Meta’s job cuts are gutting customer service, leaving influencers and businesses with nobody to call
Katya Karlova
Toward the tail end of the Covid pandemic, Katya Karlova’s career morphed from fashion model to Instagram influencer. As businesses started to reopen, Karlova started posting photos of herself on the app to connect with other photographers, leading to more opportunities.
Her following on the photo-sharing service ballooned to over 250,000 people, the type of reach that attracted brand partnerships. Clothing companies like Secrets in Lace, which sells nylon stockings and lingerie, paid Karlova to promote their products in her videos.
Karlova, who lives in Los Angeles, even became a verified Instagram user, signifying at the time that she was “notable and unique,” according to Instagram’s help center.
But the party ended in a hurry.
When Meta, the parent company of Facebook and Instagram, began its cost-cutting spree in late 2022 and amped it up this year, Karlova’s Instagram account turned into collateral damage. As part of the company’s two rounds of layoffs, equaling roughly 21,000 job cuts, Meta gutted wide swaths of its customer service operation, leaving influencers and businesses with nobody to contact about their accounts.
For Karlova, that meant internet scammers were suddenly given free rein to her profile, stealing her photos and creating fake accounts that they could use to deceive Instagram users, in some cases convincing them to send money for what they described as adult-related content.
“This is really damaging,” Karlova said in an interview. “This is my brand and I work really hard to build it to be something impactful and positive.”
Even prior to the cost cuts, Karlova said Instagram failed to quickly remove fake accounts when she would report them despite the fact that new fraudsters would pop up by the week. She thought that, in becoming a verified user two months ago, she would receive a higher level of support.
However, she soon realized that her requests for help continued to go unattended, telling CNBC it’s “literally like it goes into the void.”
According to former Meta employees and documents filed to the U.S. Department of Labor, many of the layoffs affected staffers in client support, customer experience and communities.
CNBC spoke with influencers, small businesses and Meta account managers as well as a half-dozen former contractors and former Meta employees about the deterioration in customer service at the company since the job cuts began in November. Taken together, they tell the story of a company whose quick pivot in late 2022 from rapid expansion mode to forced contraction had an outsized impact on parts of the business that don’t generate revenue.
The slashing of customer service has left Meta unable to address user issues ranging from people being locked out of their accounts to software bugs not getting fixed in Facebook Groups. It’s long been a challenge for Meta, given that Facebook and Instagram are used daily by billions of people. In August, Meta’s vice president of global affairs, Brent Harris, told Bloomberg News the tech giant was looking to improve its support.
A Meta spokesperson declined to comment for this story but sent CNBC examples of various ways the company has invested in customer service in recent years, including a small test of a live chat support feature on Facebook and a support site for some creators.
‘We felt it’
MeLynda Rinker has a front-row seat to the chaos. She’s a Meta certified community manager, overseeing a massive Facebook group of users who love the color pink.
Each day, some of the more than 420,000 members of 50 Shades of Pink, a group created by Rinker in 2012, log onto Facebook to share photos of pink flowers, pink Cadillacs, pink spatulas, pink hair, pink sunsets and even pink telephones.
In early February, Rinker noticed a problem with Facebook’s backend system, which she uses to manage the group and track analytics and growth metrics. A graph indicated that 50 Shades of Pink was generating zero user activity. She knew something was broken.
Rinker needed to contact someone from Facebook for help, but when she called there was nobody home.
“The day that all those people got fired, we felt it — those of us on Facebook felt it,” said Rinker. “You could tell that things weren’t getting fixed, you could tell that there were struggles because they fired all these people, so the people that remain are working with less to get the same stuff done.”
Rinker was a member of Facebook’s Power Admins Global Program, an invite-only club for influential group managers. That distinction gave her access to Groups Support where she could get help from Facebook employees who could troubleshoot technical bugs and offer product suggestions.
Facebook shut down Groups Support in January. Several group administrators, who asked not to be named, said that in the absence of the customer support feature, trying to reach an employee through the more general help center often proves futile.
According to a screenshot shared with CNBC, Facebook notified group administrators on Jan. 19 that Groups Support would no longer be available as of Jan. 23. The message with the headline, “Saying goodbye to Groups Support,” didn’t provide an explanation for the change and referred administrators to various help pages and resources in case they experienced technical problems.
“Communities are still the heart of the Facebook mission, and we continue to look at meaningful ways to invest in communities, Groups and the Facebook experience at large,” the message said.
Rinker said she was eventually able to resolve the analytics bug by personally contacting a Meta employee who she knew to escalate the issue. But that’s a Band-Aid solution and not a long-term fix. Rinker said there’s one thing the company could do if it wants to prove it cares about supporting groups after promoting them “heavily” the last few years.
“We need to put support back with those groups in order to truly show those admins that what they’re doing is important,” Rinker said.
