Google's parent company, Alphabet, announced on Friday that it would slash roughly 12,000 jobs globally, blaming the drastic restructuring on a new economic reality.
The internet sector is preparing for a recession, and the layoffs come a day after Microsoft said it will reduce its workforce by 10,000 over the next few months. Following Twitter, Amazon, and Facebook's owner Meta, Microsoft announced layoffs.
At the height of the coronavirus outbreak, people went to the internet for work, school, and leisure, and businesses hired quickly to meet demand.
Alphabet CEO Sundar Pichai discussed the company's "periods of extraordinary growth" over the previous two years in an email to employees.
“To match and fuel that growth, we hired for a different economic reality than the one we face today.”
Pichai stated that roughly 12,000 positions would reduce the staff due to a review conducted to ensure that employees and their responsibilities are aligned with the company’s aims.
At the end of September 2022, Alphabet had almost 187,000 employees across the globe. These layoffs amount to about 6% of the company’s overall staff.
Job losses will be felt “across departments, functions, levels of responsibility, and regions,” Pichai said.
“The fact that these changes will impact the lives of Googlers weighs heavily on me, and I take full responsibility for the decisions that led us here.”
Pichai explained that the reductions were necessary to “sharpen our focus” on essential areas such as AI.
“Being constrained in some areas allows us to bet big on others,” he explained.
Search giant Google is feeling the heat from Microsoft-backed chatbot ChatGPT, which can produce human-like material in seconds.
Microsoft claims it will utilise the innovation to improve Bing, its search engine competitor with Google.
New York Times reports that in response to the chatbot danger, Google has enlisted the assistance of co-founders Larry Page and Sergey Brin, who have stepped away from their day-to-day positions at the internet giant.
Brin and Page reportedly gathered with Google officials on multiple occasions last month to brainstorm.
Google did not respond to The New York Times’s article.
Google spokeswoman Lily Lin stated, “We have long been focused on developing and deploying AI to improve people’s lives.”
“We continue to test our AI technology internally to make sure it’s helpful and safe, and we look forward to sharing more experiences externally soon.”
Pichai offered severance packages for U.S. employees, which included at least 16 weeks of salary, a bonus for the year 2022, paid vacations, and health insurance for six months.
He insisted that he was “optimistic about our ability to deliver on our mission, even on our toughest days.”
Wall Street received the cuts well, which sent Alphabet’s stock price soaring by more than 5% at the close of trading.
Meta’s stock price is up 35% since it announced 11,000 job cuts on November 9, while Amazon’s stock has increased 13% since it let go of 18,000 employees earlier this month, mirroring the effect of layoffs on other digital companies.
The foremost wigs in the tech industry reportedly overspent before because they failed to anticipate a slowdown.
Wedbush Securities’ Daniel Ives remarked that the layoffs illustrate years of wasteful expenditure in an industry experiencing “hypergrowth.”
“The reality is tech stalwarts overhired at a pace that was unsustainable and now darker macro is forcing these layoffs across the tech space,” he said.
Without counting the layoffs announced by Alphabet on Friday, the tech news site Layoffs.fyi reports that approximately 194,000 industry workers have lost their employment in the United States since the beginning of 2022.