- It was one of the hardest calls that I've had to make
in the 18 years of running the company.
- [Narrator] Company-wide announcements
from tech CEOs have all had similarities recently.
- This is a very difficult decision.
- Tough decision.
- [Narrator] Amazon is preparing to lay off up
to 10,000 workers.
Meta is cutting 11,000.
Netflix has made big cuts, so has Shopify, Snap, Twitter.
Well, maybe that's a unique circumstance.
(Elon chuckling)
Here are the macro and micro reasons
why the tech industry is seeing massive layoffs right now.
Picture it, Silicon Valley, 2019.
These three major tech companies' revenues
were growing steadily as everything moved online.
And their number of employees was also growing.
Then, of course, the pandemic hit.
People began shopping from home, binge watching,
(Netflix starting music)
and just generally being online more.
Not only did the revenues
of many of these tech companies skyrocket,
but so did their head count.
- I think Amazon is the quintessential example here.
If you're promising two-day shipping,
you have to deliver two-day shipping.
Amazon, in response,
just had to hire many, many more people.
- [Narrator] Not only did Amazon grow its delivery operation
but it also grew from its Web Services.
- Companies and businesses
that might not have been online before,
now had an online presence.
You have to host that data somewhere,
and so Amazon saw their cloud computing service do very well
during the pandemic.
- [Narrator] Revenues stayed high through 2021
and many tech CEOs thought the growth would continue
at the same rate they had seen for the last two years.
- We're gonna continue to invest aggressively
into the growth opportunities that we see.
- [Narrator] So they continued the hiring spree,
and not just a lot of employees
but some expensive employees
because this is also when the talent wars ramped up
where companies were vying for in-demand employees.
Facebook launching the Metaverse is a prime example.
- From now on, we're going to be Metaverse-first,
not Facebook-first.
- We saw about 100 or so people leave Microsoft for Meta,
and some of these people who left the company said
that they were being offered double their salary.
- [Narrator] But by 2022, consumer habits
had changed in a big way.
People were no longer stuck inside.
Netflix saw a drop in subscribers for the first time
in over a decade.
People began spending more of their money on services
and less on goods.
Revenues for many tech companies started to stall
or even decline for the first time.
- Some of these CEOs sort
of overestimated where that new middle ground is.
- [Narrator] Which is why they're explaining,
while apologizing that they grew too fast.
Each tech company has also faced distinct problems.
A major one, Apple's privacy change,
which required apps to ask users
if they wanted to be tracked.
It affected a key component
of many of these social media companies'
digital ad-focused business models.
Add in the threat from TikTok
taking away viewership from other social media platforms.
- When you have all these things happening
at the same time, I think that's what really did it
for these companies and put them in.
- [Narrator] The bigger companies aren't outliers either.
Layoffs have been happening across the industry
throughout 2022 but have recently surged.
But even though these are a lot of layoffs,
the companies are not shrinking back to pre-pandemic levels.
Meta's layoffs will bring the number
of employees to about here.
Amazon's to about here.
Netflix brought the employee count here.
- To be clear, a lot of these companies are still growing.
It's just that the growth is slowing back
to sort of pre-pandemic or early pandemic levels.
- [Narrator] CEOs also say the timing
has to do with the threat of an economic downturn.
- Well, there certainly have been a lot
of changes very quickly in the macroeconomic environment.
- We're in a very rapidly changing economic environment.
- In some ways, these layoffs are a bit proactive.
I means, some of them have said we're doing this now
so that we never have to do this again.
- [Narrator] These layoffs, while concentrated
in the tech industry, are still a lot.
Tens of thousands of people.
- For a lot of people, this reversal and these layoffs
are something that they've never seen before.
- [Narrator] The tech industry
had the exceptionally pronounced experience
of growing during the pandemic,
and now while the rest of the labor market is growing,
they've having the exceptional experience of not.