Googlers press top executives for clarity on cost-cutting

Alphabet Executives, dressed in Halloween costumes, faced questions from worried employees at a meeting on Wednesday, after comments on the company’s earnings call suggested more cost cuts were on the way.

“There’s a realness to it,” said Brian Ong, Google’s vice president of recruiting, according to a recording of the meeting reviewed by CNBC. “We’re hiring less than we did a few years ago.”

Ong, who was specifically responding to a question about retention and promotion opportunities, added that fewer positions are open and geographic hiring has changed, “so you may see fewer roles available where you are.” .

A Google spokesman declined to comment.

The meeting came after Alphabet reported better-than-expected third-quarter earnings and revenue on Tuesday, sending shares soaring. In a call with investors, CFO Anat Ashkenazi, who recently succeeded Ruth Porat, said she wanted to “push a little further” with cost savings across the company.

Google chief scientist Jeff Dean wore a starfish suit to the meeting, while Ashkenazi wore a former Indiana Pacers star Reggie Miller jersey. CEO Sundar Pichai wore a black T-shirt that read “ERROR 404 COSTUM NOT FOUND” with an image of a pixelated dinosaur.

Ashkenazi said one of her top priorities in the new role would be to make more cuts as Google expands its spending on artificial intelligence infrastructure in 2025.

It’s a theme that started in 2023, when the economy and the market turned around, and has continued ever since. Google has restructured its workforce to move faster in the AI ​​arms race, where it faces increased competition. That includes layoffs, organizational shakeups and has caused workers to feel a “decline in morale,” as CNBC previously reported.

Over the past two months, Google has made cuts to its marketing, cloud and security teams in Silicon Valley, as well as its trust and security unit.

Google is not alone. Dropbox this week announced it will lay off 20% of its global workforce as Amazon continues to shut down various projects. Inside Google, employees have expressed concern that the company is preparing for more layoffs, possibly after the end of the year, according to internal correspondence seen by CNBC.

Pichai joked that the quarterly call was perfect preparation for Ashkenazi ahead of the company meeting.

“I was telling Anat yesterday, earnings calls are a piece of cake compared to TGIF the next day,” Pichai said, to laughter from the audience.

Some employee comments and questions included praise for “another great quarter,” success in chip advancements, and improvements to Google’s successful AI note-taking tool NotebookLM. However, other questions expressed fears about what greater cost efficiencies would mean for the workforce.

“What exactly was meant by the comments about further efficiencies in staff numbers”? a question asked, showing Ashkenazi’s comments from the call.

Ashkenazi did not elaborate, but said employees are “one of the most important assets we have.” She said the company is investing in people and that it hired 1,000 new graduates in the third quarter.

Pichai, who has preached efficiency for nearly two years, echoed the sentiments of the past.

“If you have to do something new and it’s going to take 10 people, if you can find a way to do it with eight people by making smart compromises somewhere and aligning the teams better, that’s an example of finding efficiencies even in the number of employees, “said Pichai.

In response to another question about the ongoing layoffs and reorganizations and what might be coming in the future, Pichai said, “If we’re making company-wide decisions, we’ll definitely let you know.”

He said the company is spending heavily on AI at the moment, but the need to increase that spending won’t last forever.

“We are going through an extraordinary period of capital advancement,” Pichai said. “When you have these technological changes, in the earlier stages, you invest disproportionately and then the curve gets better and that’s the transition as an industry that we’re working on.”

He added that not all cuts are decided by senior management.

“It’s not like all these decisions are made centrally at a company level,” he said. “And so, at the scale of our company, there may be times where there are small groups of people affected.”

Ashkenazi on Tuesday mentioned that one way to get more cost efficiency is to use AI internally. The company said that 25% of new code is now generated by AI.

In response to a question about productivity, Brian Saluzzo, head of Core developers, said that while 25% refers to low-level tasks, leadership is in the midst of “expanding into more complex areas” within the company.

“Core” refers to the teams that build the technical foundation on top of Google’s core products. In May, CNBC reported that Google laid off more than 200 employees from its core engineering teams, in a shakeup that included rehiring some roles in India and Mexico.

Pichai went on to say, “In this moment of transition, across all functions, everywhere in the company, it’s worth challenging us to think about where we can use AI to be more productive.”

He added that by 2025, the workforce must “strive to do more” and “help customers around the world take those lessons as well.”