Alphabet’s (NASDAQ: $GOOG) Google is laying off hundreds of employees as it looks to lower costs and prioritize artificial intelligence. The layoffs come as rival AI offerings from Microsoft and ChatGPT-creator OpenAI threaten Google’s core search business.
On the latest investor call, Google executives pledged to scrutinize operations and cut lower-priority areas to free up resources for key growth opportunities.
In Q3, Alphabet CFO Ruth Porat said they are slowing hiring growth to prioritize products and reallocate talent. She stated, “Product prioritization and reallocation of talent to support our most important growth opportunities.”
Cuts Span Google Assistant, Hardware, Search Teams
Google has announced terminations in its Voice Assistant unit. Moreover, hundreds of positions in the equipment group, which administers Pixel, Nest, and Fitbit, are being killed. The augmented reality (AR) segment will likewise see most individuals laid off. Hundreds of positions in Google’s focal engineering group are also being cut. Fitbit creators James Park and Eric Friedman are leaving, their exit coming three years after Google paid $2.1 billion for the wellness-focused firm.
Initial Wave of Layoffs in 2023 Has Lasting Impact
Alphabet CEO Sundar Pichai announced the initial round of cuts in January 2023.
Since January 2023, when Alphabet, Google’s parent organization, declared that it would cut around 12,000 positions, proportionate to over 6% of its worldwide labor force, tension have endured amongst Google workers. These measures are part of more extensive organizational changes at the company.
Throughout 2023, Alphabet continued with more modest workforce reductions, impacting segments related to enrollment, news items, and the Waze mapping application.
A Google spokesperson said: “Throughout the second half of 2023, teams made changes to become more efficient, align resources to top priorities, and eliminate some roles globally.”
Alphabet Workers Union Criticizes Cuts
The Alphabet Workers Union, representing around 1,400 workers, panned the reductions as “pointless.”
They emphasized, “Our individuals and associates endeavor daily to make remarkable items for our clients, and the organization ought not to keep ending our associates while reliably creating significant quarterly income. Our responsibility to defend our positions will continue until work security is guaranteed.”
Google Workforce Reductions: Impact on Stock Performance
Google had over 182,000 workers toward the end of September last year; as such, the cuts are only a tiny percentage of the workforce. Alphabet stock is up around 1% in the past 24 hours, with GOOG opening at $144.57 and GOOGL at $143.34 this morning.
The terminations are now an industry-wide pattern. Leading tech organizations are eliminating more seasoned employees and using generative AI to handle many tasks.
Despite the cuts, investors remain upbeat about the stock. They contend that the organization’s strength in web search tools and its Google AdSense business give it an enormous storm of independent benefits. Reclassifying the deck seats against the rising tide of AI bodes well.
Conclusion
As AI capabilities advance rapidly, tech giants like Google face pressure to adapt. The Layoffs come as Microsoft boosts AI offerings to challenge Google’s dominance. Google is one of many tech firms that are downsizing. Meta cut over 21,000 roles in 2023. Amazon, Spotify, and other tech firms also made significant job cuts amid economic uncertainty.
As companies turn to AI for efficiency gains, competition is heating up. But consumers are growing concerned about AI’s impact on jobs. PYMNTS research shows that 70% think AI can replace some job skills. Though AI brings productivity, its workplace impact remains hotly debated.
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