Google ‘spent billions of dollars’ to lay people off

The company's increased AI investments mean more layoffs.

2 mins read

Google’s parent company Alphabet, which laid off more than 1,000 employees in the first month of 2024, revealed in its fourth-quarter earnings report on Tuesday that it spent $700 million on employee severance.

During 2023, the tech giant showed more than 12,000 employees the door and paid $2.1 billion in severance and other costs.

Despite the layoffs, Google ended 2023 with growth in most of its core businesses. But the company signaled that growth and recent layoffs ‘in an effort to cut costs’ are not enough to offset its increasing investment in artificial intelligence.

Google posted revenue of $86 billion in the fourth quarter of 2023, up 13 percent year-on-year. The search giant’s core digital advertising and cloud computing businesses also showed steady growth, which CEO Sundar Pichai attributed to Google’s investments in productive artificial intelligence.

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Google’s search engine unit, its primary source of revenue, generated $48 billion in revenue, up nearly 13 percent from the previous year. According to Pichai, the company’s subscription services and devices division generated $10.7 billion in revenue, mainly thanks to YouTube Premium, YouTube TV and Google One subscriptions. YouTube’s advertising revenue was $9.2 billion, up 15 percent from last year.

Google 'spent billions of dollars' to lay people off 1
Google describes Gemini as ‘the most advanced and capable AI model ever.

‘Gemini period’ could lead to more employee layoffs

In a call with investors, Pichai called 2024 Alphabet’s ‘Gemini era’, referring to the company’s AI language model. “Gemini is the first step towards the goal after we built Google DeepMind by bringing together two of our world-class research teams. Gemini Ultra, which the company is currently working on, is coming soon,” Pichai said.

Google is now the third largest cloud provider in the world. And its cloud unit seems to have gained momentum in the last year. The company reported $9.19 billion in revenue for Google Cloud, a significant 25.6 percent year-on-year increase.

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Google’s continued investment in AI, or the ‘Gemini era’, means that in 2024, the company will make up for it by cutting back in other departments and there will be more layoffs.


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