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Mark Zuckerberg is finally embracing his new role as Meta’s Chopper-in-Chief. Here are the plans he just laid out to further cut costs in 2023.

Mark Zuckerberg wearing sunglasses

Alex Kantrowitz

  • The CEO said growth will probably not “go back to the way it was before.”
  • Meta has entered a new era, Zuckerberg tells analysts on a conference call.
  • The company is canceling multiple data center projects.

Mark Zuckerberg caught the cost-cutting bug.

During a call with Wall Street analysts discussing Meta‘s fourth-quarter results, Zuckerberg said his new push for “efficiency” in 2023 was inspired by how much better the company seemed to perform in the wake of November’s mass layoffs and other moves, like closing offices. The improvement was “unexpected,” he added, and made him realize the company has entered a new era.

“For the first 18 years, I think we grew it, you know, 20%, 30% compound or a lot more every year, right? And, and then obviously that changed very dramatically in 2022, where our our revenue was negative for the first time in the company’s history,” he said. “We don’t anticipate that that’s gonna continue, but I also don’t think it’s gonna necessarily go back to the way it was before.”

“It’s been a rapid phase-change, to take a step back and say, ‘Ok, we can’t treat everything like it’s hyper growth,'” he added. “We have a lot of things now that a lot of people use and that support a large amount of business and we should operate somewhat differently.”

To that end, Meta, formerly known as Facebook, is planning to further cut costs this year. Zuckerberg brought up last year’s 11,000 layoffs, and made it clear that move “was the beginning of our focus on efficiency and there would be additional steps.”

Closing and merging offices

One of the additional steps is the closing and “consolidation” of more offices. It cost the company $2.2 billion last year to exit a number of major leases as Meta decided to continue allowing remote work on a full-time basis. Desk sharing is being implemented this year as offices in California, Seattle and New York are set to close. The office space dedicated to Instagram in San Francisco is going to close this year, for instance, set to be combined with the main Facebook office building also in San Francisco. 

Susan Li, Meta’s new CFO, said during the call that the company would see another $1 billion in charges related to lease exits this year. She also noted that “further costs from restructuring efforts” are possible.

Employees are bracing for more layoffs 

That could come from a new round of layoffs. Employees are bracing for another 5% to 10% cut to headcount as performance reviews wrap up and Zuckerberg talks about wanting to “flatten” the reporting structure. He said on Wednesday the company is “removing some layers of middle management” and noted that Reality Labs, which is building a metaverse, is not safe from more cuts. Many managers have already lost their jobs, as Insider reported. Layoffs in the fourth quarter cost the company $975 million, according to Wednesday’s disclosure.

“What makes you a better company over time is being able to execute and do more because you’re operating more efficiently,” Zuckerberg said. “We’re in a different environment now where a lot of what we do, it makes sense to focus on the efficiency a lot more than we had previously and make sure we can work effectively. For what it’s worth, I think it’ll be a more fun place for people to work because they can get more stuff done.”

Canceling multiple data center projects

Meta has also been canceling multiple data center projects, and incurred $1.3 billion in charges related to that. This effort is continuing into 2023. Li said the same operational “scrutiny” being applied to other areas of the company is going toward data centers as well.

The building and maintenance of data centers is typically a huge expense for any big tech company, despite many tax incentives handed out by state governments to host them. Meta is undertaking an entirely new architecture for its data centers, Li said, that will give the company the capacity to use them for AI and non-AI needs and workloads. The company did not disclose which current data centers are being closed or affected by the design changes. Although, the goal is for data centers to simply cost the company less money.

“It will be cheaper and faster to design,” Li said of the new center architecture. “And we are going to optimize our overall approach to building data centers.”

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Read the original article on Business Insider