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In the same week that Microsoft announced 10,000 layoffs, Google parent company Alphabet is following suit by cutting six percent of its workforce — some 12,000 jobs are getting the axe.

In a letter to Alphabet employees , CEO Sundar Pichai frame it as "a difficult decision to set us up for the future", which while more sympathetic than Microsoft's "align our cost structure with our revenue and where we see customer demand" explanation is still small comfort to all those Google employees who were laid off.

Like Microsoft and Amazon, Alphabet is a well-positioned company to weather even the harshest of economic storms. Alphabet ended the last quarter with $116 billion in cash on hand, but that was a decline in liquid assets from the year prior. They bring in money hand over fist and can aggressively invest in whatever new markets they want. But Google is not so singularly controlled and single-minded a company as Facebook or Apple and though Pichai is proving to be an excellent CEO he is still more beholden to shareholders than Google co-founders Larry Page and Sergey Brin would have been.

CEO Sundar Pichai's subtext was clear: Google needs to invest more in AI, not humans.

The subtext for the layoffs is clear in Pichai's letter. While the "difficult economic cycle" is used as a cloak, the letter also mentions AI twice even though it's about 1 out of every 16 Google employees being laid off. The point was made to state that Google made "early investments in AI" and that they "pivoted the company to be AI-first years ago". That's absolutely not any solace to the people fired, nor much of a salve to those still employed. It's a statement for the shareholders and tech pundits, trying to explain that Google is not behind on AI even as rival Microsoft drives hard into the technology. Heck, it wouldn't be surprising to see AI start taking the place of some of those jobs that Alphabet just eliminated.

Public perception is that Google is behind on AI. ChatGPT is a very impressive tool but still rough around the edges, but with the backing of Microsoft and pending integration of Open AI's other tools into some of Microsoft's core businesses they're looking more ascendant while Google languishes on trying to squeeze every last dollar out of Google Search.

Google has seen that writing on the wall, and they're afraid. While Google has numerous AI projects in the works, none of them have made nearly the splash that ChatGPT has. Plenty of AI tools have even been released by Google; but they always seem subtle in their application — Featured Snippets in search results, improved camera performance in Pixel phones, a neat but low-key voice assistant for making the mundane phone calls that we don't want to do. All impressive when you think about them for a bit, but not as "Wow!" as ChatGPT — and that's just a tech demo!

In fact, Google has been in this position before. From the other side. It was Google that ate the lunch of the first generation of search engines, effectively ending the businesses of Yahoo, Alta Vista, Ask Jeeves, and other first-generation search tools. Google Search was that "Wow!" product twenty years ago, blowing the pants off the competition with search results that were fast and relevant to our queries. But now… now Google Search is kind of a nightmare and AI tools where you can just ask a question like a human, get an answer that sounds very human, and then ask easy follow-up queries are the new breath of fresh air.

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