news/AAPL/2023.01.20/Alphabet cuts 12,000 jobs after pandemic hiring spree, refocuses on AI.txt

Jan 20 (Reuters) - Google's parent Alphabet Inc
is cutting about 12,000 jobs as it faces "a different
economic reality", it said in a staff memo, doubling down on
artificial intelligence (AI) and axing staff who support
experimental projects.The job cuts affect 6% of its workforce, and follows
thousands of layoffs at tech giants including Amazon.com Inc
, Microsoft Corp and Meta Platforms Inc
who are downsizing after a pandemic-led hiring spree
left them flabby in a weak economy.Shares in Mountain View, California-based Alphabet, which
boosted its workforce by nearly a third through 2020 and 2021,
rose 4% on Friday. They had fallen 30% in the past 12 months,
echoing a 24% slump in the broader tech industry.Sundar Pichai, Alphabet's boss since 2019, said in the memo
on Friday that he took "full responsibility" for the decisions
that led to the layoffs.Pichai, whose pay was recently tied more closely to
performance, said this was a moment to "sharpen our focus,
reengineer our cost base and direct our talent and capital to
our highest priorities," as Alphabet looked to get imbue its
products with more AI, echoing comments from Microsoft that
announced job cuts on Wednesday.Alphabet, long a leader in AI, is facing competition
from Microsoft, which is reportedly looking to boost its stake
in ChatGPT - a promising chatbot that answers queries with
human-like responses.Advertising dollars, Alphabet's mainstay revenue source,
meanwhile, is feeling the squeeze from businesses chopping
budgets as consumers pull back spending."It is clear that Alphabet is not immune from the tough
economic backdrop, with worries about a U.S. recession growing,"
said Susannah Streeter, an analyst at Hargreaves Lansdown."Ad growth has come off the boil ... Competition is also
heating up, with Alphabet facing a powerful rival in TikTok, and
Instagram also vying for its important YouTube viewers,"
Streeter said, noting that Alphabet has also racked up billions
in regulatory fines.Evercore ISIS analyst Mark Mahaney said Alphabet's
record-high headcount had created major margin risk going into
fiscal 2023 and Bernstein analyst Mark Shmulik said the job cuts
could save the company Alphabet $2.5 billion to $3 billion in
costs.BIG JOB CUTSWith Alphabet's staff cuts, layoffs at four of the biggest
U.S. tech companies total 51,000 jobs in the past few months.
They have fanned fears of a recession even as the U.S. job
market remains tight."The tech sector is bit like the proverbial canary in the
coal mine," said Stuart Cole, an economist at Equiti Capital,
who believes the tech layoffs portend that the outlook for job
security is finally beginning to turn more negative.Apple, which hired more prudently through the
pandemic, has held off on cuts so far. On Friday, though,
website AppleInsider reported citing sources that the iPhone
maker had started to lay off non-seasonal employees in its
retail channel in places such as Best Buy stores.Apple was not immediately available for a comment on the
report.'LITTLE COMFORT'Alphabet has been working on a major AI launch, two people
familiar with the matter told Reuters. One of the sources said
it would take place in the spring. The New York Times also
reported that Google planned to unveil more than 20 new products
and a search engine including chatbot features.Among those losing their jobs are recruiters, corporate
staff and people working on engineering and product teams,
Pichai said. Google has cut most jobs at Area 120, its in-house
incubator for new projects, a company spokesperson told Reuters.The Alphabet Workers Union said in a statement that the
company's leadership taking "full responsibility" was "little
comfort.""It's appalling that our jobs are first on the chopping
block so shareholders can see a few more points in a chart next
quarter," the union said.In the United States, where Alphabet has already emailed
affected employees, staff would 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, Pichai said in the memo.
Employees in Asia will learn starting in February if the
reduction impacts them.(Reporting by Jeffrey Dastin in Davos, Switzerland, Akash
Sriram, Deep Vakil, Chavi Mehta, Tiyashi Dutta, Nivedita Balu
and Yuvraj Malik in Bengaluru; Editing by Elaine Hardcastle,
Alexander Smith, Nick Zieminski, Sayantani Ghosh)