Alphabet cuts 12,000 jobs as tech industry woes bite

Published January 21st, 2023 - 11:47 GMT
Alphabet layoffs
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ALBAWABA — Google's parent company Alphabet announced Friday it will cut 12,000 jobs globally, joining the growing list of American tech firms making staff cuts amid an ongoing global economic slowdown.


The layoffs come a day after Microsoft said it would axe 10,000 by April, following similar cuts by Meta, Amazon and Twitter as the global economic downturn forces companies in the tech sector to realign.


The cuts, about 6 percent of its workforce, follow a major hiring spree during the height of the coronavirus pandemic when companies needed to meet higher demand as people shifted to online work, school and entertainment.


Alphabet CEO Sundar Pichai informed staff about the cuts on Friday in an email that was also posted on the company’s website, writing: "Over the past two years we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today."


A review is taking place to make sure that people and their roles are in line with the company's priorities, Pichai wrote, adding that cuts would be "across departments, functions, levels of responsibility and regions".


Regulatory filings show that Alphabet’s workforce increased during the pandemic, inflating to nearly 187,000 by September last year, from 119,000 at the end of 2019.


Pichai wrote that Google, founded nearly a quarter of a century ago, was "bound to go through difficult economic cycles", adding "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".


Being constrained in some areas allows the company to bet big on others, Pichai wrote.


"These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities, " Pichai wrote, as the company doubles down on artificial intelligence (AI) and axes staff who support experimental projects.


With the emergence of ChatGPT, a Microsoft-backed AI chatbot that can generate elaborate, human-like content in just seconds, Google's search engine has found itself under pressure.


According to the New York Times, Alphabet has turned to founders Larry Page and Sergey Brin, who are no longer involved in the day-to-day running of the tech firm, for help in responding to the threat posed by AI and Microsoft’s Bing search engine.


"It is clear that Alphabet is not immune from the tough economic backdrop, with worries about a United States recession growing," Susannah Streeter, an analyst at Hargreaves Lansdown, told Reuters.


"Ad growth has come off the boil. … Competition is also heating up, with Alphabet facing a powerful rival in TikTok, and Instagram also vying for its important YouTube viewers," Streeter added, noting that Alphabet had also racked up billions in regulatory fines.


After the job cuts were announced early Friday, Alphabet’s stock price rose more than 3 percent in premarket trading, ending the formal trading day up more than 5 percent to $98.02. 


In 2021, Alphabet posted profits of $76 billion and revenue of nearly $258 billion. It is expected to report its financial results for 2022 on February 2.



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