Google has announced it will cut 12,000 jobs, joining its peers in the tech world who have responded to economic pressures with a wave of job cuts.
The layoffs will affect about 6 percent of its owner Alphabet’s total workforce and are part of an industry-wide shutdown that has affected more than 50,000 people at just four major tech companies — Amazon, Meta, Microsoft and Alphabet.
In a letter to employees on Friday, Alphabet CEO Sundar Pichai said the roles to be eliminated would “impact Alphabet, product areas, functions, levels and regions,” calling the period a “difficult economic cycle.” He said he takes “full responsibility for the decisions that got us here.”
The layoffs reflect a sharp correction in the sector after a hiring boom in the early days of the Covid-19 pandemic.
The Silicon Valley giants rapidly increased their workforces during this period in the belief that the historic boom in digital demand would continue despite rising inflationary pressures in the global economy. Since the end of 2019, the number of workers at Amazon has almost doubled, while Microsoft will increase its workforce in 2022 by more than double the previous year.
Enterprise software giant Salesforce also recently announced it would cut 10 percent of its staff, while Twitter cut half of its 7,500-strong workforce after being acquired by Elon Musk.
Shares jumped 2.2% in premarket trading on Friday after the letter was posted online.
Pichai said the reduced workforce would help sharpen the company’s focus, particularly in areas such as artificial intelligence, which he described as a “substantial opportunity.”
“Being limited in some areas allows us to bet big in others. The company’s AI-first move years ago led to groundbreaking advances in our business and across the industry,” he said.
The cuts come amid a major slowdown in Google’s core search advertising business in the third quarter of 2022, when Google Search revenue rose 4.2 percent to $39.5 billion, missing forecasts for 8 percent growth.
Brent Thiel, an analyst at Jefferies, said: “Most people think that 5 percent cuts out the underperformers, which they have to do every year anyway,” adding that others in the tech industry cut up to 10 percent of their workforces.
Earlier this week, Microsoft announced plans to lay off 10,000 employees by the end of March, or nearly 5 percent of its workforce.
CEO Satya Nadella said in a note to staff: “As we saw customers accelerate their digital spending during the pandemic, we are now seeing them optimize their digital spending to do more with less.”
Additional reporting by Fergus Ryan in London
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