Possible 10,000 Layoffs at Google, Pressure from Major Shareholders and Growing Unrest Within the Company


Last Updated on 01/05/2023 by てんしょく飯


While the U.S. labor market as a whole is adding jobs, layoffs continue to occur in the tech sector.



Possible 10,000 layoffs at Google

The U.S. Bureau of Labor Statistics reported on December 2 that nonfarm payrolls remained above 200,000 in November, up 263,000 from the previous month. The results reflected job gains in the leisure/hospitality, healthcare, and government sectors.


Meanwhile, the tech sector in November reported more than 50,000 layoffs, with layoffs at major companies such as Twitter, Cisco, Stripe, and Salesforce, as well as Meta and Amazon.


Looking at the layoffs in the U.S. tech sector in the same month in order of size, Meta had the largest number of layoffs at 11,000. This was followed by Amazon with 10,000, Cisco with 4,100, Twitter with 3,700, real estate database Zillow with 2,000, online used car seller Carvana with 1,500, food delivery company DoorDash with 1,250, cryptocurrency exchange Kraken with 1,100, and Stripe with 1,000, Salesforce with 1,000, and so on.


Under these circumstances, Google is reported to be the next company to have large-scale layoffs.


Although Google has not yet led to large-scale layoffs at this point, media outlets are beginning to report the possibility of layoffs of 10,000 employees in the near future, based on trends within the company and among its shareholders.


Fears of layoffs spreading within the company; new personnel evaluation system to extract 6% of low-performing personnel.

The 10,000 figure probably comes from The Infomation’s November 17 news report on Google’s new personnel evaluation system.


The Infomation reported that, according to sources, Google has revamped its personnel evaluation system due to increasing pressure from outside sources to improve productivity. Under the new system, managers were told to pick out the 6% of Google’s total workforce of approximately 180,000 employees who are not productive. Six percent of all employees is roughly 10,000 people, and it is believed that these “low-productive” employees will be the target of layoffs. Under the previous personnel evaluation system, the percentage of employees classified as low-productive was 2%, according to the report.


Following The Infomation, on November 23, CNBC reported on growing concerns about layoffs within Google.


At a recent Google company-wide meeting, a number of questions about layoffs received high ratings on an internal questioning system called Dory, indicating a high level of employee concern. Among the questions that received high ratings were a scattering of questions that questioned management’s responsibility, according to the report.


One highly rated question, while noting that Google’s workforce grew by 36,000 employees, a 24% increase over the previous year, asked, “I get the impression that most teams are understaffed, and where exactly are these increased employees being assigned to? Also, with concerns about productivity, was it necessary to increase the number of employees so much in such a short period of time?” He also pointed out the errors in management judgment.


Open Letter to Google CEO from Major Shareholder, Growing Pressure


Increasing pressure from shareholders is another factor contributing to growing concerns about layoffs at Google.


The growing investor pressure on Google can be seen in an open letter from one of its major shareholders, TCI Manegement, to the company’s CEO, Sundar Pichai.


TCI Manegement is a London, U.K.-based hedge fund with $42 billion under management as of April 2022, according to information provided. The fund’s holdings of Alphabet stock are valued at over $6 billion.


On November 15, TCI published a letter of request to CEO Sundar Pichai, in which it pointed out the high cost of Google’s operations and demanded that the company start reducing its workforce and compensation levels in order to cut costs.


TCI pointed out that the rapid increase in the number of jobs at Google over the past few years is “excessive” not only in terms of the speed of the increase itself, but also in relation to the size of the company’s business. It also noted that it has become an open secret and other funds are aware that Silicon Valley companies such as Google, Meta, Twitter, and Uber can generate the same level of revenue with far fewer employees than they do now.


The report also notes that the median compensation for Google employees in 2021 is $295,884, 67% higher than Microsoft’s and 153% higher than the average of the top 20 U.S. tech companies, and says that this huge disparity is unacceptable and calls for a reduction in employee compensation. He also called for a reduction in employee compensation.


The report also calls for the downsizing and closure of divisions that are not profitable. A particular target was Waymo, a self-driving car development business.


TCI stressed that the market’s interest in self-driving is waning, that competitors such as Ford and Volkswagen are leaving the market, and that the excessive investment in Waymo cannot be ignored. He then requests that the costs of the Waymo business should be significantly reduced.


With regard to Google’s businesses other than online advertising, the closure of the Pixelbook laptop and Stadia cloud gaming business was reported in September, and it will be interesting to see how other businesses, such as Waymo, will develop in the future.