Google’s parent Alphabet cutting 12,000 jobs globally

The cuts are the latest to shake the technology sector. PHOTO: REUTERS

SAN FRANCISCO - Google’s parent Alphabet said on Friday that it is cutting about 12,000 jobs, or 6 per cent of its workforce.

In a memo to staff, Alphabet chief executive officer Sundar Pichai said the company had rapidly expanded headcount in recent years “for a different economic reality than the one we face today”.

“I take full responsibility for the decisions that led us here,” he said.

The job cuts affect teams across the company including recruiting and some corporate functions, as well as some engineering and products teams.

The layoffs are global and impact US staff immediately, Google said.

In the United States, where Alphabet has already e-mailed affected employees, staff will receive severance and six months of healthcare as well as immigration support.

Overseas, layoff notifications will take longer due to local employment laws and practices, Mr Pichai said.

Ms Susannah Streeter, an analyst with Hargreaves Lansdown, said Alphabet’s advertising business, which underpins Google’s search engine and YouTube, was not immune to economic turbulence. “Ad growth has come off the boil, a sharp contrast from the busy days of the post-pandemic reopening which saw a surge in consumer spending.”

The company faces competitive and regulatory threats as well, she said.

The cuts are the latest to shake the technology sector and come days after rival Microsoft Corp said that it would lay off 10,000 workers.

Meta Platforms, Twitter and Amazon.com have all slashed their ranks.

The news comes during a period of economic uncertainty as well as technological promise, in which Google and Microsoft have been investing in a fledgling area of software known as generative artificial intelligence.

In his note, Mr Pichai added: “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.”

In October, the company reported earnings and revenue that missed analyst expectations.

Profit declined 27 per cent to US$13.9 billion (S$18.4 billion) compared with the prior year.

At the time, Mr Pichai said Google would curb its expenses and chief financial officer Ruth Porat said the number of new jobs would fall by more than half in the fourth quarter from the previous period.

Google’s reduction in headcount follows investor pressure to adopt a more aggressive strategy to curb spending.

In November, TCI Fund Management urged the Internet search giant in an open letter to publicly set a target for profit margins, increase share buybacks and reduce losses in its portfolio of Other Bets, Alphabet’s moonshot division.

“The company has too many employees and the cost per employee is too high,” TCI managing director Chris Hohn said, noting that Alphabet’s headcount had swelled 20 per cent per year since 2017.

According to human resources consulting firm Challenger, Gray & Christmas, the most job cuts in 2022 were in the technology sector – 97,171 for the year, up 649 per cent compared with the previous year.

Google has made a series of cost-cutting moves in recent months.

It cancelled the next generation of its Pixelbook laptop and permanently shuttered Stadia, its cloud gaming service.

Earlier in January, Verily, a biotech unit of Alphabet, said it was cutting 15 per cent of its staff.

REUTERS, BLOOMBERG

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