Google parent to lay off 12,000 workers as AI focus intensifies

Google parent Alphabet Inc. has said it plans to eliminate roughly 12,000 jobs, reducing its staff by 6% and marking the company’s largest-ever round of layoffs as it copes with a darkened economic outlook.

The reductions will cut across Alphabet units and geographies, the company said, though some areas, including recruiting and projects outside of the company’s core businesses, would be more heavily affected.

Pichai announced the redundancies, affecting about 6% of Alphabet’s 187,000-strong workforce, in an email to Google staff. Echoing recent statements by the company’s US peers, he indicated the business had overexpanded during the height of the pandemic, when demand for digital services and products boomed.

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

Pichai said the reductions would “cut across Alphabet, product areas, functions, levels and regions”. The company also owns, under the Google umbrella, YouTube and the Android mobile operating system.

Alphabet had already alerted investors to a slowdown in its core business of search advertising – where companies pay to appear in users’ search results. Last year it reported search revenues of $39.5bn (£32bn) for the third quarter, a growth rate of 4% that fell below market expectations.

Other job cuts in the US tech industry in recent months include 18,000 redundancies at Amazon, 11,000 at the Facebook owner, Meta, and 8,000 at the business software company Salesforce.

The chief executive of Amazon, Andrew Jassy, said the company had “hired rapidly over the last several years” as he announced the redundancies. The chief executive and founder of Meta, Mark Zuckerberg, said expectations that the pandemic would lead to a sustained rise in revenue “did not play out the way I expected”. The co-chief executive of the software firm Salesforce Marc Benioff said this month: “We hired too many people leading into this economic downturn we’re now facing.”

Tech firms laid off more than 150,000 workers globally last year, according to the website Layoffs.fyi, with a further 38,800 layoffs already announced in 2023.

Dan Ives, an analyst at the US financial services firm Wedbush Securities, said the across-the-board job cuts reflected previously buoyant tech companies responding to a much tougher global economic environment.

“We are seeing 5%-10% headcount cuts across the tech sector as many of these companies (both big and small) were spending money like 1980’s Rock Stars and now need to rein in the expense controls ahead of a softer macro,” he said.

Pichai said in his statement that Google was well prepared to take advantages of developments in artificial intelligence. “We have a substantial opportunity in front of us with AI across our products and are prepared to approach it boldly and responsibly,” he wrote. Alphabet’s units include the British AI subsidiary DeepMind.