Google’s parent company Alphabet announced on Friday it would cut around 12,000 jobs worldwide, citing changing economic realities as it became the latest US tech giant to undertake a large-scale restructuring.
The layoffs come a day after Microsoft said it would cut up to 10,000 staff in the coming months, following similar cuts by Facebook owner Meta, Amazon and Twitter as the tech sector braces for the economic downturn.
The cuts follow large layoffs during the coronavirus pandemic as companies struggle to meet demand as people go online for work, school and entertainment.
“Over the past two years, we have seen a period of dramatic growth,” Alphabet CEO Sundar Pichai said in an email to employees.
“To match and accelerate that growth, we hire a different economic reality than we face today.”
A review is underway to ensure that people and their roles align with the company’s priorities, Pichai said, adding that the workforce will be reduced by about 12,000 positions.
Alphabet employs nearly 187,000 workers worldwide by the end of September 2022. The cuts represent more than 6 percent of its total workforce.
The cuts will be “across departments, functions, levels of responsibility and regions,” Pichai added.
“The fact that these changes will affect the lives of Googlers means a lot to me, and I take responsibility for the decisions that lead us here.”
– ‘Unsustainable’ –
Pichai said the cuts would “sharpen focus” on priorities including artificial intelligence.
“Being limited in some areas allows us to bet big in others,” he said.
Google’s world-dominating search engine has come under pressure due to the emergence of ChatGPT, a Microsoft-backed chatbot that can generate human-like content in seconds.
Microsoft says the technology will be used to power Bing, a longtime rival to Google search.
Google has turned to founders Larry Page and Sergey Brin, who have left their day-to-day roles at the tech titan, to help respond to the threat posed by chatbots, according to a New York Times report.
Brin and Page met with Google executives several times last month to brainstorm, the Times reported.
Google declined to comment immediately on the Times report.
“We have long been focused on developing and using AI to improve people’s lives,” said Google spokeswoman Lily Lin.
“We continue to test our AI technology internally to make sure it’s useful and safe, and we look forward to sharing more of our experience externally.”
Pichai announced a severance package for US employees, who will receive at least 16 weeks of pay, a 2022 bonus, paid vacation and six months of health coverage.
He said he remains “optimistic about his ability to carry out his mission, even on the most difficult days.”
Wall Street welcomed the cut: Alphabet shares ended the official trading day up more than 5 percent to $98.02.
It tracked the effect of job cuts at other tech giants, with Meta shares up 35 percent since announcing 11,000 job cuts on November 9 and Amazon shares up 13 percent since 18,000 layoffs earlier this month.
Analysts have said that the tech big guns were previously overspent, not seeing a slowdown on the horizon.
Daniel Ives of Wedbush Securities said the layoffs highlighted the irresponsible spending of time in a sector experiencing “hypergrowth”.
“The fact is that the tech stalwarts are overhired at an unsustainable pace and now the macro darkness is forcing these layoffs in the tech space,” he said.
According to tech site Layoffs.fyi, nearly 194,000 industrial workers have lost their jobs in the US since the start of 2022, not including those announced by Alphabet on Friday.