Google CEO Pichai says staff cuts were made to avoid ‘much worse’ issues

Google said last Friday that it would eliminate about 12,000 jobs. PHOTO: EPA-EFE

CALIFORNIA – Google’s chief executive told employees on Monday that job cuts were made in a bid to act decisively as the company’s growth slowed.

In an internal meeting, Mr Sundar Pichai, who is also CEO of Google parent Alphabet, said he had consulted the company’s founders and board in making the decision for 6 per cent cuts, according to remarks reviewed by Bloomberg.

“If you don’t act clearly and decisively and early, we can compound the problem and make it much worse,” Mr Pichai said. “These are decisions I needed to make.”

Google said last Friday that it would eliminate about 12,000 jobs, becoming the latest technology giant to retrench after years of abundant growth and hiring.

Although speculation about the cuts had swirled for months, the layoffs were nonetheless a shock to the system for some employees. Some only realised they lost their jobs when they were unable to access corporate systems.

Yet, Mr Pichai stressed the cuts were the product of careful consideration. “The process was far from random,” he said.

The size of Google’s workforce forced executives to keep the circle of decision-makers relatively small, said Ms Fiona Cicconi, Google’s chief people officer, in the meeting with employees.

“In an ideal world, we would have given managers a heads-up, but we have over 30,000 managers at Google,” Ms Cicconi said. “We wanted to give certainty sooner.”

Another executive said severance packages had been structured to reward workers with long tenures at the company. 

Alphabet chief financial officer Ruth Porat stressed in the meeting that the cuts were intended to free up the company to continue investing in key priorities.

“Act early, and you then create the capacity to invest for long-term growth,” Ms Porat said. “As difficult as this was, those were the takeaways.”

The cuts include most of the jobs at Area 120, Google’s in-house incubator for new projects. Three projects in the incubator will “graduate” later this year, meaning they will be folded into Google, a company spokesman said on Friday.

“We have made the difficult decision to wind down the majority of the Area 120 team,” the spokesman said.

The managing partner of Area 120 remains with the company, the spokesman said.

Virtually all other workers who were not involved in the three projects have lost their jobs, according to two people with knowledge of the matter.

Launched in 2016, Area 120 offers select employees the opportunity to work on small start-ups that live inside Google. “Many of Google’s best ideas begin as passion projects,” the Area 120 website explained.

Among the incubator’s biggest hits was GameSnacks, a gaming platform launched in 2020 that caters to people using low-memory devices on slow cellular networks.

Google made another round of cuts to Area 120 in September, when some teams at the incubator were notified that their projects had been reorganised or cancelled. A company spokesman said at the time that Area 120 would be “shifting its focus to projects that build on Google’s deep investment in artificial intelligence and have the potential to solve important user problems”. BLOOMBERG

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