Yet several former employees said Meta’s mass layoffs would make it even more difficult to address the rise of user complaints as CEO Mark Zuckerberg tries to right the ship following a brutal 2022.
Meta shares lost two-thirds of their value last year as year-over-year revenue dropped for three straight quarters. The struggling ad business coincided with Zuckerberg’s effort to pivot the company to the nascent metaverse, a futuristic proposition that’s costing billions of dollars every quarter.
In February, Zuckerberg declared 2023 Meta’s “year of efficiency,” which includes “becoming a stronger and more nimble organization.” His comments bolstered the beaten-down stock. But they spelled deepening concern for those focused on customer experience.
An ex-employee said there were so many support complaints in 2022 that they bogged down the internal hotline called “Oops,” which people in customer service use to prioritize issues for friends, acquaintances and family members.
Mark Zuckerberg, chief executive officer of Meta Platforms Inc., demonstrates the Meta Quest Pro during the virtual Meta Connect event in New York, US, on Tuesday, Oct. 11, 2022.
Michael Nagle | Bloomberg | Getty Images
One way Meta is trying to address the problem is through paid subscriptions. In March, the company released a verification offering in the U.S. for a monthly fee of $11.99 on the internet and $14.99 on Apple iOS devices.
The company says Meta Verified helps people, particularly influencers, get extra account protection and monitoring as well as account support.
“Get help when you need it from a real person on common account issues that matter to you,” Meta said in promotional materials for the service. Meta Verified is not yet available for businesses, but multiple firms told CNBC that they expect it to be soon.
Nobody home for business calls
Amanda Holliday, a marketing consultant, said many of her business clients contacted her the weekend Zuckerberg first announced the testing of a subscription service. While Holliday said she tries to remind her clients “to have patience and perspective and gratitude” for platforms that give marketers huge reach, she’s recognized the growing frustration.
Holliday said it appears that the only people who get customer service are those who represent a company that’s spending heavily on advertising. “It’s pretty much impossible to get a hold of anyone,” she said. “They walk you through steps you need to do for things and then you’re just sort of left like holding your phone waiting, hoping that they got your request or issue, and then you don’t hear anything usually.”
Marc Bridge, CEO of online jewelry retailer At Present, said Meta’s customer-support team routinely contacts him because he’s been steadily reducing ad spending since Apple’s 2021 privacy change that made it harder to target users.
Bridge said Meta should consider putting more investment into keeping customers happy rather than chasing them after they’re gone, calling it a “missed opportunity.”
Now that Meta has become bottom line focused, it’s trying to quickly cut areas viewed as cost centers. Some former members of the Communities team, which is tasked with building and maintaining relationships with groups on Facebook, said they’ve struggled to justify how they directly help with profitability.
Last summer, Robert Lopez, a celebrity hairstylist for the ROIL Salon in Los Angeles, experienced a nightmare situation on Instagram that began with a seemingly innocent direct message from a friend in the industry.
The message told Lopez to check out his friend’s videos on Instagram. In the clips, his friend seemed to be bragging about making a lot of money in an investment deal. After chatting back and forth with the friend, Lopez found himself the victim of a phishing scam that resulted in his account being taken over by a hacker.
Making matters worse, the hacker threatened to release compromising videos that Lopez sent to his romantic partner via Instagram DMs if he failed to pay a $5,000 fee.
Lopez was able to reach Instagram support, but the people he wrote to said they couldn’t confirm his identity, leaving him helpless as the hacker ran roughshod over his account. He was finally able to get the situation fixed by a friend at the company, but plenty of damage had been done.
“I lost a lot of followers and that does affect my work,” Lopez said, noting that companies monitor accounts when they’re considering product sponsorship deals. “The more followers you have, the more you get paid.”
But the bigger problem for him going forward is that his inside source was laid off in November, meaning next time he may not be so lucky.
Lopez’s only other option is get help through the verification subscription. However, some influencers say Facebook has had such poor customer service that there’s no reason to pay for it.
Karlova said her Instagram account is still plagued by scammers who are eating into her income, causing continued stress in her personal and professional life. With all of the turmoil taking place inside Meta and the company’s focus on cost cuts, it’s hard to have confidence that management will get this right, she said.
More recently, Karlova said Instagram flagged five of her posts that the company’s content-moderating algorithms deemed sexual in nature, leading to a dip in her following. She said it was “a big deal because they flagged partnership posts that I created for brands, which could make brands not want to work with me and impact my earning potential.”
Karlova was finally able to contest the decision but not before her account suffered days of poor statistics.
“I’m just at a loss with the amount of issues with their algorithm and the fact that there’s no one to even speak to about this,” she said.
After all the problems she’s experienced, Karlova questions whether Meta will be able to provide better customer service. It seems less likely now that even fewer people are tasked with addressing support issues.
