Editors: Zenan, Xiaozhou
They all thought that Google's family was big, but he still made a move.
The buzzword in tech in recent days has not been a new technology, but layoffs.
On January 20, Google's parent company Alphabet said in an employee memorandum that it would lay off about 12,000 employees and increase investment in artificial intelligence but reduce employees supporting related experimental projects due to the "changing economic situation."
The layoffs affected more than 6% of Google's employees worldwide. Tech giants such as Amazon, Microsoft and Meta have also experienced significant layoffs, raising concerns about the prospects for economic development.
Perhaps because of open source throttling and spurred by new news, Alphabet's stock rose 5.7% on Friday. Google increased the number of employees by 1/3 between 2020 and 2021. Over the past 12 months, its stock has lost 30%, while U.S. tech stocks have lost an average of 24%.
Google CEO Sundar Pichai said in a memo Friday that he was "fully responsible" for the decision that led to the layoffs.
Pichai said it was a moment to "sharpen our focus, redesign our cost base, and direct our talent and capital to the highest priorities" as Google looks to inject more artificial intelligence into its products, echoing Microsoft's comments announcing layoffs on Wednesday.
Google said in an email that the employees who were laid off had been notified.
Google has been a leader in AI since the rise of deep learning, but it is facing competition from Microsoft. It was recently reported that Microsoft is pumping $10 billion into OpenAI, seeking to increase its stake in ChatGPT.
Meanwhile, Google's main source of revenue, advertising revenue, is under pressure from corporate budget cuts as consumers cut back on spending in recent times.
Susannah Streeter, an analyst at Hargreaves Lansdown, said: "It is clear that Alphabet is not immune to the difficult economic backdrop, and fears of a recession in the United States are increasing."
"Advertising growth is over... Competition is also heating up, with Alphabet facing strong competition from TikTok and Instagram competing for its significant YouTube audience," Streeter said, noting that Google has amassed billions of dollars in fines over regulation.
Mark Mahaney, an analyst at Evercore ISIS, said Google's record headcount poses significant profit risks to fiscal 2023, and Bernstein analyst Mark Shmulik believes that layoffs could save Google $2.5 billion to $3 billion in costs.
With Alphabet's layoffs, the total number of layoffs at the four major U.S. tech companies in the past few months has reached fifty-one thousand. Stuart Cole, an economist at Equiti Capital, said that "the tech industry is like a canary in a mine," and he said that the drastic layoffs in the tech sector bode for a bleaker job outlook across all sectors.
Google is the third U.S. tech giant to announce big layoffs this week. On Wednesday (January 18), Microsoft announced plans to cut 10,000 jobs by the third quarter of this fiscal year in response to the global economic slowdown. It was the company's biggest layoff in more than eight years.
Microsoft CEO Satya Nadella said in an email to employees that "this is a challenging time for everyone affected." It's one of the hardest choices made in Microsoft's 47-year history," "Some parts of the world are in recession and others are expected to have recessions, so proceed with caution."
On the same day, Amazon executives emailed employees to confirm the launch of a new round of layoffs, which, as previously reported, are expected to affect 18,000 people, the largest number in technology history. Doug Herrington, the company's global head of retail, said in an email to employees that supply chain difficulties, inflation and overcapacity are all increasing the cost of the company's service costs and that the cost structure needs to be further improved to attract more customers. Only by cutting costs can companies invest more in innovative businesses.
Previously, Meta (Facebook) announced in November last year that it would lay off 11,000 employees, or about 13% of its total workforce. Analysts expect the social media giant to continue to lay off jobs this year.
Apple, another tech giant, has yet to make major layoffs, but the company has become more cautious in hiring employees. However, recently foreign media reported that Apple is preparing to lay off some employees in retail channels.
Some companies have published the number of unemployed or imminent unemployed.
However, the layoffs did not affect the industrial progress of these tech giants.
According to Reuters, Google will make a major AI release this spring. The New York Times also reported that Google plans to launch more than 20 new products and a search engine that includes chatbot functionality, which seems to be facing the challenges posed by ChatGPT.
As Pichai said, the company's leadership will take "full responsibility" for the layoffs, which may provide "a little comfort" to the employees who were laid off.
For more responsive tech companies, layoffs in anticipation of an economic downturn are a predictable option, but recent calls from companies have also raised questions about productivity. Speaking of layoffs, the biggest momentum is Musk's acquisition of Twitter, and yesterday foreign media paid attention to the current situation of Twitter:
Internal records show that since Musk took over, Twitter has laid off about 80% of its employees, from 7,500 to about 1,300, with fewer than 550 full-time engineers.
In addition to about 1,300 full-time employees, Musk has authorized about 130 employees from other businesses, including Tesla, SpaceX and The Boring Company, as well as talent from venture funds and other companies to work on Twitter.
Reference content:
https://www.reuters.com/business/google-parent-lay-off-12000-workers-memo-2023-01-20/
https://www.cnbc.com/2023/01/20/twitter-is-down-to-fewer-than-550-full-time-engineers.html