Google’s parent Alphabet is cutting 12,000 jobs

New York

Google parent Alphabet is cutting about 12,000 jobs, or 6% of its workforce, the company announced Friday, in the latest cuts to shake up the tech sector.

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

Affected US employees will remain on the company’s payroll for 60 days and receive at least 16 weeks’ pay as severance pay, in addition to other benefits.

Alphabet has increased its workforce by more than 50,000 employees in the past two years due to growing demand for services during the pandemic increased profits. But in recent quarters, the company’s core digital ad business has slowed as the economic crisis and fears of a recession have forced advertisers to pull back on spending.

“Over the past two years, we have seen periods of dramatic growth,” Pichai said in an email. “To match and drive that growth, we’ve hired for a different economic reality than we face today.”

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

Alphabet is scheduled to announce earnings for the three months to Dec. 30 in early February, and Wall Street analysts expect the company’s revenue to grow by just 1.7% compared to the same period last year. That would mark a sharp slowdown from the 32% growth seen at the same time last year. Analysts also predict that net income will fall by nearly 25% year over year.

The layoffs at Google are just the latest in a wave of layoffs in tech, as inflation weighs on consumer spending and rising interest rates cut funding. Demand for digital services during the pandemic has also weakened as people return to offline lives.

Microsoft ( MSFT ) said Wednesday it will lay off 10,000 employees. Amazon ( AMZN ) also recently announced it will lay off 18,000 people, Salesforce ( CRM ) is laying off 10% of its staff, and Facebook ( FB ) parent Meta announced 11,000 job cuts. (Apple is the rare major tech company that hasn’t announced significant layoffs in recent months.)

On Friday, Wayfair said it would lay off approximately 1,750 employees, the second round of layoffs in less than six months.

Tech CEOs, from Meta’s Mark Zuckerberg to Salesforce’s Marc Benioff, blamed themselves for over-hiring early in the pandemic and misreading how the surge in demand for their products would moderate after Covid-19 restrictions eased. Pichai also took the blame on Friday for Alphabet’s cuts.

“The fact that these changes will affect the lives of Google employees weighs heavily on me, and I take full responsibility for the decisions that got us here,” Pichai said. But he added: “I am convinced of the great opportunity that lies ahead of us.”

Job growth has slowed in recent months, and layoff announcements — particularly from tech companies — have become more widespread. But that doesn’t necessarily mean an increase in unemployment, Robert Frick, a corporate economist at Navy Federal Credit Union, told CNN on Thursday. Initial claims for unemployment insurance fell to 190,000 in the week ended Jan. 14, the lowest total in 15 weeks, according to the Labor Department.

“While layoffs at high-profile companies make headlines, many companies are desperate for more workers, especially technology workers. These workers are in high demand from the automotive industry to the Department of Veterans Affairs and non-profit organizations,” he said.

“The labor market is still so tight that many tech workers and workers with other skills are being ripped off long before they need to pick up an unemployment check. They are more likely to be snapped up by smaller companies, which have a much higher demand for workers than large corporations,” Frick added.

— Alicia Wallace contributed to this article.

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