Alphabet, parent of Google, is cutting 12,000 jobs | CNN Business

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Google parent Alphabet is cutting about 12,000 jobs, or 6 percent of its workforce, the company said Friday, in the latest cuts to shake up the technology sector.

The cuts will affect roles across product areas and regions, CEO Sundar Pichai said in an email to employees that was posted on the company’s website Friday.

Affected US employees will remain on the company’s payroll for 60 days and will receive at least 16 weeks’ wages as compensation, in addition to other benefits.

Alphabet increased its workforce by more than 50,000 employees over the past two years due to booming demand for its services during the pandemic increased profits. But in recent quarters, the company’s core digital ad business has slowed as the economic downturn and recession fears caused advertisers to cut spending.

“Over the past two years we have seen periods of dramatic growth,” Pichai said in the email. “To match and fuel that growth, we hired for a different economic reality than we face today.”

Pichai said the layoffs were part of an effort to refocus on the company’s core business, as well as its early investments in artificial intelligence. “These are important times to sharpen our focus, reinvent our cost base and direct our talent and capital to our highest priorities,” he said.

Alphabet will report earnings for the three months to December 30 in early February, and Wall Street analysts expect the company’s revenue to grow just 1.7% compared with the same period a year earlier. This would mark a sharp slowdown from the 32% growth it recorded at the same time last year. Analysts also expect net income to drop nearly 25% year over year.

Google’s job cuts are just the latest in a sweeping wave of tech layoffs as inflation weighs on consumer spending and rising interest rates squeeze funding. Demand for digital services during the pandemic has also declined as people return to their offline lives.

Microsoft ( MSFT ) said Wednesday it would cut 10,000 jobs. Amazon ( AMZN ) also recently announced it would lay off 18,000 people, Salesforce ( CRM ) is cutting 10% of its workforce, and Facebook ( FB ) parent Meta has announced 11,000 job cuts.

Tech CEOs, from Meta’s Mark Zuckerberg to Salesforce’s Marc Benioff, have blamed themselves for over-hiring early in the pandemic and misunderstanding how a surge in demand for their products would cool once it did. reduce Covid-19 restrictions. Pichai on Friday also took the blame for alphabet cuts.

“The fact that these changes have an impact on the lives of Googlers weighs heavily on me, and I take full responsibility for the decisions that got us here,” Pichai said. But, he added, “I am confident of the great opportunity before us.”

Job growth has slowed in recent months and layoff announcements, particularly at technology companies, have become widespread. But that doesn’t necessarily equate to more unemployment, Robert Frick, a corporate economist at Navy Federal Credit Union, told CNN on Thursday. The number of first-time claims for unemployment insurance fell to 190,000 in the week ended Jan. 14, the lowest total in 15 weeks, according to Labor Department data.

“While high-profile company layoffs make headlines, many companies are desperate for more workers, especially technology workers. These workers are in high demand from the auto industry to the Department of Veterans Affairs and nonprofits,” he said.

“The labor market remains so tight that many tech workers and workers with other skills find themselves long before they have to collect an unemployment check. And they’re more likely to be snapped up by smaller companies, which have a demand for workers much bigger than the big corporations,” Frick added.

— Alicia Wallace contributed to this article.