Computer graphics of round yellow frowning face emoji. Sad emoticon against blue background. Express your emotions.
Illustration: OsakaWayne Studios/Moment/Getty Images

Big Tech’s apology tour

Source Code

Good morning! Meta announced that it cut 11,000 employees this week and as Protocol first reported, Salesforce is planning for a major round of layoffs as well. Winter has come for the tech industry. And this is just the beginning.

Is it too late now to say sorry?

Mark Zuckerberg and Jack Dorsey recently did something that is, unfortunately, rare in the tech industry: They admitted they were wrong.

After a particularly bruising round of layoffs at Twitter under new overlord Elon Musk, Dorsey acknowledged he was at fault for growing the company too quickly. And as Meta shed 11,000 workers, Zuckerberg used a similar talking point.

The acts of contrition will likely do little to assuage the concerns of the thousands of employees who are now jobless ahead of the holiday season. But Dorsey’s and Zuckerberg’s olive branches at least stand in contrast to some more brutal layoffs elsewhere in the industry.

  • At Salesforce, for example, employees who were recently laid off were given two months’ severance, sources told Protocol, a sharp reduction from what the company previously provided and noticeably less generous than Meta’s 16 weeks.
  • At Meta, workers were also given additional severance based on their tenure at the company. At Salesforce, employees who’d been there over a decade received the same package as those who had been there a year, the sources said.
  • Salesforce did not respond to a request for comment.

It’s startling how fast tech has fallen. For many, particularly younger workers, it’s tough to remember a time when the industry was wounded this badly. Even during the Great Recession, companies like Intel used the down time as a key opportunity to expand.

  • For the past decade, capital has flowed into the sector like the mighty Mississippi. It propped up thousands of startups, many with no viable path to profitability. And with seemingly uncapped growth potential, companies added thousands to their workforces to support ever loftier sales goals.
  • Meanwhile, vendors like Salesforce and Facebook spent billions over the past two decades to gobble up companies, creating a new wave of business and consumer tech giants. And Amazon, Microsoft, and Google cemented their behemoth status as businesses rushed to adopt the cloud and consumers spent more of their lives on the internet.

It seemed nothing could stop the impenetrable tech industry. Winter would never come in Westeros.

  • The pandemic briefly strengthened that mindset given the massive growth of IT vendors like Zoom and DocuSign, as well as the heightened demand for ecommerce and other digital services.
  • But investors quickly became nervous about just how much money businesses were spending, as well as how quickly consumers were pivoting back to pre-pandemic behavior. And as sales propelled to historic new heights, it quickly became a question of when, not if, the boom would bust.
  • Now, some of those acquisitions, like Salesforce’s $27 billion deal for Slack, are looking like major liabilities as profitability becomes paramount. Burned by huge cloud and software bills, companies are increasingly eager to cut costs. Amid historic inflation, consumers quickly pivoted in their spending habits. And as a result, vendors are shedding workers at an alarming pace.

Winter has arrived with a vengeance. While customers will certainly continue to spend money on IT services, where those dollars are deployed as well as how much those investments will grow remains an open question. That means the growth that many vendors thought would come is likely delayed by years — if not indefinitely.

  • Meta and Twitter have their own challenges that could take a while to sort out. But for others in Big Tech, like Salesforce, the last few months of the year are often quite lucrative. It’s when many of the largest customers renew, which makes the timing of the layoffs all the more noteworthy.
The end is nowhere near for tech layoffs. In fact, some industry insiders expect them to resume with even greater gusto following the upcoming holiday season. Perhaps now all we can ask is for CEOs to follow in the footsteps of Zuckerberg and Dorsey and at least make an effort to show remorse. Then they’re free to jump on their personal jets and head to their private tropical estates to recoup before the next round.

A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Don’t miss out! Register today to hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event will be live-streamed on November 16th.

Learn more and reserve your spot here.

The best of Protocol

Brad Smith explains why the world needs to go carbon-negative — and how to get there— Michelle Ma

  • Brad Smith has been busy leading Microsoft’s climate initiatives since the departure of chief environmental officer Lucas Joppa. In a conversation with Protocol’s Michelle Ma ahead of COP27, Smith emphasized that tackling climate change is going to take collaboration among government, markets, and nonprofits, as well as a willingness to help fossil fuel and coal businesses “transform” to clean energy.

Amazon’s HQ2 project is stuck in the past— Anna Kramer

  • Amazon’s HQ2 project seemed like a “magical elixir” for the troubles of Arlington, Virginia, a city that had been battling high office-vacancy rates for more than a decade. But as remote work has become the standard, the project — envisioned as a white-collar paradise complete with interlacing parks, child care centers, and a facial spa — seems stuck in 2019.

Upstart CEO: The pain for lenders is far from over— Ryan Deffenbaugh

  • Upstart, a technology provider for lending that makes most of its money by charging fees for matching financial institutions with borrowers, has been badly hurt by higher interest rates and economic uncertainty. But Upstart and fintech lenders like it are in for a rough road ahead, CEO Dave Girouard said.

The red trickle could still be bad for TikTok, Apple, and Google— Ben Brody

  • Republicans fell short of the midterm “red wave” they hoped for. But their likely success in taking over the House means that lawmakers will be pursuing a new set of tech priorities in a divided government. The best possibility for action comes from bipartisan agreements: building on momentum for privacy, competition, and antitrust reform taking aim at Apple, Google, and TikTok.

When hackers come for biometric login data, Okta now has a countermove— Kyle Alspach

  • Malicious actors get increasingly sneaky in their phishing attempts. Biometric data is considered an inherently more secure method of authentication, but a series of high-profile cases of thwarted multifactor authentication shows that biometric logins could become a bigger target for phishing. Okta has a solution: “Make even the biometric authenticators more anti-phishing.”

How OBS Studio became the open-source backbone of livestreaming — Janko Roettgers

  • Open Broadcaster Software helped make Twitch what it is today. What started out as a very basic game-streaming app for creator Hugh Bailey to play StarCraft II has since ballooned into a key growth engine for the game-streaming space. Not only did collaborating on OBS help Bailey become a better programmer, but it also gave him a sense of purpose.

Too big, too fast: How Twilio found itself in cost-cutting mode after pandemic growth— Aisha Counts

  • Though Twilio is still a growing company, its trajectory has changed. Its current financial outlook is a drastic shift for a company that was growing at an explosive 50% over the past several years thanks to demand for its communications APIs. While macroeconomic factors are partially to blame, Chief Operating Officer Khozema Shipchandler said the company’s biggest misstep was growing too big, too fast.

Elon Musk’s Twitter takeover is a reminder that Slack is never private — Lizzy Lawrence

Elon Musk’s ascension to the head of Twitter has caused a vibe shift in the company’s Slack channels. Now that Musk has access to a treasure trove of internal Slack messages, a once-bubbly environment has grown quiet as formerly outspoken employees fall silent. The situation is a lesson that your work Slacks are never your own.

Thoughts, questions, tips? Send them to our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

Recent Issues

The best of Protocol

The confessions of SBF

Your holiday book list

A tale of two FTXs