to rise to the occasion and prove their worth at the company would be headed for the exit. It was a bleak reminder of the foreboding year ahead for the tech giants, which are heading into another earnings season with tumbling stock prices and downturn in advertising.
Snap, the parent company of Snapchat, will be the first of the major social and tech platforms to report earnings, on July 21. The company is expected to miss its revenue targets, according to an SEC filing submitted in May, warning that the “macroeconomic environment has deteriorated further and faster than anticipated,” which would result in “revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range.” Snap CEO Evan Spiegel also noted a change in the “pace” of hiring, hinting at a slowdown.
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In June, Spotify said it would reduce its hiring growth by 25 percent in response to the ongoing economic downturn. And on July 12, Google joined the fray when Alphabet CEO Sundar Pichai announced a hiring slowdown and urged employees to “be more entrepreneurial, working with greater urgency, sharper focus and more hunger than we’ve shown on sunnier days.”
Even if some of the individual companies manage to meet revenue expectations during the second quarter, it will be with the caveat that their stock prices, at least in the case of Meta, have seen a nearly 50 percent drop in price this year. Private competitors like TikTok, which Insider Intelligence forecasts to surpass both Twitter ($5.58 billion) and Snapchat ($4.86 billion) in ad revenue this year at $11.64 billion, also are coming in and taking up space in the market, forcing the tech giants to be more creative.
As a result, some platforms like Snap — whose digital ad revenue makes up just 1.1 percent of the U.S. market share, according to eMarketer — have begun experimenting with subscriptions. In June, the company launched Snapchat+, a $3.99-a-month subscription tier that gives users access to new features — albeit still with ads.
Though the initial launch may have confused some observers, Snap rolled out a subscriber-only web version of Snapchat on July 18 that will allow users to send messages and make video calls with others via their computers. Given that Snap is seen as a social platform rather than a work-oriented service, the feature may be compelling enough to entice Zoom-fatigued subscribers looking for a change, and give Snap another avenue to make money.
A version of this story appeared in the July 20 issue of The Hollywood Reporter magazine. Click here to subscribe.
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