What’s behind the layoffs in Silicon Valley

san francisco “We have decided to reduce our workforce by around 12,000 jobs.” With these words, Google CEO Sundar Pichai initiated one of the largest waves of layoffs in the company’s history. After other tech companies such as Amazon, Microsoft and Meta, Google’s parent company Alphabet is also cutting thousands of jobs.

In the wave of layoffs, however, one company has so far been left out: Apple. All tech companies had been able to increase their sales significantly over the past few years and hired a lot of staff. However, Apple was very reticent. This could now lead to the group getting by without major job cuts.

Apple had increased its workforce by around 20 percent to 164,000 full-time positions between fiscal years 2019 and 2022. In a similar period, the Facebook group Meta increased its workforce by almost 100 percent. At Google, the increase was around 60 percent, at Microsoft it was around 50 percent. Amazon more than doubled its workforce between fiscal years 2019 and 2021. On February 2, the group will present its balance sheet data for the 2022 financial year.

Analyst Mark Mahaney from asset manager Evercore ISI judged the staff cuts at Google to be the right step. During the past five quarters, Google has increased its workforce and created 12,800 new jobs in the most recent quarter alone. This is a major risk for the company given the uncertain economic situation.

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Wedbush analyst Dan Ives wrote: “Silicon Valley, after a decade of hyper-growth, is now entering the reality of cost-cutting mode to weather this economic storm.”

Chaotic wave of layoffs at Google

However, he regarded Apple as a special case. “Apple remains our top pick for 2023 as we believe demand will hold up in this storm and the risk/reward ratio is a real hit at current levels,” Ives wrote.

That doesn’t mean Apple will avoid downsizing entirely. According to information from the Handelsblatt, the first positions are vacant. Within the workforce, it was assumed that Apple could thus avoid having to lay off employees and at the same time reduce the number of employees – but without mass layoffs.

At Google, the wave of layoffs on Friday was sometimes chaotic. Several Google employees reported that even experienced professionals who were known for their good work were being laid off.

“That doesn’t make any sense,” a Google employee told Handelsblatt. There is no recognizable system according to which employees have been terminated. All access to the company’s systems was cut off for redundant Google employees on Friday night. Many then learned about the wave of layoffs from the media. 5,000 of the dismissed employees had come together in a group and would advise on legal action, the television station CNBC reported.

All Google businesses affected by layoffs

Criticism also came from the responsible trade union. “Alphabet leadership claims to take ‘full responsibility’ for this decision, but that’s cold consolation for the 12,000 workers who are now out of work,” said Google’s Alphabet Workers Union chair Parul Koul.

“This is outrageous and unacceptable behavior from a company that made $17 billion in profit last quarter alone,” Koul said in a statement. The union is one of the very few at a major US tech company. However, the Alphabet Workers Union only has around 1,100 members – with around 190,000 employees worldwide.

CEO Pichai wrote in an email to employees that was later shared publicly, “We hired for a different economic reality than the one we face today.”

The layoffs will affect almost all of Google’s businesses, including the Chrome operating system, Google Search, the Android smartphone operating system and the Google Cloud service, reports The Information portal.

Google’s incubator for new business ideas, Area 120, will be wound down in the wake of the cuts, Bloomberg news agency reported. Area 120 was launched in 2016 and offers select employees the opportunity to work on small startups emerging within Google.

More: Microsoft announces 10,000 job cuts this year

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