Case Analysis

2022 Layoff: Twitter and Meta 2022
Elon Musk, the world’s richest man, became Twitter’s largest shareholder in April 2022. Later that
month, Musk wrote a letter to Bret Taylor, Chairman of the Board, offering to buy all shares — a deal
worth $44 billion.
Musk, who previously criticized the social media company for its account-banning practices and what he
called censorship, wrote in his letter that Twitter had the "potential to be the platform for free speech
around the globe."
The only way for it to achieve that potential? Transform it into a private company, wrote Musk. Fast
forward to October 27. Following a roller coaster period of will he or won't he buy Twitter, Musk closed
the deal and became Twitter's new owner. The two weeks that followed will be used as a case study for
years to come in what not to do when taking over a company.
What Is Happening at Twitter?

Hours after Musk assumed the helm at Twitter, he fired top executives, including CEO Parag Agrawal,
CFO Ned Segal and head of legal policy, trust and safety Vijaya Gadde. Musk announced himself as
interim CEO and dissolved the company’s board — though he later claimed it was temporary. He also
closed Twitter offices and temporarily suspended employee badge access.
Twitter staff learned of potential layoffs via an email signed by "Twitter." Hours later, many found
themselves locked out of company emails, Slack accounts and computers — before receiving any
notification about their job status.
Those that did get an email — around 3,700 employees — got messages that said something to the
effect of: “Today is your last working day at the company.” The layoffs effectively halved the company's
workforce from 7,500 to 3,800.
Why Did Twitter Lay Off Workers?

Musk agreed to pay $54.20 per share to buy Twitter in April 2022. By July, the stock price plunged to
$32.65.
The billionaire attempted to backtrack on the deal for months, alleging Twitter had misled him about the
abundance of fake accounts. Twitter sued Musk to complete the deal and, eventually, Musk gave in. The
deal officially closed on October 27, 2022.
Stock prices rebounded — sitting at $53.70 today — but Musk still claims he and other investors were
“obviously overpaying” for Twitter. Yet that wasn’t Musk’s only problem.
Once the transition of ownership became official, major advertisers began pulling their budgets away
from Twitter. Musk accused "activist groups" for forcing advertisers to drop the company. This in spite of
a meeting Musk had with advertisers shortly after the deal finalized, where he failed to provide
assurances about the platform's future. His vocal support of loosening content moderation, the layoffs
that erased existing relationships with advertisers, and his own behavior on the site including retweeting
conspiracy theories around the attack on Paul Pelosi, created an environment antithetical to wooing
advertisers.
He later cited the profit loss as the reason for Twitter layoffs, writing, “Regarding Twitter’s reduction in
force, unfortunately there is no choice when the company is losing over $4M/day.”
Why Is Meta Laying Employees Off?
Twitter isn't the only company dealing with layoffs. On November 9, Mark Zuckerberg wrote a
message to Meta employees sharing plans to reduce staff significantly.
Zuckerberg claimed the ecommerce surge at the start of the pandemic led to “outsized revenue
growth,” with many predicting a permanent acceleration. As a result, the company significantly
increased its investments.
“Unfortunately, this did not play out the way I expected,” wrote Zuckerberg. Instead:
Ecommerce returned to pre-pandemic trends.
The economy took a downturn.
Competition increased.
Ads faced signal loss.
The result? Meta saw much less revenue than expected.
Zuckerberg announced he would lay off more than 11,000 employees — around 13% of its workforce.
Similar to Twitter staff, Meta claimed it would notify affected employees via email.
Yet in contrast to the Twitter layoffs, Meta offered avenues for those impacted to speak with a Meta
representative, ask questions and/or join information sessions.
How Is Zuckerberg Approaching Meta
Layoffs?
Meta and Twitter job cuts have the same outcome — thousands of tech employees out of work. But
these two billionaires handled company layoffs in vastly different ways.
While Zuckerberg and Musk both used email as their medium of communication, the similarities end
there.
Twitter employees filed a class action lawsuit alleging Twitter violated federal and state laws by failing to
give proper notice before termination. California's WARN Act and the federal Worker Adjustment and
Retraining Notification Act both require 60 days advance notice when conducting layoffs at this scale.
Twitter employees were left with little in the way of compensation or support after layoffs. While staff
was initially told they would receive the same severance pay and benefits they would have received
under Twitter’s previous ownership — two months’ severance or more, based on years of employment
— Musk told employees they would get only one month’s severance pay.
Zuckerberg outlined the support offered to affected employees in his letter, which includes:
Four months’ severance pay, plus two additional weeks for each year of employment.
Health insurance for employees and family coverage for six additional months.
Access for three months to external career services support.
Immigration support for those on a visa.
One other critical difference between the two approaches? Accountability. In the case of Twitter, Musk
has laid blame on anyone and everyone for its current state but the closest he has come to
acknowledging his own part in the current chaos came in the form (appropriately enough) of a tweet.
Zuckerberg, by contrast, wrote this line in his letter announcing the layoffs to Meta staff: "I want to take
accountability for these decisions and for how we got here." While a passing line in a statement is
unlikely to soften the blow of losing your job, it can impact the responses employees have to layoffs.
Twitter and Meta Aren't Alone

Twitter and Meta are not the only tech companies that have laid off workers.
Other notable layoffs include:
Snap laid off 1,000 employees — 20% of staff
Stripe eliminated 1,100 jobs — 14% of staff
Coinbase cut 1,100 workers — 18% of staff
Shopify laid off 1,000 employees — 10% of staff
Netflix, Microsoft, Lyft, Robinhood, Tesla and others have also seen company-wide staff cuts.
Many of these tech companies fell into the same trap as Meta, assuming that growth caused by the
pandemic would continue. They hired more employees based on that assumption of constant growth.
Now tech companies are watching as digital advertisers cut back on budgets and consumers reduce
spending due to inflation. With revenue dipping, companies are looking to cut costs. And labor spending
is unfortunately the often first place they turn to.

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2022 Layoff: Twitter and Meta 2022

What Is Happening at Twitter?

Why Did Twitter Lay Off Workers?

Ecommerce returned to pre-pandemic trends.

The economy took a downturn.

Ads faced signal loss.

The result? Meta saw much less revenue than expected.

Immigration support for those on a visa.

Twitter and Meta Aren't Alone

Other notable layoffs include:

Snap laid off 1,000 employees — 20% of staff

Stripe eliminated 1,100 jobs — 14% of staff

Coinbase cut 1,100 workers — 18% of staff

Shopify laid off 1,000 employees — 10% of staff

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