Jan. 20 (Reuters) – Alphabet Inc, the parent company of Google (GOOGL.O) It said in a note to employees that it is cutting about 12,000 jobs as it faces a “different economic reality,” doubling down on artificial intelligence (AI) and firing employees who support pilot projects.
The job cuts affect 6% of its workforce, and come after thousands of tech giants including Amazon.com Inc (AMZN.O)Microsoft Corporation (MSFT.O) and Meta Platforms Inc (META.O) Those who began to shrink after a pandemic-led wave of hiring left them flabby in a weak economy.
Shares in Mountain View, California-based Alphabet, which has boosted its workforce by about a third during 2020 and 2021, rose 4% on Friday. They’re down 30% in the past 12 months, reflecting a 24% decline in the broader tech industry. (nineteenth).
Sundar Pichai, Alphabet’s president since 2019, said in the memo Friday that he takes “full responsibility” for the decisions that led to the layoffs.
Pichai, whose pay has recently been closely tied to performance, said this was a moment to “sharpen our focus, re-engineer our cost base, and direct our talent and capital to our highest priorities,” as Alphabet sought to bring more artificial intelligence to its products, echoing comments from Microsoft that announced Wednesday job cuts.
Alphabet, the longtime leader in artificial intelligence, faces competition from Microsoft, which is reportedly looking to boost its stake in ChatGPT — a promising chatbot that answers queries with human-like responses.
Meanwhile, advertising dollars, Alphabet’s primary source of revenue, are feeling the pressure of companies cutting budgets as consumers cut back on spending.
“Alphabet is clearly not immune from a difficult economic backdrop, with growing concerns about a recession in the US,” said Susannah Streeter, an analyst at Hargreaves Lansdowne.
“Ad growth has stopped boiling… The competition is also fierce, with Alphabet facing a strong competitor in TikTok, and Instagram also vying for its critical YouTube viewers,” Streeter said, noting that Alphabet has also racked up billions in regulatory fines.
Mark Mahaney, an analyst at Evercore ISIS, said the record high number of employees at Alphabet created significant margin risk in fiscal 2023. The job cuts could save Alphabet from $2.5 billion to $3 billion in costs, Bernstein analyst Mark Schmulek said.
Big job cuts
[1/4] The Google LLC logo is seen at the Google Store Chelsea in New York City, US, January 20, 2023. REUTERS/Shannon Stapleton
With Alphabet cutting staff, layoffs at four of the largest US technology companies amount to 51,000 jobs in the past few months. They have heightened fears of a recession even as the US labor market remains tight.
“The tech sector is a bit like the proverbial canary in the coal mine,” said Stuart Cole, an economist at Equiti Capital, who believes the tech layoffs herald that the future of job security is finally starting to turn more negative.
an Apple (AAPL.O)Hired more wisely during the pandemic, it has held up cuts so far. On Friday, though, the site AppleInsider reported Citing sources, the iPhone maker has begun laying off off-season employees in its retail channel at places like Best Buy (BBY.N) Stores.
Apple could not be reached for comment on the report.
“little rest”
Two people familiar with the matter told Reuters that Alphabet is working on a major AI launch. One of the sources said that this will take place in the spring. The New York Times also reported that Google plans to unveil more than 20 new products and a search engine that includes chatbot features.
Among those who lost their jobs were recruiters, corporate employees and people working on engineering and product teams, Pichai said. A company spokesperson told Reuters that Google has cut most jobs in District 120, an internal incubator for new projects.
The Alphabet Workers Union said in a statement that taking “full responsibility” to lead the company was “not a great relief”.
“It is appalling that our jobs are initially on the verge of being chopped up until shareholders can see a few more points in the next quarter’s chart,” the union said.
In the US, where Alphabet has already emailed the affected employees, the employees will get severance and six months of Medicare as well as immigration support.
In the memo, Pichai said overseas layoff notices will take longer due to local employment laws and practices. Staff in Asia will learn starting in February if the cut is affecting them.
Additional reporting by Jeffrey Dustin in Davos, Switzerland, Akash Sriram, Deep Vakil, Shafi Mehta, Tyachi Dutta, Nivedita Balu and Yuvraj Malik in Bengaluru; Editing by Eileen Hardcastle, Alexander Smith, Nick Zieminski and Sayantani Ghosh
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