Google, the layoffs reveal the ruthless side of the giant

Google, the layoffs reveal the ruthless side of the giant


On the occasion of the company's IPO in 2004, Google founders Larry Page and Sergey Brin attended a series of meetings in different American cities, which took a comically passive-aggressive turn. They shelved suits in favor of casual attire, refused to answer many questions from finance bigwigs, and warned investors that, instead of focusing on profits, the new company could use its resources "to improve a number of problems." of the world ". The founders feared the restrictions placed on a publicly traded company and vowed that Google would never pander to Wall Street. To do so, Page and Brin structured the company to control a majority of voting stock. Instead of giving money back to shareholders, Google pampered the talent behind its innovations, offering staff perks like massages, free food, and lavish pay. In late 2010, for example, Page and Brin shocked employees by announcing a 10 percent wage hike across the board, a doubling of the already sizable annual bonus, and a $1,000 Christmas present. The beneficiaries already had top-of-the-market salaries, plus lucrative equity shares. The generosity of the founders, however, was proof that the two were sincere when they stressed that Google employees were the heart of the company.

Layoffs and cuts

Although Brin and Page have been little involved in Google's activities for years, in the company's 25-year history the tendency to challenge convention has always remained marked. At least until this month, when Google's parent company Alphabet laid off 12,000 employees, about 6 percent of its workforce, including many top executives and some of the people it hired when the company was in its infancy. For a company famous for pampering its workers, the layoffs came as a real shock. Especially since some of the people involved were dismissed coldly, finding themselves access to corporate email blocked before even being able to say goodbye to colleagues.

Alphabet isn't the only company to have laid off many of its employees over the last times. The leaders of Meta , Microsoft, Amazon , Salesforce and others are doing the same thing: they try to patch up what they suddenly perceive as an excessive number of employees by cutting staff. The message released by the giant's current CEO, Sundar Pichai, was similar to other corporate communications seen during this period; the impression is that the technology companies that have decided to reduce the number of employees have drafted them by providing an delivery identical to ChatGpt : “ Unfortunately at the time when we were making tons of money during the pandemic I was too optimistic on the hiring front, so now some of you will have to leave. But this is just a setback in our journey. I can't wait to see what the future of this club has in store, but some of you won't be able to be a part of! ”.

What is happening to Alphabet, however, is different. With the exception of a few hundred sales people in 2009, the company had never resorted to mass layoffs. To this must be added the signs that indicate that the era of unlimited benefits is over (among the people left at home there are also 27 masseurs). Not that the company is in danger from a financial point of view: despite the slowdown in growth and the decline in shares - which recently involved any technology company - Alphabet in fact continues to collect a lot. In the most recent quarter, the company earned $14 billion in profits and has $116 billion in cash; moreover, in recent years it has spent over 100 billion dollars to buy back its shares, an operation that Wall Street really likes but which is of no use to the company.

The layoffs and the cut Some of the benefits Pichai wanted have justifications. With 187,000 employees, it is undeniable that there were thousands of people at Alphabet whose work was not an integral part of the company, probably not only the massage therapists but also hundreds of mid-level managers who took care of non-essential projects (Brin and Page always thought these figures slowed down innovation). Unsurprisingly, those involved in artificial intelligence (AI), such as the research group Google Brain, have been spared. Indeed, Pichai underlined that the cuts were decided to allow Google to allocate more resources to AI .

A pragmatic turn

But in some ways, Alphabet's layoffs are the symbol of what appears to be a gradual change of philosophy. For years, the company has funded projects and created entire divisions dedicated to producing new forms of technology. One of these was an internal incubator called Area 120, which was essentially shut down after this month's cuts. Wall Street has complained for years about the unprofitability of the company's "bets" and now the company seems to want to focus more on the more concrete activities .

There is no doubt that Alphabet has burned billions of dollars in research of the next big innovation. But these projects are called moonshots - literally "launch to the moon" - for a reason: one success can compensate for a hundred failures. Indeed, one could say that it has already happened. Google Brain – which originated within Google's X division dedicated to innovations – is now not only integrated into the company, but plays an essential role in almost all of Google's software and gives the company a key advantage in upcoming wars that will unleash around generative Ai .

Furthermore, investing in new domestic businesses is even more important now that the US government and the European Union are suspicious of acquisitions by Big tech . Google's most successful move after online searches was its $1.6 billion purchase of YouTube in 2006, which today, for example, it would never want allowed by the Federal Trade Commission, the US agency responsible for of consumer protection.

The impact on remaining employees

Another not encouraging sign is represented by the fact that Alphabet seems increasingly inclined to count the cents on employee benefits. While it's easy to make fun of them - especially when they're presented as shameful acquired rights in TikTok videos -  it's also true that there aren't many companies capable of generating the profits necessary to guarantee them. Brin and Page, however, believed that "spoiling" workers was a profitable strategy. This concept has since become the model followed by almost all of Google's competitors in Silicon Valley: not only the tech giants, but also the best-funded startups have begun to vie for the best chefs on the square with the same ferocity with which they hunted for machine learning experts. It was a grand experiment that challenged Wall Street's belief that the best workforces were those subjected to brutal hardships and ruthless cuts. Now the experiment no longer seems to be in great health, and this comes at the expense of working people everywhere and those of us eager to see a crazy idea turn into the next big innovation (I guess it will now be more likely to be a startup to succeed).

Perhaps it is no coincidence that Alphabet's moves come at a time when one of the company's main shareholders, hedge fund magnate Christopher Hohn , is in communication with Pichai. Hohn has said publicly that the company should slash headcount: Current layoffs of 6 percent of the workforce would be just "a step in the right direction," he wrote, arguing for a 20 percent layoff. Hohn also complained about high salaries and too much money Google was spending on his "gambles." The reason Brin and Page kept the majority of the voting stock, of course, was so they wouldn't have to listen to hedge fund multi-billionaires calling for workers to be fired or their salaries cut.

While the remaining employees are still well paid, Alphabet's latest decisions may prompt some to explore other options. While Pichai and his team attempted to give some semblance of justification for layoffs last week, people I spoke to often had no idea why one employee was cut and another stayed. What is certain is that now all the company's employees (except perhaps the artificial intelligence wizards) are a little less secure in their jobs . " It seems to me that there has been a change in the company - says a former historical software engineer of the company, who cannot understand why he was fired -. Certainly I have the impression that even the historical employees with high performance remained they'll start looking over their shoulder.”

In his message, Pichai promised that Google will continue to pay a “healthy focus on the impossible, which has been at the heart of our culture since the beginning. Unfortunately, however, what the company's latest moves have certified is that it is impossible to do it without firing people, scaring survivors and questioning the company's values.

This article is taken from Steven Levy's weekly newsletter for sportsgaming .win US.

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