Thoughts On Google’s Latest Round Of Layoffs | by Tony Yiu | Alpha Beta Blog | Jan, 2024

Suddenly the world’s richest company cares about its expenses

Google and layoffs just don’t go together. If I told you there was a company that just reported the following financial stats last quarter, what would you think?

• Revenues: $76.7 billion (11% growth year over year)
• Net Income: $19.7 billion (profit margins of 25.7%)
• Operating Cashflow: $30.7 billion
• More than $150 billion of cash and liquid investments on the balance sheet.

That’s not the financial picture of a troubled company. That’s a company that continues to make ungodly amounts of cash every quarter!

I remember back in the mid 2010s when there was a talent war going on between Google, Facebook, and the hot (over-funded) startups of the day like Uber and Stripe. Back then, part of Google and Facebook’s competitive (and hiring) strategy was to pay engineers and researchers so much money that they would never want to leave. Given where startup valuations eventually headed during those frothy years (thanks to low rates and a massive flood of money into venture capital), that meant throwing out increasingly massive equity packages. In a sense, Google was saying, I would rather pay you millions to stay here and twiddle your thumbs than for you to leave and start a competitor that might disrupt me.

It’s a bit ironic that now Google and its mega-cap tech peers are complaining about the high prices of engineers — after all, they were the ones that set those prices (plus perks) at such sky-high levels. It’s also ironic that Google is on a bit of a productivity push after being OK with paying princely sums for people to do nothing for so many years.

The justification behind the latest layoffs seem to be driven by a desire to invest more in AI (artificial intelligence). Outside of Microsoft (and its partner OpenAI), Google seems to be the furthest along in terms of AI and LLM (large language model) capabilities.

But AI is a field that’s developing fast and the biggest tech companies along with some well-funded startups are all throwing massive amounts of money into the AI arms race — because they all recognize that AI could…