Google’s parent Alphabet on Friday announced it would cut about 12,000 jobs worldwide, citing a shifting “economic reality,” becoming the latest US tech giant to embark on a large-scale restructuring.
The layoffs come a day after Microsoft said it would cut its workforce by 10,000 in the coming months after Facebook owners Meta, Amazon and Twitter made similar cuts as the previously unassailable tech sector grappled with a major economic downturn.
Google against labor law
“In the last two years we have experienced periods of dramatic growth. To accommodate and drive that growth, we hired for a different economic reality than today,” Alphabet CEO Sundar Pichai said in an email to employees.
“We conducted a rigorous review of all product areas and functions to ensure our people and roles align with our highest priorities as a company,” Pichai said, adding that the workforce would be reduced by around 12,000 roles.
“The roles we are eliminating reflect the outcome of this review.”
Alphabet employed nearly 187,000 people worldwide at the end of September 2022. The cuts account for just over 6 percent of the total workforce.
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Pichai said American employees have already been notified of the cuts, while cuts in other countries will take longer due to local labor laws.
The cuts will be “across departments, functions, levels of responsibility and regions,” Pichai added.
“The fact that these changes will impact the lives of Googlers weighs heavily on me, and I take full responsibility for the decisions that have brought us here.”
– “not sustainable” –
Pichai announced severance packages for US employees who will receive at least 16 weeks of salary, their 2022 bonus, paid vacation and six months of health insurance.
He said he remains “optimistic about our ability to fulfill our mission, even on our toughest days.”
Wall Street welcomed the cuts: Alphabet shares rose 3.5 percent in electronic trading before the market opened.
Analysts have said that Tech’s big guns previously overspent without seeing a slowdown on the horizon.
Wedbush Securities’ Daniel Ives said the layoffs highlight irresponsible spending in a sector basking in “hypergrowth”.
“The reality is that tech stars have been overtaken at a pace that was unsustainable, and now darker macros are forcing these layoffs across tech,” he said.
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Nearly 194,000 manufacturing workers have lost their jobs in the U.S. since the beginning of 2022, not counting those announced by Alphabet on Friday, according to tech website Layoffs.fyi.
Hewlett Packard and cloud-computing giant Salesforce also announced significant cuts this month as rampant inflation and rising interest rates have slowed growth.
US tech giants have also come under scrutiny from the European Union, which has begun enforcing regulations to prevent them from avoiding taxes, stifle competition, benefit from news content without paying, and as platforms for to serve disinformation and hatred.