Mass Tech Layoff Wave Rising to New Heights
After mass layoffs at Twitter aimed at turning the social media platform profitable in as short a timeframe as possible, several other tech companies seen as robust and secure workplaces have followed suit with the two most significant layoffs in the tech industry since the beginning of the COVID-19 pandemic. Within a week of each other, Meta and Amazon have reduced their workforce by 11,000 and 10,000, respectively, as data crowdsourced by Layoffs.fyi shows. These business decisions indicate that the layoff wave in the sector, which started in April, ebbed in September, and is now at an all-time high, is not over yet.
As our chart shows, more than 500 startups and tech-oriented companies incorporated in the United States laid off employees between April and October, compared to just 20 in the first quarter. For example, online used car retailer Carvana reduced its workforce by 2,500 employees in May. The staff cuts of more notable companies like Netflix or PayPal were comparably minor in this timeframe. The former dismissed 450 or around four percent of its employees during the second quarter of 2022, while PayPal terminated contracts for 83 of its workers.
July saw social media giants TikTok and Twitter laying off multiple employees. Chinese tech firm Bytedance owns the former, but it stores the data of its non-Chinese users in the U.S. and can be considered a fringe case in terms of being incorporated in the United States. In the case of Twitter, increasing pressure due to the potential takeover by Tesla CEO Elon Musk was one of the suspected reasons for these layoffs. One of Musk’s most ambitious rivals, the Amazon-backed electric vehicle manufacturer Rivian, also cut 840 of its staff in July due to the world having “dramatically changed.”
Another industry plagued by fraud, increased hacker attacks, and a drastic loss in value for many cryptocurrencies over the past months is the fintech sector. For example, between April and August, industry darlings like neobroker Robinhood, NFT marketplace OpenSea, and cryptocurrency exchange Coinbase all had to let go between 20 percent and one-third of their workforce due to effects at least in part attributable to the so-called “crypto winter.”
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Michael N. Mercurio is a leading attorney in the field of mergers and acquisitions (M&A). He serves as outside general counsel in buy-side and sell-side M&A, as well as in all business law and real estate law matters. As a strategic partner to firm clients, Mr. Mercurio regularly counsels entrepreneurial individuals and assorted entities on the many challenges, issues, and opportunities companies face throughout the business lifecycle—from start-up to eventual exit.
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