Alphabet, the parent company of Google, said Friday that it planned to cut 12,000 jobs, becoming the latest technology company to reduce its workforce because of concerns about a broader economic slowdown, after a hiring spree during the pandemic.
The job cuts are the company’s largest ever, amounting to about 6% of its global workforce. CEO Sundar Pichai said Alphabet had expanded too rapidly during the pandemic, when demand for digital services boomed, and must refocus on products and technology core to its future, such as artificial intelligence.
“We hired for a different economic reality than the one we face today,” Pichai said in a note to employees posted on the company’s website.
Google joins a list of technology companies that have laid off workers after concluding they overextended under the belief that the pandemic-fueled boom represented a new normal. Amazon, Meta, Microsoft, Salesforce and Twitter are among others that have announced thousands of job cuts.
Technology firms have cut more than 190,000 jobs since the start of 2022, according to Layoffs.fyi, a website that tracks the industry.
The moves mark the end of a period of rapid expansion in the technology industry, which battled for employees with lavish perks and high pay. Google, started in 1998, helped define a work culture that influenced corporations far beyond Silicon Valley.
Alphabet, based in Mountain View, California, had nearly 187,000 employees at the end of September, up from about 150,000 a year earlier.
In a note titled “A difficult decision to set us up for the future,” Pichai said the job cuts would run across product areas, job responsibilities and locations. That future includes increased competition from rivals offering new ways to search for information on the internet; ChatGPT, a popular chatbot created by OpenAI, has dazzled users by providing clearly written answers to questions and queries.
“These are important moments to sharpen our focus, re-engineer our cost base and direct our talent and capital to our highest priorities,” Pichai said. “Being constrained in some areas allows us to bet big on others.”
Last month, Google declared a “code red” in response to ChatGPT, with Pichai upending existing projects to concentrate on the field of artificial intelligence. With the job cuts, Google chipped away at efforts that are lower priorities.
Google Research, a pillar of the AI initiatives, cut roles in areas that have gotten less traction, including health care, according to an email that Jeff Dean, senior vice president for research, health and AI, sent to his employees. The company plans to streamline its investments in Google for Clinicians, a tool for health care providers. Google and Alphabet also consolidated robotics efforts, Dean added.
Google Cloud, which has hired at a breakneck pace over the past several years, also saw cuts. “Today’s news primarily impacted positions that were non-customer facing, non-engineering and operational in nature,” Thomas Kurian, Google Cloud’s CEO, wrote in an email to employees. He added that the division would continue to hire in strategic areas, including product development and customer-related roles, to bolster its growth.
X, Alphabet’s “moonshot factory,” which incubates new companies, fired members of its strategy and business operations team, said two people with knowledge of the cuts, who were not authorized to discuss them. Many of the companies that were created in X have struggled to generate significant revenue and become profitable.
There were reductions in other parts of the company. Google fired 16% of its Fuchsia team, which had about 400 people working on operating systems for the company’s home devices, one person said. A team in data-center maintenance experienced cuts. Other engineers, user-experience researchers and product designers were also affected.
Even as Alphabet and other tech giants trim their workforces and pledge to become more efficient, they remain hugely profitable. In 2021, Alphabet had profit of $76 billion and revenue of nearly $258 billion.
The Alphabet Workers Union, which represents 1,100 members, criticized the cuts.
“With billions in profits and executive compensation untouched, our jobs should not be on the chopping block,” Parul Koul, the union’s executive chair, said in a statement.
But the technology industry has not been immune from rising interest rates and a slumping global economy. As the advertising market struggles and companies buy fewer ads on Google’s search engine or on YouTube, which Google owns, Alphabet’s bottom line took a hit. The company’s cloud computing business has continued to trail Amazon and Microsoft. In October, Alphabet said quarterly net profit had fallen 27%.
Wall Street analysts hailed Alphabet’s move. Mark Mahaney of Evercore ISI wrote in a research note that the job cuts were a necessary step to preserve profit. After the cuts were announced Friday, Alphabet’s stock price rose more than 5%. The company will report its financial results for 2022 on Feb. 2.
Many employees at Google had been bracing for cuts as other large tech firms announced job losses. The closure of some small offices, and the release of a new employee evaluation system that was seen as a way to identify underperformers, signaled to many workers that the company was preparing for layoffs.
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The layoffs were announced in the middle of the night in the United States, while many of the affected employees were asleep. They awoke to text messages, news stories and, in some cases, the realization that they no longer had access to Google’s corporate systems.
Chewy Shaw, a site reliability engineer for YouTube who was let go Friday, said the scale and speed of the layoffs was infuriating. “The authorities on high can come down at any surprising moment and just snap their finger and you’re gone,” Shaw said.
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Alphabet said U.S. employees would receive a severance package that included 16 weeks of salary, plus two weeks of extra pay for every year they had worked at Google. Laid-off workers will receive six months of paid health care. Compensation for workers outside the United States will be determined by local labor laws, the company said.
This article originally appeared in The New York Times.