Google’s parent Alphabet cuts 12,000 jobs

Google’s parent Alphabet cuts 12,000 jobs

New York CNN —

Google parent Alphabet is cutting about 12,000 jobs, or 6% of its workforce, the company said on Friday as part of the latest cuts to shake the tech sector.

The cuts will affect roles across product lines and regions, CEO Sundar Pichai said in an email to employees posted on the company’s website on Friday.

Affected US employees will remain on the company’s payroll for 60 days and will receive a minimum of 16 weeks’ salary as severance pay in addition to other benefits.

Alphabet has expanded its workforce by more than 50,000 over the past two years due to booming demand Services during the pandemic boosted profits. But in recent quarters, the company’s core digital ads business has slowed as the economic downturn and recession fears caused advertisers to scale back spending.

“In the past two years, we’ve had periods of dramatic growth,” Pichai said in the email. “To accommodate and drive that growth, we hired for a different economic reality than the one we face today.”

Pichai said the layoffs were part of an effort to refocus on the company’s core business as well as its early investments in artificial intelligence. “These are important moments to sharpen our focus, reshape our cost base and direct our talent and capital towards our highest priorities,” he said.

Alphabet is expected to report earnings for the three months ended Dec. 30 in early February, and Wall Street analysts expect the company’s revenue to rise just 1.7% from the year-ago period. That would represent a sharp slowdown from the 32% growth recorded at the same time last year. Analysts also expect net income to fall nearly 25% year over year.

Google’s job cuts are just the latest in a bloody wave of tech layoffs as inflation weighs on consumer spending and rising interest rates constrain funding. Demand for digital services during the pandemic has also eased as people return to their offline lives.

Microsoft (MSFT) said Wednesday it would cut 10,000 employees. Amazon (AMZN) also recently announced it would lay off 18,000 employees, Salesforce (CRM) is cutting 10% of its workforce and Facebook (FB) parent Meta has announced 11,000 job cuts. (Apple is the rare big tech company not to announce any significant layoffs in recent months.)

On Friday, Wayfair said it would cut about 1,750 employees in its second round of layoffs in less than six months.

Tech CEOs, from Meta’s Mark Zuckerberg to Salesforce’s Marc Benioff, have blamed themselves for hiring too many people early in the pandemic and misjudging how an increase in demand for their products would cool once the restrictions of Covid-19 would be relaxed. Pichai also took the blame on Friday for the cuts from Alphabet.

“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,” Pichai said. But he added: “I’m confident about the great opportunity that lies ahead.”

Job growth has slowed in recent months and layoff announcements – particularly from tech companies – have become more frequent. But that doesn’t necessarily mean more unemployment, Robert Frick, a business economist at Navy Federal Credit Union, told CNN on Thursday. The number of initial jobless claims fell to 190,000 in the week ended Jan. 14, the lowest total in 15 weeks, according to Labor Department data.

“While layoffs from high-profile firms make the headlines, many firms are desperate for more workers, especially tech workers. These workers are in high demand from the auto industry to the Department of Veterans Affairs to nonprofit organizations,” he said.

“The job market is still so tight that many tech workers and workers with other skills are snatched away long before they need to get a unemployment check. And they’re more likely to be bought up by smaller companies that have a much greater need for labor than large corporations,” Frick added.

— Alicia Wallace contributed to this article.