Well, Meta Platforms CEO Mark Zuckerberg, as we've been reporting, says that the company will cut more than eleven thousand jobs and that represents about of metas workforce, joining us to discuss his mandate seeing Bloomberg Intelligence senior tech industry analyst mandive. We've discussed some of the other ways that Meta is trying to cut costs as well. We never like to hear about job cuts, but is it actually going to be enough to turn things around for Meta?
I mean, let's put it into context. So Meta actually grew their employee base from twenty five thousand to almost eighty five thousand in a span of four years. And this kind of growth you could argue, you know, during the pandemic, the company was growing, uh, you know, and they were growing employee based in line with that. That is what led to this situation. So what they're doing
now is going back to their levels. And I think in terms of the offset, they're spending about you know, fifteen billion dollars in operational costs on the reality labs, the Meta worst segment that they thankful growth you know, for the next few years, but essentially, you know, the core business is still generating free cash for margins. So really, if they peer back the reality labs, then this will
look a lot better. But otherwise I think we're just going back to where they were back in in terms of the employee account. Can I push back a little bit on that because we know that the digital ad market is contracting right now, and I know that Meta on that front has to be facing somewhat of a headwind. Fair statement, absolutely, and it reflects in the ad pricing.
So They're pricing has been declined double digits this year, but that is something that's affecting everyone Alphabet and you know, all the other players in the industry, so that cyclical, that component will come back. Yes, they have pressure from TikTok, that is the other headmen that they face and which is somewhat affecting Meta more than the other players. But I think even that will improve over time. Maybe there is a band on TikTok that could be good news
for Meta. You're right as well in some of the Bloomberg intelligence pieces that we're looking through that you have seen engagement on the core Facebook app peaking, And I think that we could all argue that when we look at our own interaction with that app, So tell us where the bigger growth is then coming through. I mean, we chink about reality labs, but is it is it the likes of reals? Is it Instagram? Where do we
see some more kind of a guest movement formata? Yes, so on a standalone basis, Instagram is still doing very well from an engagement perspective. And the ad pricing compression is not affecting Instagram as much as it's affecting the core blue app, So clearly Instagram is still working. WhatsApp has actually been a bright spots so Matter recently disclosed in their earnings that click to message ads is almost
a nine billion dollar run rate business. And again, this company is over a hundred and twenty billion dollars revenue run rates, so pretty sizable given you know, the WhatsApp was always something that didn't monetize very well, so that seems to be improving. So definitely some bright spots to call out. But when you look at a company with over a hundred billion dollar revenue run rate, you need
something big to drive that next leg of world. Now the company fields its matter worse, but so far there hasn't been any commercial success or you know, Uh, it's kind of a jump in installed base of r headsets and and that's why I think it's too premature to go, you know, that big in terms of committing fifteen billion dollars in APEX and another ten billion dollars in CAPEX spending on something that we don't know it's commercially viable.
So you mentioned TikTok, they're obviously the social media landscape has changed pretty dramatically, and we see what's going on with Twitter right now and the challenges facing the new leader, Elon Musk. I know, Mandeep, it's a bit of apples and oranges. But can you see anyway that Meta or any one of its platforms, whether it's Facebook or Instagram, any one of those platforms can benefit from a lot
of what we're seeing at Twitter. They could, But again the question is what will move the needle in the case of Meta. So even if let's say, you know, a billion dollars of ad revenue get split across all these competing platforms, whether it's Meta or Snapchat or Pinterest, it's not going to move the needle for Meta. It could move the needle for Snapchat or Pinterest because they're much smaller in size, but for Meta, given their size, like the Apple at pricing, headwind is about a ten
billion dollar drag on their top line this year. So, just to give you a sense of the magnitude of what Apple has done, because of all the privacy changes and the lower ad advocacy that Meta has, they're losing almost ten billion dollars. Now something has to offset that. First, I don't think it's going to be Twitter's revenue. We talked about the fact that losing your job but never never something we want to hear of metas workforce that
is facing that that more than eleven jobs. Who do you think might be looking to pick those jobs up? Because a smart company is going to look for talent when others are saying, look, we can't kind of deal with that right now and potentially move their business forward. Yeah, So look, I mean there are companies that are looking to expand into ads, and what Apple has done is really created a level playing field for anyone to benefit from, you know, first party data. So even retailers are looking
to offer their own app platform. A company like Roadblocks that reported results today, much smaller in size, but they talked about expanding their head count and roadblocks is also a metaverse played to an extent because they have you know, three D games, even though you don't play it using the VR headsets, it's all three D content. So look, there will be a company that will uh you know, emerge out of this downturn and and really take share.
And uh, I think the smaller ones I have a better shot at it, all right, Man, Deep, always a pleasure, Thank you so much, Bloomberg's men, Deep saying from a Bloomberg Intelligence he is our senior tech industry analyst.