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Google parent Alphabet to cut 12,000 jobs

January 20, 2023
FILE: A signage is displayed outside Google’s new Bay View campus on June 16, 2022 in Mountain View, California. (Zhang Yi/VCG via Getty Images)

(CNN) — Google parent Alphabet is eliminating about 12,000 jobs, or 6% of its workforce, the company said Friday, in the latest cuts to shake the technology sector.

The cuts will affect roles across product areas and regions, CEO Sundar Pichai said in an email to employees that was posted on the company’s website Friday.

Affected US employees will remain on the company’s payroll for 60 days and receive at least 16-weeks salary in severance, in addition to other benefits.

Alphabet grew its workforce by more than 50,000 employees over the past two years as booming demand for its services during the pandemic boosted profits. But in recent quarters, the company’s core digital ad business has slowed as the economic downturn and recession fears caused advertisers to pull back their spending.

“Over the past two years we’ve seen periods of dramatic growth,” Pichai said in the email. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”

Pichai said the layoffs were part of an effort to refocus on the company’s core business, as well as its early investments in artificial intelligence. “These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities,” he said.

Alphabet is set to report earnings for the three months through December 30 in early February, and Wall Street analysts are expecting the company’s revenue to grow just 1.7% compared to the same period in the prior year.That would mark a sharp slowdown from the 32% growth it posted at the same time last year. Analysts are also projecting net income will be down nearly 25% year-over-year.

Google’s job cuts are just the latest in a bruising wave of tech layoffs, as inflation weighs on consumer spending and rising interest rates squeeze funding. The demand for digital services during the pandemic has also waned as people return to their offline lives.

Microsoft said on Wednesday it would cut 10,000 employees. Amazon also recently announced that it would lay off 18,000 people, Salesforce is cutting 10% of its staff and Facebook-parent Meta has announced 11,000 job cuts. (Apple is the rare Big Tech company not to have announced significant layoffs in recent months.)

On Friday, Wayfair said it would cut approximately 1,750 employees, in its second round of layoffs in less than six months.

CEOs got it wrong

Tech CEOs, from Meta’s Mark Zuckerberg to Salesforce’s Marc Benioff, have blamed themselves for over-hiring early on in the pandemic and misreading how a surge in demand for their products would cool once Covid-19 restrictions eased. Pichai on Friday also took the blame for Alphabet’s cuts.

“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,” Pichai said. But, he added: “I am confident about the huge opportunity in front of us.”

Job growth has slowed in recent months and layoff announcements — particularly from tech firms — have become more widespread. But that doesn’t necessarily equate to more joblessness, Robert Frick, corporate economist at Navy Federal Credit Union, told CNN Thursday. The number of first-time claims for unemployment insurance fell to 190,000 for the week ending January 14, the lowest total in 15 weeks, according to Department of Labor data.

“While layoffs from high-profile firms make the headlines, plenty of firms are desperate for more workers, especially tech workers. Those workers are in high demand from the auto industry to the Department of Veterans Affairs to not-for-profits,” he said.

“The labor market is still so tight that many tech workers, and workers with other skills, are snapped up well before they need to collect an unemployment check. And they are more likely to be snapped up by smaller firms, which have a much greater demand for workers than major corporations,” Frick added.

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