The influence of the major tech companies is clearly visible in this: Amazon already started in November, and Meta also announced its layoffs. January was the month of Microsoft and Google. Those four companies have many more employees than many other companies and although the round of layoffs can be relatively large, for example if around five percent of the employees have to leave, in absolute terms it involves many more people.
The companies give approximately the same reason. During the pandemic, they hired a lot more people because they believed that the developments they saw then, whether it be more online shopping or more working from home, would continue unabated once the acute phase of the pandemic was over. Now that this is not the case, the tech companies have too many people.
Perhaps the most notable was Google. He has never done a major round of layoffs before but did so last month. “Over the past two years, we’ve seen periods of great growth. To bolster that growth, we’ve hired people for a different economic reality than we’re seeing now.”
Of course, there is more at Google. Shareholders are unnerved by the charges from governments, including the US Justice Departmentseeking to break up Googleand various other investigations elsewhere in the world. The emergence of ChatGPT also leads to concern within the company.
Microsoft says much the same thing. “While we saw customers spend more digitally during the pandemic, we are now seeing them optimize their digital spend to do more with less money. We are also seeing organizations in every industry and country operating with caution as some parts of the world are in a recession and in other parts of the world, they prepare for it.”
The same can be heard at Amazon. “Managers across the company have been looking at their workforce and prioritizing what matters most to customers and the long-term health of the business. Looking back over the past year has been especially difficult due to the uncertain economy and as we many people have adopted over the past few years.”
Last November, Meta founder Mark Zuckerberg also seized on post-pandemic changes to justify the layoffs. “At the start of the corona pandemic, the world went online fast and the rise in e-commerce led to a disproportionate growth in sales. Many people predicted that this would be a permanent acceleration that would continue once the pandemic was over. I believed that too, and so I made the decision to invest significantly more. This has not worked out as I expected.”
Do you still miss a big tech company? Indeed: Apple. The company has not yet announced a round of layoffs. That is also not obvious, because it also did not participate in the mass hiring during the pandemic. The way of earning money also differs from that of other large tech companies. While Google, Microsoft, Meta and Amazon earn money from software products such as advertising, web services and e-commerce, Apple still relies heavily on hardware sales.
Besides the big tech companies, there are many more companies that have laid off people. MessageBird stood out in the Netherlands , sending 31 percent of its staff home. The reason sounds familiar. “We were growing too fast and didn’t integrate acquired businesses at the necessary speed, so we weren’t able to prevent this.”
Another example is Spotify, which sent 6 percent of its staff away, again for the same reason. “Like so many other executives, I hoped we could sustain a strong tailwind during the pandemic and believed that our global business and limited risk from limited reliance on advertising would protect us. In hindsight, I was overambitious in investing ahead of revenue growth.”
The question is whether the layoffs help, writes The Verge based on conversations with various professors. Studies indicate that companies that make layoffs actually perform less in the following years, but the evidence is far from conclusive. There is also evidence that workers who have been laid off are more likely to require care or even commit suicide , while workers who are allowed to stay may be less productive and feel less engaged due to increased stress and the loss of colleagues. It is therefore possible that these cost savings actually cost both employees and employers a lot.
The current wave of layoffs cannot be automatically linked to the discontinuation of products and services, but if one is not due to the other, then both are consequences of the same cause: the management of a company believes that costs must be cut.
In retrospect, Stadia was the first to get fired from Google. The search giant no longer wanted to invest in its game streaming platform and finally pulled the plug a few weeks ago. Customers also received what appeared to be a severance package, as they got money back for games and the controller became usable on other platforms. In addition, Google stops Optimize, an A/B testing service. Incubator Area 120 is also leaving. There is clearly less room for experimentation.
At Microsoft, it is clear that the company no longer invests in certain things and invests in others. Mixed reality is no longer a priority, soMixed Reality Toolkit will stop and AltSpaceVR will not continue either. Earlier it was already clear that Microsoft had put the development of a new HoloLens headset on the back burner. There’s still money to invest in OpenAI, the maker of image generator Dall-E and chatbot ChatGPT.
Much is still unclear at Amazon. Perhaps much less Alexa hardware will be made in the coming years, but the company has not confirmed that. Many layoffs have also fallen in that division. The company said nothing about products or services that will stop as a result of the layoffs. It is clear, however, that Amazon is stopping the comics platformComixologyand has fired the employees who were working on it.
Meta stops developing various types of hardware,such as the Portal video calling devices and smartwatches. It also no longer wants to spend money onlong support for the first Quest headset; several functions will therefore disappear soon. Meta isn’t beating so much about the upcoming metaverse as much as it is continuing to invest in it,as with this acquisition that came out recently. This technology can help Meta to make special, 3D-printed lenses.
At Spotify, it is not entirely clear what is disappearing, but chief content officer Dawn Ostroff is disappearing. As a member of the board, Ostroff was responsible for podcasts on Spotify and the advertisements around it in recent years. That now falls under the management who already had subscriptions under his wing. That seems to indicate that closing deals around podcasts is becoming less important. According to HotPod, the people laid off are mostly people who came in through acquisitions of Podsights and Chartable, companies that specialized in podcast statistics. Messagebird just says it’s going back to basics, but doesn’t say exactly what it’s going to stop doing as a result of the layoffs.
The economy is a cycle and so is hiring and firing: there were mass layoffs 20 years ago after the dotcom bubble burst and now it’s the same again. The difference is that companies are now much larger and more mature.
Companies are forced to fire people and stop services. Most large companies have now had their turn, but that doesn’t mean it’s done now. The tech giants in particular are under more pressure than just financial: they also have to deal with governments and regulators knocking at their doors, trying to curb their power. This can have consequences for their turnover and therefore for the people who work there. On the other hand, nobody knows how the economic situation will continue. If it picks up again, large tech companies may suddenly need many more people.