The AI giant, Meta Platforms, Inc., is reportedly planning significant workforce reductions. During U.S. trading on Friday, Meta's stock price fell nearly 4%, erasing $61.9 billion (approximately 437 billion Chinese yuan) from its market capitalization in a single day. The company's total market value subsequently decreased to $1.55 trillion (approximately 10.69 trillion Chinese yuan).
Reports emerged suggesting that to counter surging AI-related costs, Meta is considering layoffs affecting 20% or more of its workforce. As of the end of last year, Meta employed nearly 79,000 individuals.
Simultaneously, xAI, under the leadership of Elon Musk, is undergoing a period of instability, with several of its co-founders departing. Of the original 12 co-founders, only two reportedly remain. Additionally, xAI's closely watched AI agent project, codenamed "Macrohard," is said to have stalled.
Meta Potentially Cutting at Least 20% of Workforce According to information from Reuters, multiple sources indicate that Meta is preparing for large-scale layoffs, potentially impacting 20% or more of its total employee count. This move is intended to offset the high costs associated with building AI infrastructure and to prepare for a transition as AI-assisted tools improve workforce efficiency.
Reportedly, the specific timing for the layoffs has not been finalized, nor has the ultimate scale been decided. Two of the sources mentioned that Meta's senior leadership has recently communicated the layoff plans to other senior managers, instructing them to begin formulating reduction strategies. In response to the report, Meta spokesperson Andy Stone stated, "This is a speculative report about theoretical scenarios."
If Meta proceeds with a 20% reduction, it would represent the most substantial workforce adjustment since the company's "Year of Efficiency" restructuring between late 2022 and early 2023. According to the latest financial report, the company had nearly 79,000 employees as of December 31 last year. In November 2022, Meta laid off 11,000 employees (approximately 13% of the workforce at that time), and announced plans to cut an additional 10,000 roles about four months later.
Over the past year, Meta's CEO Mark Zuckerberg has consistently pushed for the company to enhance its competitiveness in the generative AI sector. To attract top AI researchers to a new super-intelligence team, the company has offered substantial compensation packages, some reportedly worth hundreds of millions of dollars over a four-year period.
Meta plans to invest $600 billion in data center construction by 2028. Earlier this week, it acquired Moltbook, a social platform for AI agents. Meta also spent at least $2 billion to acquire the Chinese AI startup Manus.
Zuckerberg has hinted that these investments will lead to efficiency gains. In January of this year, he noted that he had seen "projects that previously required large teams now being accomplished by a single exceptional individual."
Meta's strategy reflects a broader trend among major U.S. corporations, particularly in the tech sector, this year. Executives view recent advancements in AI systems as a catalyst for transformation. Amazon confirmed layoffs of approximately 16,000 employees (around 10% of its workforce) in January. Last month, the fintech company Block cut nearly half of its staff, with its CEO Jack Dorsey explicitly citing AI tools as enabling the company to achieve more with leaner teams.
As Meta advances its AI investments, its Llama 4 model faced a series of setbacks last year, including criticism that benchmark results for an early version were misleading. The company abandoned plans to release its largest version, codenamed "Behemoth," in the summer. This year, the super-intelligence team has been working on a new model called "Avocado" to re-establish the company's standing, but this model's performance has also lagged behind expectations.
Major Upheaval at Musk's xAI xAI, the artificial intelligence startup founded by Tesla CEO and world's richest person Elon Musk, is experiencing significant turmoil. Not only have several co-founders departed, but its Grok chatbot has also sparked multiple controversies. Musk has acknowledged that the company requires a deep restructuring.
Less than six weeks after a proposed $1.25 trillion merger deal between SpaceX and xAI, Musk admitted that the AI startup needs to be "rebuilt from the ground up." He made this declaration via the social platform X amidst a series of departures by co-founders. This past Thursday, xAI co-founder Guodong Zhang announced his departure. Haotian Liu, an xAI colleague who worked closely with Zhang, also stated that he had left the company earlier in the week.
Of the 12 original xAI co-founders, only two are now said to remain. Addressing this situation during an all-hands meeting in February, Musk stated that some individuals were "better suited for the early stages of a company than for its later phases." However, reports indicate that some of the departed engineers are collaborating on new ventures, suggesting deeper internal conflicts at xAI. Media reports citing sources claim that management from SpaceX and Tesla have been asked to review the work of xAI employees, leading to the dismissal of some staff.
On the evening of the 12th, Eastern Time, Musk posted on social media platform X: "xAI wasn't built correctly the first time, so it's currently being rebuilt from the ground up. Tesla went through the same thing."
Furthermore, xAI's notable AI agent project, Macrohard, was reported to have stalled as of this past Wednesday, following the departure of its lead, co-founder Toby Pohlen.
This personnel shake-up at xAI coincides with SpaceX's preparations for a potentially historic IPO. In the recently announced merger proposal, SpaceX was valued at $1 trillion, while xAI was valued at $250 billion. Meanwhile, the company is bringing in new engineers, such as Andrew Milich and Jason Kingsberg from the startup Cursor, while simultaneously cutting positions, reportedly due to observations of rapid progress in programming tools from OpenAI and Anthropic. Musk also admitted that the hiring process may have missed some qualified candidates and stated that the company is re-reviewing past applications to re-establish contact.
xAI also faces several controversies related to its Grok chatbot and an image generator, which has been accused of being able to create non-consensual synthetic imagery based on real photographs. Despite these controversies, the company has successfully secured contracts with U.S. government agencies and continues to invest in energy and data infrastructure, including in locations like Memphis. Tesla is deepening its collaboration with xAI by integrating Grok into its vehicle systems and supplying energy storage equipment for xAI's data centers.
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