Google CEO Sundar Pichai shocked employees on January 17th by announcing another round of layoffs coming in 2024, despite having already cut 12,000 jobs just weeks prior. As Google restructures itself to focus more heavily on AI development, the advertising business that made up the bulk of its revenue is taking a hit, leading to thousands more losing their jobs.
While the initial round of layoffs was seen as a necessary cost-cutting measure, Pichai delivered the latest announcement with a tone that caught employees off guard. Rather than expressing regret or sympathy, the CEO said employees should expect job cuts to continue, framing it as business as usual for the new Google.
Hard Pivot Towards AI Leaves Many Jobless
In a memo sent internally to all staff, Pichai stated that Google’s headcount grew “rapidly” over the past two years “for a different economic reality than the one we face today.” He went on:
“I am confident about the huge opportunity in front of us thanks to the strength of our mission, the value of our products and services, and our early investments in AI…To fully capture AI’s potential, we’ll need to make tough choices…So we’ve undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company. The roles we’re eliminating reflect the outcome of that review. They cut across Alphabet, product areas, functions, levels and regions.”
The announcement confirms reports from January 16th of hundreds being laid off from Google’s advertising division. It also follows news on January 17th that YouTube conducted a reorganization resulting in the loss of over 100 jobs.
While advertising still makes up the majority of Google’s $282 billion in annual revenues, Pichai clearly telegraphed that resources are being channeled into Google’s next era focused on artificial intelligence, including products for its cloud platform.
Alphabet, Google’s parent company, is pouring billions into AI research and development. Other big tech companies like Microsoft and Meta have also made huge investments into the field, marking the beginning of what some are calling the “AI arms race.”
Google pioneered new AI called LaMDA that can carry on lifelike conversations, as well as imaging AI that creates realistic art from text prompts. Pichai himself stated in the memo that Google plans to unveil “AI milestones” around speech recognition, translating languages, generating images, and more.
Analysts say if executed successfully, Google’s strategic realignment could pay massive dividends in the years ahead as AI becomes integrated into more and more industries. But for thousands of employees currently on the chopping block, those long-term possibilities provide little comfort.
Massive Cuts to Google’s Bread and Butter Business
Sources told Reuters that the latest round of layoffs impacted over 700 employees in Google’s vast advertising division. Many worked in technical engineering support positions for advertisers using Google’s ad products, suggesting a move away from services previously core to the company.
Tim Armstrong, former Google advertising chief, shared his two cents on LinkedIn, saying “In the past five years, Google made more revenue than the prior 14 years combined off the advertising products.” But now, “The Golden Goose got COVID and high inflation.”
Indeed, economic challenges have advertisers tightening their budgets. Alphabet reported a decline in ad revenues the final three quarters of 2022. And regulatory pressures around antitrust issues loom large for Google’s dominance of the digital ad ecosystem.
While still highly profitable, advertising can no longer fuel growth like it once did. Thus Pichai deems it an area ripe for aggressive cuts so funding can flow towards AI and cloud computing – divisions he clearly believes represent the future.
“Boring” Management Decisions Elicit Backlash
Employees past and present didn’t hold back on expressing frustrations with recent leadership strategies.
Comments on The Verge‘s live updates included:
- “This company is being broken down and stripped for parts by deeply uninspired management.”
- “Sundar is profoundly boring and has absolutely no vision.”
Long-tenured engineers that helped build Google’s advertising machine enabling those years of hypergrowth were let go without warning. Many teams and org structures were abruptly changed too, leaving confusion and anxiety in their wake.
In an interview with New York Post, one former Google ads employee who was just laid off vented:
“We made that Golden Goose! We were proud of what we built. But all the founders are gone, the CEO has no vision, and the new leadership is completely uninspiring. It’s like they killed the Goose by accident, and they have no idea how to get her to lay Golden Eggs again.”
Clearly those on the business end of Google feel discarded by detached higher ups chasing the allure of AI without a well thought out transition plan. Whether Google is right to so aggressively deemphasize advertising and pursue emerging technologies remains to be seen. But for now, morale amongst surviving employees is understandably low.
More Pain Before Progress?
In total, Google’s layoffs in 2023 have left over 15,000 people jobless – a sobering 10% chunk of its workforce. And Pichai was unambiguous that this “year  will be a year of significant investment in our AI future.” Reading between the lines points to additional major layoffs being probable before 2024 ends.
Other tech titans like Amazon and Microsoft also made deep cuts in early 2023 to brace against potential recession, then continued thinning ranks throughout the year. Their actions suggest Google’s ongoing layoffs are indeed the new normal as the industry shifts in profound ways.
(Table data compiled from media reports)
Still, investors seemed pleased with Google’s aggressive posture as Alphabet stock only dipped slightly on the announcement before recovering, hovering close to 52 week highs.
And even ex-employees acknowledged the shape-shifting could ultimately pay off, with one telling Business Insider:
“I fundamentally believe this company has to reinvent itself…It’s just business and not personal. It sucks, but I get it.”
The widespread adoption of advanced AI does feel inevitable. If Google successfully positions itself on that leading edge over competitors, it may retain its dominant status for decades more. For the thousands sacrificed in the pivot though, Google’s handling of the transition and lack of compassion displayed fosters plenty of ill will.
Only time will tell whether Pichai’s moves were strategic foresight, reactive blunders, or a bit of both. But either way, 2023 will be remembered by Googlers as the year everything changed.
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