EXCLUSIVE meta girds for ‘fierce’ headwinds, slower growth in second half – memo

June 30 (Reuters) – Meta Platforms Inc, owner of Facebook (META.O) is bracing for a leaner second half as it faces macroeconomic pressures and data privacy breaches from its advertising business, according to an internal memo seen by Reuters on Thursday.

The company needs to “prioritize more ruthlessly” and “operate leaner, meaner, better-executed teams,” chief product officer Chris Cox wrote in the memo, which appeared on the company’s internal message board. workplace company.

“I have to stress that we are going through a tough time here and the headwinds are fierce. We need to execute perfectly in a slower growth environment, where teams don’t have to expect vast influxes of new engineers and budgets. “, wrote Cox.

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Meta did not immediately respond to a request for comment.

The memo is the latest rough forecast to come from Meta executives, who have already moved to cut costs and pause hiring across much of the business this year in the face of slowing ad sales and user growth. . Read more

Tech companies across the board have scaled back their ambitions in anticipation of a possible recession in the United States, although the fall in share price at Meta was more severe than at rivals Apple (AAPL.O) and Google (GOOGL.O).

The world’s biggest social media company has lost around half of its market value this year, after Meta reported that daily active users on its flagship Facebook app saw a quarterly decline for the first time. Read more

Its austerity drive comes at a delicate time, coinciding with two major strategic pivots: one to reshape its social media products around “discovery” to fend off competition from the short-video app TikTok, the another an expensive long-term gamble on augmented and virtual reality technology.

In his memo, Cox said Meta should quintuple the number of graphics processing units (GPUs) in its data centers by the end of the year to support the “discovery” push, which requires a additional computing power for artificial intelligence to surface. posts from Facebook and Instagram to user feeds.

Interest in Reels, Meta’s TikTok-style short video product, was growing rapidly, Cox said, with users doubling the time they spent on Reels year-over-year, both in the United States and around the world. the world.

Some 80% of the growth since March has come from Facebook, he added.

This user engagement with Reels could provide a key avenue to bolster the bottom line, making it important to boost ads in Reels “as quickly as possible,” he added.

Chief Executive Mark Zuckerberg told investors in April that executives viewed Reels as “an important part of the discovery engine’s vision,” but at the time described the short video change as a “short headwind.” term” that would gradually increase revenue as advertisers became more comfortable with the format.

Cox said Meta also saw opportunities for revenue growth in enterprise messaging and in-app purchase tools, the latter, he added, could “mitigate signal loss” created by changes in privacy led by Apple.

He said the company’s hardware division was “laser-focused” on successfully launching its mixed reality headset, codenamed “Cambria”, in the second half of the year. Meta has also focused on linking accounts between its virtual reality products and traditional social media apps, he said.

Zuckerberg will share more about the company’s priorities and outlook during the company’s upcoming Q&A, he said. The weekly session should take place on Thursday.

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Reporting by Katie Paul; Editing by Kenneth Li and Lisa Shumaker

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