While the company had massively hired in 2020 and especially 2021, Alphabet / Google finds itself with worrying drops in income. As much as the awareness of its delay in the strategic field of AI. Which pushes leaders to lay off 12,000 people and try to motivate their troops in a context where Google is, for the first time, late.
Twelve thousand people thanked, heads falling without notice and a perceptible doubt in the management of the company: the year 2023 sounds like a small blow to the head of the giant Alphabet, parent company of Google, YouTube, Android and other Nests. By laying off 6% of its employees worldwide, Alphabet/Google is triggering a small earthquake as it is the largest wave of layoffs in the company’s 25-year history. A straight cut, but that wouldn’t even be enough for investors who are demanding even more bud! In an address where he presented his plan and answered questions, the CEO of Alphabet Sundar Pichai explained and justified the plan to the approximately 186,779 employees (figures Sept. 2022), sounded by the announcement letter of January 20. A plan that inevitably questions when a company posts 13.91 billion dollars in net profits in the third quarter of 2022 alone!
A strong downtrend
If the sum of 13.91 billion is enough to make any other company salivate, in the heads of the leaders of Alphabet, it is a failure and a disavowal of their strategy for a year. Because as important as the figure is, it is in free fall compared to last year when it amounted to 18.94 billion. A decrease of 26.54% compared to 3e quarter of 2021, which comes even as Google recruited with a vengeance that year in the horde of its subsidiaries. However, several of these units did not grow as expected, such as YouTube, whose advertising revenue should have increased by 3% compared to the previous year… only to end up falling by 2%. And Alphabet executives struggled to understand the extent of the decline, since Sundar Pichai confided in a call to his investors: “ We will slow down hiring in 2023 [mais] talents are the most precious resource “. No slowdown in the end, but rather a clean and straight cut.
Read also: Layoffs: the 10 massive plans that illustrate the carnage in tech (January 2023)
A cut whose brutal nature Sundar Pichai tried to justify – many people, especially in the USA and in the Anglo-Saxon subsidiaries, were cut off from all their access overnight. Arguing that ” Google has over 30,000 managers and that the length of a consultation process could have pose a risk, even a small one “on tools” on which people’s lives depend “, the dismissals were decided in the secrecy of some top managers. And the “clean” cut is justified by the Royal Hansen, vice president of security at Google as “ an unusual set of risks that, frankly, we’re not very used to dealing with. This execution thus allowed the company to avoid the blow of the vengeful employee who torpedoes a project under the influence of anger. A fact that could have happened in the face of the influx of “newbies”.
Too many new positions, veterans not immune
One can criticize the brutality of the way dot falls the ax of dismissals in the Anglo-Saxon countries. We can also and above all criticize the lack of vision of Google executives who have recruited excessively over the past two years. While the company had 135,000 employees in 2020, it posted more than 156,000 in 2021 and 186,000 at the start of 2023. By doubling in size between 2017/2018 and today, Alphabet / Google has seen its structural costs explode . And becomes a much harder liner to pilot. Apart from Apple, which has the strength of also being a (real and serious) hardware manufacturer which makes it more cautious, all the tech giants have been “trapped” by the race for digital talent post pandemic.
Read also: Panic at Google: the founders return to counter ChatGPT (January 2023)
Giants, like Alphabet/Google, who will also take the opportunity to do a deeper cleaning. Several testimonials are beginning to surface on the net, such as that of this veteran who was dismissed overnight after 20 years of service. In addition to the severity of the clean cut without warning, these dismissals of former employees are justified by the fact that ” no one is immune to a change in our careers says Brian Glaser, one of the company’s most senior HR managers. Why target not only the latest arrivals but also the veterans? Because, in addition to the decline – or the slower progression – of some of its activities, the executives of Alphabet / Google have experienced as a real snub the arrival of a new technological tool that everyone has been talking about for two months: GPT chat.
Delay on AI: Chat GPT has sounded the tocsin
AI and its challenges are, in theory, priorities on the roadmaps of all industries and almost all governments. But the Chat-GPT phenomenon and its parent OpenAI seem to be the catalyst that will massively accelerate competition in this field. If the general public was able to discover with wonder the power of AI with Dall-E, Stable Diffusion and others, the conversational power of Chat-GPT conquered the world. And makes Google wobble.
Read also: ChatGPT: Microsoft wants to invest 10 billion in OpenAI… and dominate consumer AI? (January 2023)
A Google that no doubt realized that the work of the OpenAI teams – responsible for the GPT training model, Dall-E and ChatGPT – put them in front of their technical backwardness. In a field that is perceived by many as THE technological revolution of the decade. A revolution where the actor in the spotlight is currently under Microsoft’s sphere of influence. If Google is not one-armed in the field of AI – we see it in the neural accelerators of its smartphone chips, or in its TPU pods for servers – engineers have undoubtedly been able to measure their delay in several areas. And the leaders took note of their mistakes and of the new priorities.
CNBC
