Google parent Alphabet is cutting about 12,000 jobs, or 6 percent of its workforce, it said in a staff memo on Friday, as the technology sector faces layoffs and companies stake their futures on artificial intelligence (AI). Put on.
Alphabet shares rose about 3 percent in premarket trading.
The cuts come at a critical moment for the American company, which has long been at the forefront of key areas of AI research.
Alphabet now faces a challenge from Microsoft in a branch of tech that can, for example, create anything a user can think of and type into a text box.
Microsoft said this week that recession fears are forcing it to cut 10,000 jobs, less than 5 percent of its workforce, and that it will focus on pushing its products with more AI – A point Alphabet CEO Sundar Pichai echoed in the memo.
Alphabet faced “a different economic reality” over the past two years as it rapidly expanded headcount, decisions for which Pichai said he took “full responsibility”.
Pichai became CEO of Alphabet in 2019.
Still, he said, Google is “preparing to share some completely new experiences for consumers, developers and businesses” and the company has “a lot of opportunity in front of us with AI in our products.”
The company is working on a major AI launch, two people familiar with the matter told Reuters. One of the sources said that it will happen in the spring of this year.
Susannah Streeter, an analyst at Hargreaves Lansdown, said Alphabet’s advertising business, which underpins Google’s search engine and YouTube, is not immune to the economic downturn.
“Ad growth has emerged, which is in stark contrast to the busy post-pandemic reopening days that saw an increase in consumer spending,” he said. He said the company also faces competitive and regulatory threats.
It was unclear whether Alphabet would take a one-time financial charge related to the job cuts. Microsoft’s severance packages, lease consolidations and hardware lineup changes will cost it more than $1 billion, it said earlier this week.
Pichai said Alphabet’s layoffs followed a review of its people and priorities, which resulted in workforce reductions across geographies. Those who lost jobs included recruiters, corporate staff and people working in engineering and product teams, he added.
In the United States, where Alphabet has already emailed affected employees, staff will receive severance and six months of health care, as well as immigration support.
A man who said he worked on Google’s Chrome browser posted on Twitter that he lost his job even as he stepped into a leadership position on a project.
Abroad, layoff notifications will take longer due to local employment laws and practices, Pichai said in the memo.
