Google Job Cuts Signal Continued Efforts to Trim Spending

Google is set to cut hundreds of jobs, a move that includes the departure of the co-founders of wearables company Fitbit. This announcement follows a similar action taken by Amazon.com and reinforces the notion that large technology firms are still seeking ways to reduce expenditure, even after last year’s significant layoffs.

According to the tech giant’s parent company, Alphabet, employees across various teams, including those working on Google’s Assistant program, hardware, and internal software tools, will be affected by the layoffs. While the exact number of job cuts remains uncertain, it appears that Google’s hardware operations are bearing the brunt of the reorganization. Notably, Fitbit co-founders James Park and Eric Friedman will be leaving Google as part of this restructuring. The acquisition of Fitbit by Google was completed in 2021 for an estimated $2.1 billion.

As technology companies shift their focus towards artificial intelligence, they face mounting pressure to find cost savings elsewhere. Amazon has already made substantial job cuts within its film and television studios, as well as at Twitch, its popular videogame-streaming platform.

Despite the anticipation surrounding potential interest-rate cuts this year, technology companies continue to grapple with a challenging funding environment. Additionally, there are projections of a slowdown in both U.S. and global growth in 2024.

Macquarie analyst Frederick Havemeyer suggests that tech companies may be inclined to make significant cuts and rapidly divest strategies that are not yielding growth or profitability. This sentiment aligns with Alphabet’s announcement of job cuts last year, which saw the company planning to eliminate 12,000 positions in January alone. In comparison, Amazon’s plans involved cutting a total of 27,000 jobs in early 2023.

While the scope of these job cuts is not expected to match the mass layoffs of last year, it is evident that Google, alongside other major technology companies, recognizes the need to reassess their workforce and streamline operations. Prior to the layoffs in 2020, Alphabet had approximately 190,711 employees. As of September, that number had decreased to 182,381.

Despite the news of job cuts, shares of Alphabet and Amazon have seen positive movement in premarket trading. This indicates investor confidence in the long-term prospects of these tech giants. Microsoft and Apple have also experienced slight gains in their stock prices.