Alphabet to Cut 12,000 Jobs, Citing AI Opportunity

Alphabet Announces 12,000 Job Cuts

Alphabet, the parent company of Google, will reduce its global workforce by around 6%, cutting 12,000 jobs, according to an internal memo from CEO Sundar Pichai. The announcement was made on Friday, January 20, 2023.

Pichai told employees he takes full responsibility for the decisions that led to the layoffs. In the memo, he pointed to a substantial opportunity ahead for the company through its early investments in artificial intelligence. The memo did not state that AI caused the job cuts; rather, it framed AI as an area of opportunity amid the restructuring.

Global Impact and Affected Teams

The layoffs are global, with US staff impacted immediately. Teams across Alphabet are affected, including recruiting, some corporate functions, and some engineering and product teams.

For affected US employees, Alphabet will provide at least 16 weeks of severance and six months of health benefits. Other regions will receive packages based on local laws and practices.

Context of the Cuts

The layoffs follow a period of slower growth for Alphabet. In October 2022, the company reported lower-than-expected third-quarter numbers, falling behind both revenue and profit expectations. Overall revenue growth slowed to 6% in that quarter, while Google Cloud grew 38% year-on-year to $6.9 billion.

A month later, The Information predicted that Google could cut at least 10,000 jobs after changes to its Google Reviews and Development (GRAD) program meant managers would have to allocate a low performer rating to at least 6% of employees, compared to 2% under the old performance review process. Some industry watchers speculated that the move to increase the number of employees ranked as low performers would end with those employees losing their jobs.

The cuts also come amid a wave of large layoffs from other tech companies, including 10,000 layoffs at Microsoft and 18,000 at Amazon. According to Layoffs.fyi, an online tracker of technology sector job losses, in the first 20 days of 2023, 133 tech companies laid off 38,815 employees across the globe.

AI Investments and Restructuring

While Pichai's memo highlighted the company's early investments in artificial intelligence as providing a substantial opportunity, the connection between AI and the layoffs is not explicitly stated. The job cuts are part of a broader restructuring that affects various teams globally. The company has not provided further comment beyond the CEO's email.

The total number of employees at Alphabet can be calculated from the 6% figure: 12,000 divided by 0.06 equals 200,000. This aligns with the company's global workforce size prior to the layoffs.

Sources

• Google’s parent company Alphabet to cut 12,000 jobs – Computerworld