Big Tech Layoffs Deflate Musk and Zuckerberg

Restructuring is a horrible time for the staff of any company, but it’s also an opportunity to concentrate on what reliably makes money. Elon Musk has made cuts so deep at Twitter Inc. that his team has started asking dozens of workers to return after being laid off last Friday, when about half of them were shown the door. Mark Zuckerberg’s Meta Platforms Inc. is, meanwhile, gearing up to fire thousands of its roughly 87,000 salaried employees on Wednesday, according to the Wall Street Journal, the first time in its history that it has ever carried out mass job cuts.

Inflation, fears of recession and a pandemic hiring boom have led to this inflection point for Big Tech, with firms like Stripe Inc. making painful job cuts too. But the cuts at Meta and Twitter are more than an opportunity to bolster their bottom line; it’s a moment to put aside their leaders’ obsessions with new and untested services.

Musk and Zuckerberg both run companies with advertising in their DNA, and they should refocus on being good ad businesses if they want to stem their decline — even if their moment of dominance appears to have peaked. Instead, Facebook’s founder is chasing virtual reality and Musk is threatening advertisers who boycott Twitter, as companies including General Motors Co., Microsoft Corp. and Verizon Communications Inc. suspend their ads on the site over concerns of inadequate content moderation.

Zuckerberg has invested more than $10 billion in building a novel business based on virtual reality — the metaverse — that includes a $1,499 headset that he’s pitching, inexplicably, for office meetings. Musk is selling Twitter’s blue verified badges for $8 and taking them away from anyone who doesn’t pay. Both billionaires are stubbornly chasing ideas that stand little chance of making money at a time when both firms need to pay their bills. Twitter in particular is saddled with $1 billion in annual interest payments thanks to debt taken on in Musk’s purchase of the company.