Tech layoffs 2023: Alphabet slays 12,000 jobs, invests in AI

Rumors are circulating that Google’s parent company is launching a new AI product.
Loukia Papadopoulos
Google is Alphabet's parent company.jpg
Google's parent Alphabet slays 12,000 jobs.

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Google's parent Alphabet has cut six percent of its workforce as it faces "a different economic reality," it said in a staff memo released on Friday by Google CEO Sundar Pichai.

That's about 12,000 lost jobs lost as the firm doubles down on artificial intelligence (AI) and gets rid of staff who support experimental projects.

Pichai, who has led Alphabet since 2019, said in the memo that he took "full responsibility" for the cuts.

Pichai added in the statement that this was a moment to "sharpen our focus, re-engineer our cost base and direct our talent and capital to our highest priorities." These priorities consist of creating AI-focused products.

Launching AI-focused companies

In November of 2021, Alphabet launched a new company called Isomorphic Labs which uses AI to discover new pharmaceutical drugs. The venture will reportedly rely on advancements made by Alphabet's DeepMind whose AI uses a model called AlphaFold2 to predict the shape of proteins with incredible accuracy.

"I'm thrilled to announce the creation of a new Alphabet company – Isomorphic Labs – a commercial venture with the mission to reimagine the entire drug discovery process from first principles with an AI-first approach and, ultimately, to model and understand some of the fundamental mechanisms of life," wrote in a blog at the time Demis Hassabis, Founder and CEO of Isomorphic Labs (and DeepMind).

Two sources also told Reuters that Alphabet has been working on a major AI launch that would take place in the spring. No word has been given as to what this product would be and if it will prove fruitful.

Meanwhile, Alphabet's mainstay revenue source consists of advertising funds. But these dollars are feeling the squeeze from businesses cutting budgets as consumers pull back spending.

Susannah Streeter, an analyst at Hargreaves Lansdown, told Reuters that Alphabet is obviously affected by tough economic times.

"It is clear that Alphabet is not immune from the tough economic backdrop, with worries about a U.S. recession growing. 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.

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Little comfort for fired workers

Meanwhile, the Alphabet Workers Union announced in a statement that the company's leadership taking "full responsibility" was "little comfort."

"It's appalling that our jobs are first on the chopping block so shareholders can see a few more points in a chart next quarter," the union said.

American staff that have been let go will now receive severance and six months of healthcare as well as immigration support. However, layoff notifications overseas will take longer due to local employment laws and practices.

Cuts at four of the biggest US tech companies have seen more than 51,000 jobs lost in the past few months, inducing fears of a recession even as the job market remains tight.

Pichai's full memo can be found here, courtesy of CNBC.

Googlers,

I have some difficult news to share. We've decided to reduce our workforce by approximately 12,000 roles. We've already sent a separate email to employees in the US who are affected. In other countries, this process will take longer due to local laws and practices.

This will mean saying goodbye to some incredibly talented people we worked hard to hire and have loved working with. I'm deeply sorry for that. The fact that these changes will impact the lives of Googlers weighs heavily on me, and I take full responsibility for the decisions that led us here.

Over the past two years we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.

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 it, 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.

To the Googlers who are leaving us: Thank you for working so hard to help people and businesses everywhere. Your contributions have been invaluable and we are grateful for them.

While this transition won't be easy, we're going to support employees as they look for their next opportunity.

In the US:

  • We'll pay employees during the full notification period (minimum 60 days).
  • We'll also offer a severance package starting at 16 weeks salary plus two weeks for every additional year at Google, and accelerate at least 16 weeks of GSU vesting.
  • We'll pay 2022 bonuses and remaining vacation time.
  • We'll be offering 6 months of healthcare, job placement services, and immigration support for those affected.
  • Outside the US, we'll support employees in line with local practices.

As an almost 25-year-old company, we're bound to go through difficult economic cycles. These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities.

Being constrained in some areas allows us to bet big on others. Pivoting the company to be AI-first years ago led to groundbreaking advances across our businesses and the whole industry.

Thanks to those early investments, Google's products are better than ever. And we're getting ready to share some entirely new experiences for users, developers and businesses, too. We have a substantial opportunity in front of us with AI across our products and are prepared to approach it boldly and responsibly.

All this work is a continuation of the "healthy disregard for the impossible" that's been core to our culture from the beginning. When I look around Google today, I see that same spirit and energy driving our efforts. That's why I remain optimistic about our ability to deliver on our mission, even on our toughest days. Today is certainly one of them.

I'm sure you have many questions about how we'll move forward. We'll be organizing a town hall on Monday. Check your calendar for details. Until then, please take good care of yourselves as you absorb this difficult news. As part of that, if you are just starting your work day, please feel free to work from home today.