(New York) After Amazon, Meta and Microsoft, it is the turn of Alphabet, the parent company of Google, to announce a large-scale restructuring with the loss of around 12,000 jobs worldwide, i.e. a little more than 6% of its total workforce.
“Over the past two years, we have experienced periods of spectacular growth,” Alphabet boss Sundar Pichai said in an email to group employees.
“To support and fuel this growth, we hired in an economic context different from the one we know today,” he added, adding that the economic situation forced the company to reduce its workforce.
Alphabet had nearly 187,000 employees worldwide at the end of September 2022.
The job cuts will be “across all departments, functions, levels of responsibility and regions”, said Mr. Pichai without giving further details.
The leader also insisted on the priority given by Google to the field of artificial intelligence, seen by many specialists as the next big battlefield for the giants of techno.
The dazzling success of the ChatGPT conversational robot from OpenAI, a young shoot funded by Microsoft, could thus overshadow the famous Google search engine.
Several American media have indeed claimed that the IT group was considering integrating ChatGPT with its own search engine, Bing.
According to the New York TimesGoogle executives even met several times last month with Larry Page and Sergey Brin, the group’s founders and current board members, to think about a strategy.
The company declined to confirm this information.
“We have long been focused on the development and deployment of artificial intelligence in daily life,” simply commented Lily Lin, a spokeswoman. “We continue to test our AI internally to make sure it is useful and safe.”
Wall Street satisfied
US employees affected by Alphabet’s plan have already been notified.
In other countries, the procedure will take longer depending on local labor law.
In the United States, laid-off employees will receive at least 16 weeks of salary, their bonuses for 2022, their paid holidays as well as six months of health coverage.
Foreign employees settled in the United States will also be able to benefit from assistance in their legal procedures, if they wish to remain on American soil.
Wall Street welcomed the announcement of these job cuts: Alphabet’s stock rose 5.72% on Friday.
“While Google has been emphasizing the need to improve the efficiency of its various businesses, we believe investors wanted to see more of this through cost reductions,” CFRA’s Angelo Zino said.
“Unsustainable rhythm”
The American computer giant Microsoft announced on Wednesday the layoff of around 10,000 employees by the end of March, citing in particular economic uncertainty.
The Wayfair furniture sales site, for its part, announced on Friday that it would cut around 1,750 jobs, or 10% of its workforce, to compensate for slow activity.
And, over the previous weeks and months, Meta (Facebook, Instagram), Amazon, Twitter and Salesforce have also decided to part ways with several thousand employees.
The tech sector is facing a tough time amid high inflation and rising interest rates after a boom, especially during the height of the COVID-19 pandemic and lockdowns.
For Naveen Sarma of the rating company S&P Global Ratings, technology groups must accept “that their growth will not be as rapid or that they will not invest as much in new products and services as they thought”.
In this context, advertisers are more reluctant to incur advertising expenditure, which represents a significant part of the turnover of companies such as Google, Facebook or Twitter.
According to the specialized site Layoffs.fyi, nearly 194,000 workers in the sector have lost their jobs in the United States since the start of 2022, not counting Alphabet’s announcement on Friday.
“Tech stalwarts have been hiring at a rate that was unsustainable, and the deteriorating macro environment is now forcing them to lay off,” commented Dan Ives of Wedbush Securities.
“Midnight struck for hypergrowth as tech companies spent money like rock stars in the 1980s,” the analyst continued.
Techno, which is trading at too low stock levels, will see a rebound in 2023, according to Ives: he forecasts a 20% rise in share prices in this sector this year.