MOUNTAIN VIEW (California, US): Google’s parent Alphabet Inc has decided to cut about 12,000 jobs, or six per cent of its workforce, the company said on Friday, as the technology sector reels from layoffs and companies stake their futures on artificial intelligence (AI).

Alphabet’s shares were up nearly four per cent in morning trade.

The cuts come at a delicate moment for the tech giant, which has long been the leader in key areas of AI research.

Alphabet now faces a challenge from Microsoft Corp in a branch of tech that can, for instance, create virtually any content a user thinks up and types in a text box. Industry observers said so-called generative AI may test Google’s dominance in internet search after a Microsoft-backed startup, OpenAI, released a chatbot known as ChatGPT that can answer queries with human-like responses.

Microsoft said this week recession worries were forcing it, too, to shed 10,000 jobs, less than five per cent of its workforce, but it would focus on imbuing its products with more AI going forward. Alphabet’s CEO Sundar Pichai echoed the sentiment in his layoff memo.

Alphabet faces “a different economic reality” from the past two years when it rapidly expanded headcount, decisions for which Pichai said he took “full responsibility”.

Pichai became Alphabet CEO in 2019.

Still, he said, Google was gearing up “to share some entirely new experiences for users, developers and businesses”, and the company has “a substantial opportunity in front of us with AI across our products”.

The company has been working on a major AI launch, two people familiar with the matter said.

Published in Dawn, January 21st, 2023