Alphabet, Google’s parent company, announced Friday that it will cut approximately 12,000 jobs globally, citing a changing economic reality as it became the latest US tech titan to implement the large-scale restructuring.
The layoffs come a day after Microsoft announced that it would cut 10,000 jobs in the coming months, following similar cuts by Facebook owner Meta, Amazon, and Twitter as the tech sector braces for an economic downturn.
The layoffs come after a massive hiring spree during the height of the coronavirus pandemic when businesses scrambled to meet demand as people went online for work, school, and entertainment.
“We’ve seen periods of dramatic growth over the last two years,” Alphabet CEO Sundar Pichai said in an email to employees.
“We hired for a different economic reality than the one we face today to match and fuel that growth.”
Pichai stated that a review is underway to ensure that people and their roles are in line with the company’s priorities and that the workforce would be reduced by approximately 12,000 positions.
At the end of September 2022, Alphabet employed nearly 187,000 people worldwide. The layoffs amount to slightly more than 6% of the company’s total workforce.
The reductions will be made “across departments, functions, levels of responsibility, and regions,” according to Pichai.
“The fact that these changes will have an impact on Googlers’ lives weighs heavily on me, and I accept full responsibility for the decisions that led us here.”
– ‘Unsustainable’ –
According to Pichai, the cuts will “sharpen our focus” on priorities such as artificial intelligence.
“Being limited in some areas allows us to bet big in others,” he explained.
The emergence of ChatGPT, a Microsoft-backed chatbot that can generate elaborate, human-like content in seconds, has put Google’s world-dominating search engine under pressure.
Microsoft has stated that the technology will be used to strengthen Bing, a long-standing competitor to Google search.
According to the New York Times, Google has turned to founders Larry Page and Sergey Brin, who have left their daily roles at the tech titan, for assistance in responding to the chatbot threat.
According to the Times, Brin and Page met with Google executives several times last month to brainstorm.
Google declined to comment on the Times report directly.
“We have long been focused on developing and deploying AI to improve people’s lives,” said Lily Lin, a Google spokesperson.
“We continue to test our AI technology internally to ensure that it is useful and safe, and we look forward to sharing more experiences with the public in the near future.”
Pichai announced severance packages for US employees, including at least 16 weeks of salary, their 2022 bonus, paid vacations, and six months of health insurance.
He stated that he is “optimistic about our ability to deliver on our mission, even on our most difficult days.”
Wall Street reacted positively to the cuts, with Alphabet shares closing the formal trading day up more than 5% at $98.02.
This tracked the impact of job cuts on other tech behemoths, with Meta’s stock up 35% since it announced 11,000 job cuts on November 9, and Amazon’s stock up 13% since 18,000 people were laid off earlier this month.
Analysts say tech’s big guns have previously overspent, with no signs of a slowdown on the horizon.
Wedbush Securities analyst Daniel Ives said the layoffs highlight a long period of irresponsible spending in a sector experiencing “hypergrowth.”
“The reality is that tech stalwarts overhired at an unsustainable rate, and now the darker macro is forcing these layoffs across the tech space,” he explained.
According to the tech site Layoffs.fyi, nearly 194,000 industry employees in the United States have lost their jobs since the start of 2022, not including those announced by Alphabet on Friday.
