West News Wire: In a staff memo, Alphabet Inc., the parent company of Google, announced that it was eliminating 12,000 positions due to “a changed economic reality,” doubling down on artificial intelligence (AI), and firing employees who support experimental projects.

The layoffs at tech behemoths including Amazon.com Inc, Microsoft Corp, and Meta Platforms Inc, who are shrinking after a pandemic-driven hiring frenzy left them flabby in a poor economy, affect 6% of their staff.

On Friday, Alphabet stock increased 4% after the Mountain View, California-based company announced a roughly third increase in personnel through 2020 and 2021. They had decreased 30% over the previous 12 months, mirroring a 24% decline in the larger tech sector.

Sundar Pichai, Alphabet’s CEO since 2019, said in the memo on Friday that he took “full responsibility” for the decisions that led to the layoffs.

Pichai, whose pay was recently tied more closely to performance, said this was a moment to “sharpen our focus, reengineer our cost base and direct our talent and capital to our highest priorities,” as Alphabet looked to get imbue its products with more AI, echoing comments from Microsoft that announced job cuts on Wednesday.

Alphabet, long a leader in AI, is facing competition from Microsoft, which is reportedly looking to boost its stake in ChatGPT a promising chatbot that answers queries with human-like responses.

Advertising dollars, Alphabet’s mainstay revenue source, meanwhile, is feeling the squeeze from businesses chopping budgets as consumers pull back spending.

“It is clear that Alphabet is not immune from the tough economic backdrop, with worries about a U.S. recession growing,” said Susannah Streeter, an analyst at Hargreaves Lansdown.

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“Ad growth has come off the boil, competition is also heating up, with Alphabet facing a powerful rival in TikTok, and Instagram also vying for its important YouTube viewers,” Streeter said, noting that Alphabet has also racked up billions in regulatory fines.

Evercore ISIS analyst Mark Mahaney said Alphabet’s record-high headcount had created major margin risk going into fiscal 2023 and Bernstein analyst Mark Shmulik said the job cuts could save the company Alphabet $2.5 billion to $3 billion in costs.

With Alphabet’s staff cuts, layoffs at four of the biggest U.S. tech companies total 51,000 jobs in the past few months. They have fanned fears of a recession even as the U.S. job market remains tight.


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