“I don’t know that they have the bandwidth or the people to do this,” Karlova said. “I just don’t see the implementation of it. I just don’t get how it would happen.”
Watch: Morgan Stanley says buy Meta
Alex Karp, CEO of Palantir Technologies speaks during the Digital X event on September 07, 2021 in Cologne, Germany.
Andreas Rentz | Getty Images
Palantir shares continued their torrid run on Friday, soaring as much as 9% to a record, after the developer of software for the military announced plans to transfer its listing to the Nasdaq from the New York Stock Exchange.
The stock jumped past $64.50 in afternoon trading, lifting the company’s market cap to $147 billion. The shares are now up more than 50% since Palantir’s better-than-expected earnings report last week and have almost quadrupled in value this year.
Palantir said late Thursday that it expects to begin trading on the Nasdaq on Nov. 26, under its existing ticker symbol “PLTR.” While changing listing sites does nothing to alter a company’s fundamentals, board member Alexander Moore, a partner at venture firm 8VC, suggested in a post on X that the move could be a win for retail investors because “it will force” billions of dollars in purchases by exchange-traded funds.
“Everything we do is to reward and support our retail diamondhands following,” Moore wrote, referring to a term popularized in the crypto community for long-term believers.
Moore appears to have subsequently deleted his X account. His firm, 8VC, didn’t immediately respond to a request for comment.
Last Monday after market close, Palantir reported third-quarter earnings and revenue that topped estimates and issued a fourth-quarter forecast that was also ahead of Wall Street’s expectations. CEO Alex Karp wrote in the earnings release that the company “absolutely eviscerated this quarter,” driven by demand for artificial intelligence technologies.
U.S. government revenue increased 40% from a year earlier to $320 million, while U.S. commercial revenue rose 54% to $179 million. On the earnings call, the company highlighted a five-year contract to expand its Maven technology across the U.S. military. Palantir established Maven in 2017 to provide AI tools to the Department of Defense.
The post-earnings rally coincides with the period following last week’s presidential election. Palantir is seen as a potential beneficiary given the company’s ties to the Trump camp. Co-founder and Chairman Peter Thiel was a major booster of Donald Trump’s first victorious campaign, though he had a public falling out with Trump in the ensuing years.
When asked in June about his position on the 2024 election, Thiel said, “If you hold a gun to my head I’ll vote for Trump.”
Thiel’s Palantir holdings have increased in value by about $3.2 billion since the earnings report and $2 billion since the election.
In September, S&P Global announced Palantir would join the S&P 500 stock index.
Analysts at Argus Research say the rally has pushed the stock too high given the current financials and growth projections. The analysts still have a long-term buy rating on the stock and said in a report last week that the company had a “stellar” quarter, but they downgraded their 12-month recommendation to a hold.
The stock “may be getting ahead of what the company fundamentals can support,” the analysts wrote.
Charles Liang, chief executive officer of Super Micro Computer Inc., during the Computex conference in Taipei, Taiwan, on Wednesday, June 5, 2024. The trade show runs through June 7.
Annabelle Chih | Bloomberg | Getty Images
Super Micro Computer could be headed down a path to getting kicked off the Nasdaq as soon as Monday.
That’s the potential fate for the server company if it fails to file a viable plan for becoming compliant with Nasdaq regulations. Super Micro is late in filing its 2024 year-end report with the SEC, and has yet to replace its accounting firm. Many investors were expecting clarity from Super Micro when the company reported preliminary quarterly results last week. But they didn’t get it.
The primary component of that plan is how and when Super Micro will file its 2024 year-end report with the Securities and Exchange Commission, and why it was late. That report is something many expected would be filed alongside the company’s June fourth-quarter earnings but was not.
The Nasdaq delisting process represents a crossroads for Super Micro, which has been one of the primary beneficiaries of the artificial intelligence boom due to its longstanding relationship with Nvidia and surging demand for the chipmaker’s graphics processing units.
The one-time AI darling is reeling after a stretch of bad news. After Super Micro failed to file its annual report over the summer, activist short seller Hindenburg Research targeted the company in August, alleging accounting fraud and export control issues. The company’s auditor, Ernst & Young, stepped down in October, and Super Micro said last week that it was still trying to find a new one.
The stock is getting hammered. After the shares soared more than 14-fold from the end of 2022 to their peak in March of this year, they’ve since plummeted by 85%. Super Micro’s stock is now equal to where it was trading in May 2022, after falling another 11% on Thursday.
Getting delisted from the Nasdaq could be next if Super Micro doesn’t file a compliance plan by the Monday deadline or if the exchange rejects the company’s submission. Super Micro could also get an extension from the Nasdaq, giving it months to come into compliance. The company said Thursday that it would provide a plan to the Nasdaq in time.
