Tech Giants Lay Off Over 7,500 Employees in January Amid AI Investments
Both Google and Amazon are aggressively investing in their AI efforts.
Tech giants Google and Amazon have initiated layoffs in January, signaling a continuation of job cuts in 2024 as they make substantial investments in generative AI. While last year was termed the “Year of Efficiency” for Big Tech, analysts anticipate smaller and more targeted layoffs this year, particularly among firms striving to catch up in the AI race.
Alphabet, Google’s parent company, revealed plans to invest in its “biggest priorities” as it laid off around a thousand employees across various divisions, including voice assistant and Pixel and Fitbit teams. Amazon also laid off several hundred employees in its streaming, studio operations, Twitch, and Audible units.
According to the tracking website Layoffs.fyi, more than 7,500 tech employees have been let go so far in January. The layoffs are viewed as strategic moves by companies investing heavily in AI to remain competitive. Google and Amazon are aggressively investing in AI, with Google unveiling its Gemini model, and Amazon developing the “Olympus” model to compete with OpenAI’s GPT-4.
Despite the layoffs, the total size is expected to be smaller than last year’s massive cuts as tech spending increases with a more stable economy. In 2023, the tech sector shed 168,032 jobs, leading in layoffs across industries. However, AI’s importance is driving changes in hiring priorities, and some tech firms are offering substantial salaries for AI roles.
Although the spending on AI is expected to deepen investor expectations, the payoff for most companies might take longer to materialize. Microsoft and Nvidia have emerged as big winners from the AI boom so far. Experts note that past evidence indicates it can take a decade or more to profitably make money from new technologies, and the timeline for AI remains a subject of debate among industry observers.
