Meta is warning of “serious times” and preparing for a leaner second half of 2022, according to an internal memo circulated to employees this week. The note comes from chief product officer Chris Cox and outlines the company’s priorities and challenges to its business going forward.
“I have to underscore that we are in serious times here and the headwinds are fierce,” Cox wrote in the memo obtained by The Verge and published in full below. “We need to execute flawlessly in an environment of slower growth, where teams should not expect vast influxes of new engineers and budgets.”
The biggest revenue challenge comes from privacy changes affecting Meta’s ad business and macroeconomic pressures, Cox says in the memo, which was first reported by Reuters. Cox says monetizing Reels, the company’s short-form video TikTok copy, “as quickly as possible” is a key priority.
Cox says teams will have to “prioritize more ruthlessly”
Cox also lays out six areas where he believes Facebook needs to deepen its investments. These include metaverse products; AI; messaging; continuing to push Reels; monetization; and meeting new privacy requirements. Cox says teams will have to “prioritize more ruthlessly” without the help of new staff or budgets.
Meta had already told employees that a slowdown was coming. In May, the company froze hiring across a number of teams, including teams working on shopping and video chatting products. The company’s stock has cratered over the past five months, as investors worry about slowing growth and expensive investments in the metaverse that may take years to pay off. Meta didn’t have a comment for this story.
Read the full memo below:
Chris Cox — Employee FYI
H2 2022 Investment Priorities
Every six months, we take stock of our product portfolio and investment plans across the company to assess how we are doing and chart the way forward. As a part of this, we evaluate which areas require the most new incremental investment relative to their current staffing levels, then publish these as guidance for managers and leaders deploying scarce resources for the next six-month period. These are the areas where we see the biggest opportunities for angle-changes in the value we can deliver for people, or businesses, or for our own business, by investing disproportionately relative to our current baseline.
I will note these are not a statement of our absolute priorities as a company. We will continue our industry-leading investments in the foundational areas of integrity, security, infrastructure, core products, and ranking, while also continuing expensing R&D investments in how we will deliver the next computing platform across our portfolio in Reality Labs. Instead, these are the places where we see the biggest gaps between what we have today and what we need to fulfill the roadmaps ahead.
The six investment priorities for this half are largely the same as last half (link). These are nested in the context of the long-term roadmap, product vision, and strategy that Mark and I shared at our last company all-hands in February (link). Here they are.
Metaverse: Avatars and Horizon Worlds + Platform remain the key priorities, and our focus now is on execution. On Avatars, we need to finalize our new art style, fully launch our avatar art store, and improve avatar experiences across VR and the Family of Apps. In Horizon, we’re focused on the core experience — increasing growth and retention through improved performance & reliability, launching cross-screens, integrations across the Family of Apps, and building new social experiences in the product. As critical product infrastructure, we are focused on shipping Project Simile to launch Company accounts accessible everywhere across Family of Apps and Reality Labs devices to power continuity across the metaverse. In hardware, we are laser-focused on the successful launch of Cambria in H2, which inaugurates our prosumer / industrial-grade mixed reality product line.
Reels + Discovery Engine: A bright point in our last-half results, we have made great strides across the family and have continued momentum in short-form video. We are growing quickly: time spent on Reels overall has more than doubled year over year both in the US and globally, with 80% of the growth since March coming from Facebook. These are early days, but with good momentum. We continue to prioritize our Modern Recommendations infrastructure to improve ranking, alongside a push in our Infrastructure team to 5x the amount of available GPUs in our data centers by end of year. We need to refactor our content org (link) which will retool our short-form, real-time and regionalized insights, not only for video, but for text, links, Groups, re-shares, and our formats more broadly. These will shift towards the vision of recommending the content that matters most from across the entire corpus of content on our platforms, to the billions of people who use our products each day. We will also push forward with refreshes to the home screen and core UI of both Instagram and Facebook to incorporate short-form video more natively while decluttering the experiences.
Community Messaging: WhatsApp and Messenger are meeting the demand of an important trend in consumer internet right now. We’re in a great position to deliver a valuable service at a scale that no one else can match. In H2, we’ll focus on testing Whatsapp communities before we launch globally at the end of the year. With Messenger we’re working on improving product-market fit by activating conversations, improving product fundamentals, and partnering with the Instagram team to create Creator channels and joinable chats before rolling out globally in the months ahead.
AI: Our AI infrastructure and investments remain the jet engines that power out products across the course, our business, and RL. We are focused on getting to scale more quickly in H2 now that we’ve federated into our five key innovation centers. Over the next half, we will hone in on increasing AI capacity and prioritizing AI in AR (Metaverse and Avatar autogen), Product (recommendations and integrity), Responsibility (regulatory readiness) and Research (language models and translation, world-building assistance in Horizon, expanding Research SuperCluster). The FAIR team will continue to drive AI research and provide the research breakthroughs needed to make progress.
Monetization: Our biggest revenue headwinds continue to be signal loss and the current macroeconomic situation, but we see opportunities to make high-impact investments to meet those challenges head-on. On Ads, the key priorities are monetizing Reels as quickly as possible and investing in AI, which we expect to continue to be a major driver of our business. For Commerce in H2, we’re doubling down on Shops Ads to mitigate signal loss and create an exceptional onsite experience. Business Messaging will be the most important new opportunity to grow revenue — the key priorities here are click-to-messaging ads, paid messaging, and software and tools.
I have to underscore that we are in serious times here and the headwinds are fierce. We need to execute flawlessly in an environment of slower growth, where teams should not expect vast influxes of new engineers and budgets. We must prioritize more ruthlessly, be thoughtful about measuring and understanding what drives impact, invest in developer efficiency and velocity inside the company, and operate leaner, meaner, better exciting teams.
Mark will share more on these priorities and our outlook overall at our next Q&A. In the meantime, I remain very excited about our product plans and look forward to heading into the second half of this year with you all.