AP

Google axes 12,000 jobs as layoffs spread across tech sector

Jan 20, 2023, 6:41 AM | Updated: 10:01 am
Workers help set up the Google booth at the Las Vegas Convention Center before the start of the CES...

Workers help set up the Google booth at the Las Vegas Convention Center before the start of the CES tech show, Monday, Jan. 2, 2023, in Las Vegas. (AP Photo/John Locher)

(AP Photo/John Locher)

LONDON (AP) — Google is laying off 12,000 workers, or about 6% of its workforce, becoming the latest tech company to trim staff as the economic boom that the industry rode during the COVID-19 pandemic ebbs.

Google CEO Sundar Pichai, who also leads its parent company Alphabet, informed staff Friday at the Silicon Valley giant about the cuts in an email that was also posted on the company’s news blog.

It is the company’s biggest-ever round of layoffs and adds to tens of thousands of other job losses recently announced by Microsoft, Amazon, Facebook parent Meta and other tech companies as they tighten their belts amid a darkening outlook for the industry. Just this month, there have been at least 48,000 job cuts announced by major companies in the sector.

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

He said the layoffs reflect a “rigorous review” carried out by Google of its operations.

The jobs being eliminated “cut across Alphabet, product areas, functions, levels and regions,” Pichai said. He said he was “deeply sorry” for the layoffs.

Regulatory filings illustrate how Google’s workforce swelled during the pandemic, ballooning to nearly 187,000 people by late last year from 119,000 at the end of 2019.

Pichai said that Google, founded nearly a quarter of a century ago, was “bound to go through difficult economic cycles.”

“These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities,” he wrote. He called out the company’s investments in artificial intelligence as an area of opportunity.

There will be job cuts in the U.S. and in other unspecified countries, according to Pichai’s letter.

Tech companies that “not long ago were the darlings of the stock market” have been forced to freeze hiring and cut jobs in preparation for an economic downturn, said a note from Victoria Scholar, an analyst with U.K.-based Interactive Investor.

“Digital spending is suffering, and ad revenues are falling with it,” she wrote.

Just this week, Microsoft announced 10,000 job cuts, or nearly 5% of its workforce. Amazon said this month it is cutting 18,000 jobs, although that’s a fraction of its 1.5 million strong workforce, while business software maker Salesforce is laying off about 8,000 employees, or 10% of the total. Last fall Facebook parent Meta announced it would shed 11,000 positions, or 13% of its workers. Elon Musk slashed jobs at Twitter after after he acquired the social media company last fall.

Those job cuts are hitting smaller players as well. U.K.-based cybersecurity firm Sophos laid off 450 employees, or 10% of its global workforce. Cryptocurrency trading platform Coinbase cut 20% of its workforce, about 950 jobs, in its second round of layoffs in less than a year.

Employment in the U.S. has been resilient despite signs of a slowing economy, and there were another 223,000 jobs added in December. Yet the tech sector grew exceptionally fast over the last several years due to increased demand as employees began to work remotely.

CEOs of a number of companies have taken blame for growing too fast, yet those same companies, even after the latest round of job cuts, remain much larger than they were before the economic boom from the pandemic began.

“I take full responsibility for the decisions that led us here,” Pichai wrote.

While the tech layoffs are “shocking numbers,” their effect on tech industry employment is “nowhere near as bad as what it seems,” said John Blevins, an adjunct professor at Cornell University’s business school.

“These workers who were laid off will readily get new jobs,” most likely at smaller tech companies, Blevins said. “They’re coming with high credentials from these big firms. That knowledge will be transferred and will actually work to everyone’s benefit.”

In their layoff announcements, both Pichai and Microsoft CEO Satya Nadella emphasized the importance of capitalizing on their advances in artificial intelligence technology, reflecting renewed competition between the tech giants sparked by Microsoft’s growing partnership with the San Francisco startup OpenAI.

Shares of Alphabet Inc., based in Mountain View, California, rose more than 4% Friday.

AP Technology Writers Matt O’Brien and Michael Liedtke contributed to this report.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Google axes 12,000 jobs as layoffs spread across tech sector