Google announced this week that it will be laying off over 1,000 employees across multiple divisions, marking one of the largest job cut rounds at the tech giant in recent years. The layoffs come as Google looks to restructure parts of its business to rely more on artificial intelligence and weather an economic storm.
Hundreds Cut From Google’s Advertising Division
The advertising division bore the brunt of the layoffs, with over 600 sales and marketing employees let go on Monday. Many of these cuts targeted Google’s ad sales teams that work directly with advertisers to buy search and YouTube ads.
Google indicated the move is part of a longer-term plan to incorporate more AI into the advertising sales process. The company has been developing an AI-based platform called Oberon that can optimize campaigns and recommend budgets for advertisers with less human involvement.
“We’ve decided to consolidate some teams and functions to operate more efficiently,” said a Google spokesperson. “These are very difficult decisions, and we do not take them lightly.”
While the adoption of AI-driven ad platforms allows Google to reduce headcount, employees expressed frustration that they were not given more warning about the sweeping changes.
“They just ripped the bandaid right off,” said one ad salesperson who was laid off after over 5 years at Google. “I wish leadership was more upfront about their long-term vision so we could have prepared ourselves.”
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Engineering, Hardware Teams Also Impacted
In addition to the ad sales division, Google’s engineering and hardware units saw job losses this week.
Over 300 engineers were cut across teams working on search, cloud, self-driving cars, and other technical areas. Layoff notices mentioned “reorganizations” and “cost cutting” as reasons behind the decisions.
Several Nest and Pixel hardware teams were similarly impacted, with around 100 employees losing their jobs. This continues months of upheaval for Google’s devices group, which previously cut some Pixel and Stadia staff.
Insiders say CEO Sundar Pichai and other leaders are hitting the brakes on speculative “moonshot” projects and re-directing engineering talent to focus on search, cloud, AI, and ads. The economic challenges facing the tech industry in 2024 have forced difficult tradeoffs.
“Google has had an incredibly fertile breeding ground for new products in recent decades,” said tech analyst Dan Ives of Wedbush Securities. “But tighter budgets mean they will need to narrow their focus, trim the fat, and double down on their core bread and butter money makers.”
Layoffs Part of Broader Tech Industry Job Cuts
Google is far from the only tech company making reductions this year. Giants like Amazon, Salesforce, Meta, Twitter, and others have collectively cut well over 100,000 jobs in recent months as the bull market of the early 2020s comes to a close.
For over a decade, tech firms grew rapidly and hired at blistering rates. But sky-high inflation, rising interest rates, and talk of a US recession have battered stock prices and erased over $4 trillion from the sector last year. This has forced cost-cutting measures across the industry.
“The past 2 years saw unprecedented growth,” said Sundar Pichai in an email to staff this week. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”
Pichai indicated this is not the end of layoffs at Google, warning employees to expect more “difficult choices” around hiring and investments going forward. Other tech CEOs have made similar comments, signaling belt-tightening will continue in Silicon Valley through 2024.
What’s Next For Google?
While layoffs are painful, analysts say Google remains well positioned to weather the uncertainty relative to peers. The advertising giant continues to dominate the lucrative search advertising market along with Meta’s Facebook.
And Google Cloud, despite sitting a distant third behind AWS and Microsoft Azure, is growing over 40% annually as more businesses migrate to the cloud. These core pillars should support strong profitability even if macro headwinds persist.
Still, Google will need to carefully manage costs and navigate a changing tech landscape where AI promises to disrupt everything from search to e-commerce. Google has bet big on AI advancements itself, evident by large investments into DeepMind and other internal AI labs.
Ultimately though, the success of these efforts rests on attracting and retaining top engineering talent. This will prove challenging as Big Tech layoffs and hiring freezes pile up. Competing with the likes of Microsoft, which recently unveiled a round of major AI breakthroughs, will test Google’s mettle.
For now, Google remains atop the tech hierarchy along with Apple, Microsoft, Amazon and Meta. But the layoffs this week underscore that even Silicon Valley staples are not immune to economic forces greater than any single company. Priorities are shifting, non-essential projects are being cut, and the tech job market is facing its greatest upheaval in over a decade. Google engineers may not find themselves in quite as high demand as years past.
The tech boom of yesteryear made stars of companies like Google. This year will test which giants shine brightest when storms hit.
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