Google parent Alphabet Inc. said Friday that it will cut 12,000 jobs, about 6% of its global workforce, becoming the latest tech giant to retrench after years of abundant growth and hiring.
The cuts will affect jobs globally and across the company, CEO Sundar Pichai told employees in an email, writing that he takes "full responsibility for the decisions that led us here."
Pichai said the company expanded too rapidly early during the covid-19 pandemic, when demand for digital services boomed for homebound consumers, and now must refocus on products and technology that are core to the company's future, such as artificial intelligence.
"We hired for a different economic reality than the one we face today," Pichai said in a note to employees posted on the company's website.
Google joins a list of other technology companies that have laid off workers after concluding they had overextended under the belief that the pandemic-fueled boom represented a new normal.
Amazon, Facebook parent Meta Platforms, Microsoft, Twitter and Salesforce are among others that have announced thousands of job cuts.
Overall, more than 190,000 jobs have been cut by technology firms since the start of 2022, according to Layoffs.fyi, a website that tracks job cuts in the industry.
The moves mark the end of a period in which the technology industry experienced uninterrupted growth, expanded rapidly and battled for employees with lavish perks and high pay.
Google, started in 1998, helped define a Silicon Valley work culture that influenced corporations far beyond the technology sector.
Overall, Alphabet had nearly 187,000 employees as of the end of September 2022, compared with about 150,000 a year earlier.
"The company has too many employees, and the cost per employee is too high," TCI Managing Director Chris Hohn said, noting that Alphabet's head count had swelled 20% per year since 2017.
The cut announced Friday comes at a time when Google is facing competition from rivals offering new ways to search for information on the internet.
ChatGPT, created by a company called OpenAI, for example, has dazzled users by providing clearly written answers to questions and queries.
"These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities," Pichai said. "Being constrained in some areas allows us to bet big on others."
He said the company has a "substantial opportunity in front of us" with artificial intelligence, a key investment area for Google.
profits still strong
Even as Alphabet and other tech giants trim their workforces and pledge to become more efficient, the companies remain strikingly profitable.
In 2021, Alphabet reported a profit of $76 billion and revenue of nearly $258 billion. But the technology sector has not been immune from rising interest rates and a slumping global economy.
As the advertising industry struggles and companies purchase fewer ads on Google's search engine or YouTube, Alphabet's bottom line took a hit. The company's cloud computing business has continued to trail Amazon and Microsoft.
In October, Alphabet said quarterly net profit had fallen 27%. The company reports its latest financial results for 2022 on Feb. 2.
At Google, the company has made a series of cost-cutting moves in recent months, canceling the next generation of its Pixelbook laptop and permanently shuttering Stadia, its cloud-gaming service.
In January, Verily, a biotech unit of Alphabet, said it was cutting 15% of its staff.
Alphabet said U.S. employees would receive a severance package including 16 weeks of salary, plus two weeks of extra pay for every year they worked at Google.
Laid-off workers will also receive six months of paid health care. Compensation for workers outside the U.S. will be determined by local labor laws, the company said.
After the job cuts were announced early Friday, shares of Alphabet Inc. rose more than 3% in premarket trading, closing at $99.28 on the day for a 5.7% gain in New York.
Elsewhere in the tech sector, Microsoft said this week that it planned to cut 10,000 jobs, roughly 5% of its workforce.
Earlier this month, Amazon said it would lay off 18,000 employees, representing 1% of its total workforce.
In November, Meta Platforms announced a head count reduction of more than 11,000 employees, about 13% of its staff.
After Elon Musk bought Twitter for $44 billion in October, he halved its workforce of roughly 7,500 employees at the time, among other cuts.
Information for this report was contributed by Adam Satariano of The New York Times; by Mark Bergen, Julia Love and Davey Alba of Bloomberg News (WPNS); and by Barbara Ortutay, Michael Liedtke and Michelle Chapman of The Associated Press.