layoffs continue Hit the tech industry, and this week, they come to one of the pandemic’s biggest winners: Zoom.
Yesterday, the video conferencing platform laid off 15% of its staff, about 1,300 people. This comes after Zoom tripled its workforce in two years. In a statement announcing the layoffs, Zoom CEO Eric Yuan said: “We have not spent enough time thoroughly analyzing our team or assessing whether we are growing sustainably and in the direction of our highest priority.” Yuan said he was “responsible for the errors,” and vowed to cut his salary by 98% and forgo his 2023 bonus, bringing his compensation down to about $10,000, according to a trading commission filing.
Zoom is not alone. Big tech companies thrived when the Covid-19 pandemic shut down the world and prompted people to increase their screen time. Amazon added more than 400,000 workers in 2020, while Meta, then Facebook, hired 13,000. Zoom has grown from an obscure video conferencing platform to a household name. There are Zoom happy hours, weddings and memorial services. By late April 2020, the company said 300 million participants were using Zoom calls every day. It was the most downloaded app on Apple devices in 2020, and it generated $2.6 billion in revenue for the fiscal year ending January 2021, up 326% from the previous year.
Nearly three years later, Zoom’s dominance is waning. Competitors, notably Microsoft and Slack, bundle calling with email and other productivity tools. Zoom is experiencing market saturation and getting into a Peloton problem — namely that most people willing to buy a Zoom package have probably already done so. “It suddenly became a much more difficult market than anything else [Zoom] Previous experience,” said Will McKeon-White, an infrastructure and operations analyst at research firm Forrester.
Zoom could fall behind rival bundled services such as Google Meet, Microsoft Teams and Slack as companies seek to cut costs in the face of market uncertainty. But for now, Zoom is still growing. Its latest financial report showed roughly 5% year-over-year growth, but a sharp slowdown from 55% year-over-year revenue growth in 2021. As fewer people zoom for fun, it becomes more about business.And Zoom’s main competitor, Microsoft Teams, has grown more quietly, surpassing 270 million monthly users by early 2022.
Zoom seems to realize it needs more than a video calling service. In late 2022, it announced plans to integrate email and calendaring capabilities into the platform and launch an AI-powered chatbot to resolve customer issues. It added cartoon avatars and meeting templates, as well as a new feature called Zoom Spots, a video collaboration experience that sounds a lot like a never-ending Zoom call, coming later this year.
Zoom is great because it’s easy to use. It’s also free if people talk for less than 40 minutes. Up to 100 people can join at a time. But other video calling services, such as Google Meet and Skype, also offer free calls that last longer. It’s not all positive being synonymous with video calling. People have reported “zoom fatigue” as a result of strange psychological effects of communicating via video and spending hours each day looking at their own faces.