A spokesperson told CNBC the company “intends to take all necessary steps to achieve compliance with the Nasdaq continued listing requirements as soon as possible.”
While the delisting issue mainly affects the stock, it could also hurt Super Micro’s reputation and standing with its customers, who may prefer to simply avoid the drama and buy AI servers from rivals such as Dell or HPE.
“Given that Super Micro’s accounting concerns have become more acute since Super Micro’s quarter ended, its weakness could ultimately benefit Dell more in the coming quarter,” Bernstein analyst Toni Sacconaghi wrote in a note this week.
A representative for the Nasdaq said the exchange doesn’t comment on the delisting process for individual companies, but the rules suggest the process could take about a year before a final decision.
A plan of compliance
The Nasdaq warned Super Micro on Sept. 17 that it was at risk of being delisted. That gave the company 60 days to submit a plan of compliance to the exchange, and because the deadline falls on a Sunday, the effective date for the submission is Monday.
If Super Micro’s plan is acceptable to Nasdaq staff, the company is eligible for an extension of up to 180 days to file its year-end report. The Nasdaq wants to see if Super Micro’s board of directors has investigated the company’s accounting problem, what the exact reason for the late filing was and a timeline of actions taken by the board.
The Nasdaq says it looks at several factors when evaluating a plan of compliance, including the reasons for the late filing, upcoming corporate events, the overall financial status of the company and the likelihood of a company filing an audited report within 180 days. The review can also look at information provided by outside auditors, the SEC or other regulators.
Last week, Super Micro said it was doing everything it could to remain listed on the Nasdaq, and said a special committee of its board had investigated and found no wrongdoing. Super Micro CEO Charles Liang said the company would receive the board committee’s report as soon as last week. A company spokesperson didn’t respond when asked by CNBC if that report had been received.
If the Nasdaq rejects Super Micro’s compliance plan, the company can request a hearing from the exchange’s Hearings Panel to review the decision. Super Micro won’t be immediately kicked off the exchange – the hearing panel request starts a 15-day stay for delisting, and the panel can decide to extend the deadline for up to 180 days.
If the panel rejects that request or if Super Micro gets an extension and fails to file the updated financials, the company can still appeal the decision to another Nasdaq body called the Listing Council, which can grant an exception.
Ultimately, the Nasdaq says the extensions have a limit: 360 days from when the company’s first late filing was due.
A poor track record
There’s one factor at play that could hurt Super Micro’s chances of an extension. The exchange considers whether the company has any history of being out of compliance with SEC regulations.
Between 2015 and 2017, Super Micro misstated financials and published key filings late, according to the SEC. It was delisted from the Nasdaq in 2017 and was relisted two years later.
Super Micro “might have a more difficult time obtaining extensions as the Nasdaq’s literature indicates it will in part ‘consider the company’s specific circumstances, including the company’s past compliance history’ when determining whether an extension is warranted,” Wedbush analyst Matt Bryson wrote in a note earlier this month. He has a neutral rating on the stock.
History also reveals just how long the delisting process can take.
Charles Liang, chief executive officer of Super Micro Computer Inc., right, and Jensen Huang, co-founder and chief executive officer of Nvidia Corp., during the Computex conference in Taipei, Taiwan, on Wednesday, June 5, 2024.
Annabelle Chih | Bloomberg | Getty Images
Super Micro missed an annual report filing deadline in June 2017, got an extension to December and finally got a hearing in May 2018, which gave it another extension to August of that year. It was only when it missed that deadline that the stock was delisted.
In the short term, the bigger worry for Super Micro is whether customers and suppliers start to bail.
Aside from the compliance problems, Super Micro is a fast-growing company making one of the most in-demand products in the technology industry. Sales more than doubled last year to nearly $15 billion, according to unaudited financial reports, and the company has ample cash on its balance sheet, analysts say. Wall Street is expecting even more growth to about $25 billion in sales in its fiscal 2025, according to FactSet.
Super Micro said last week that the filing delay has “had a bit of an impact to orders.” In its unaudited September quarter results reported last week, the company showed growth that was slower than Wall Street expected. It also provided light guidance.
The company said one reason for its weak results was that it hadn’t yet obtained enough supply of Nvidia’s next-generation chip, called Blackwell, raising questions about Super Micro’s relationship with its most important supplier.
“We don’t believe that Super Micro’s issues are a big deal for Nvidia, although it could move some sales around in the near term from one quarter to the next as customers direct orders toward Dell and others,” wrote Melius Research analyst Ben Reitzes in a note this week.
Super Micro’s head of corporate development, Michael Staiger, told investors on a call last week that “we’ve spoken to Nvidia and they’ve confirmed they’ve made no changes to allocations. We maintain a strong relationship with them.”
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