Amazon, Meta, Twitter and Microsoft have all announced they are cutting staff. What’s happening in the tech industry?
The big tech giants are laying off thousands of staff…
“What’s going on with big tech? Amazon is reported to be laying off thousands of staff as Twitter, Microsoft and Meta move to shrink their headcount too.”BBC
Around 120,000 jobs have gone globally so far.
11,000 people are going from Meta, which owns Facebook, Instagram and Whatsapp. That’s roughly 13 percent of its workforce. It’s the first mass lay-off in the firm’s history.
Over at Twitter, Elon Musk has halved the company’s headcount: 4,000 people have gone. Many of those were content moderators and engineers.
Microsoft is losing 1,000 staff and other tech heavyweights are suffering too: Spotify, Lyft, Coinbase, Stripe…
Even Amazon can’t escape. It employs 1.6 million people around the world and is set to axe three percent of its corporate workforce – that’s 10,000 jobs. It has also paused hiring in its warehouses.
Last month, Jeff Bezos – its billionaire owner – said that it was time for technology companies to “batten down the hatches.”
Traditionally, the tech industry has been associated with Silicon Valley, high wages and unstoppable growth.
So are these job losses the start of a big tech slowdown? And why are they rushing to get rid of people?
Although each company is facing its own specific challenges, the tech industry as a whole has found itself in the perfect storm.
During the Covid pandemic most big tech companies were booming
“Winning from the pandemic: big tech firms are making gains as the coronavirus is taking its toll worldwide.”Al Jazeera
Amazon’s sales jumped by 57%. Companies went on huge hiring binges to keep up with the accelerating pace of demand.
Amazon hired 476,000 employees between the end of 2020 and the start of 2022. Meta took on more than 15,000 people during this time.
But as life started to return to normal, the tech industry’s growth tailed off, and companies found themselves with more people than they could afford. Meta’s CEO, Mark Zukerberg, apologised to the staff he was laying off in a video call…
“A lot of why it’s hard is (obviously) it has a big impact on your lives. But also for our mission, we’re losing people. You’ve really put your heart and soul into this place.”Mark Zuckerberg
Another problem for tech companies is the drop off in online advertising. High inflation, low consumer spending and fear of recession mean advertisers are neither willing nor able to pay as much for their promotions to appear on platforms.
As a result, the tech industry has had its biggest source of revenue pulled out from under it. Meta’s ad revenue has fallen by nearly £1 billion in the space of a year.
Also, concerns about the invasive advertising tactics used by tech firms – led to Apple changing its privacy settings to make it harder to track people’s online activity – and sell that data to advertisers. Social media sites blame this for the huge drop in their online ad sales.
Over-resourced, failing departments have also been blamed for the downturn. A large number of job losses at Amazon have been from the hardware side of the businesses: teams working on the Kindle e-reader and Alexa virtual assistant. Facebook has cut down its teams working on failed projects like its ditched cryptocurrency Libra.
So does this mark the end of innovative – but expensive – technology projects ? And what will that mean for users?
Big tech investors have piled on the pressure to cut the bloat. Sir Christopher Hohn runs a hedge fund with a £5.1 billion stake in Alphabet, the parent company of Google and Youtube.
He wrote a scathing letter urging the company to slash jobs and cut pay.
“The company has too many employees and the cost per employee is too high. The business could be operated more effectively with significantly fewer employees. Alphabet offers employees some of the highest salaries in Silicon Valley.”Sir Christopher Hohn
The letter went on to claim that last year, the median salary for a typical Alphabet employee was $296,000 – that’s nearly 70% higher than their rival Microsoft.
For years, the tech industry has thrived on being big, fast, and able to rise above – or even capitalise on – global issues. But could the end of big tech as we know it be a good thing?
Many of the former employees of these tech companies announced their departure on Twitter or LinkedIn.
“Of course I am saddened, yet optimistic about the future because I know this means good change for me and others on my team.”Anonymous former Meta employee
They say their talent won’t be wasted because newly laid off employees like them could actually create their own innovative start-ups.
Maybe this industry-wide shake-up could be exactly what’s needed to rejuvenate the market, and end our over-reliance on a handful of big tech players.
This episode was written and mixed by Rebecca Moore.