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Google’s parent, Alphabet Inc. cut about 12,000 jobs, or six percent of its workforce, it said in a staff memo on Friday, as the tech sector retreats from layoffs and companies whose future lies in artificial intelligence (AI).
The cuts come at a difficult time for the US company, which has long been a leader in the field of AI research.
Alphabet is now facing a challenge from Microsoft Corp. in a branch of technology that can, for example, create any content you can think of and type in a text box.
Microsoft this week said recession worries are forcing it to cut 10,000 jobs, less than five percent of its workforce, and will focus on producing products with more advanced AI — a point Alphabet CEO Sundar Pichai echoed in the memo.
Alphabet faces a “different economic reality” from two years ago when it expanded its workforce rapidly, a decision for which Pichai said he took “full responsibility.”
Pichai became CEO of Alphabet in 2019.
Still, he said, Google is preparing “to share some new experiences for users, developers and businesses,” and the company has “a huge opportunity ahead of us with AI in our products.”
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The company is already working on a major AI launch, two people familiar with the matter told Reuters. One of the sources said it will be done in the spring of this year.
Susannah Streeter, an analyst with Hargreaves Lansdown, said Alphabet’s advertising business, which supports search engines Google and YouTube, was not immune to the economic turmoil.
“Ad growth has stalled, a stark contrast from the busy days of the post-pandemic reopening, which saw a surge in consumer spending,” he said. Companies also face competitive and regulatory threats, he said.
It’s unclear whether Alphabet will take a one-time financial hit related to the job cuts. Microsoft’s severance package, lease consolidation and hardware lineup changes will cost more than $1 billion, it said earlier this week.
Alphabet’s layoffs followed a review of people and priorities, resulting in workforce reductions in various areas, Pichai said. Among those losing their jobs are recruiters, corporate staff and people working on engineering and product teams, he added.
In the United States, where Alphabet has emailed affected employees, staff will receive severance and six months of health care as well as immigration support.
A man who said he was working on the Google Chrome browser posted on Twitter that he lost his job even though he was the lead on a project.
Overseas, layoff notices will take longer due to local labor laws and practices, Pichai said in the memo.
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