Slim is in at the tech giants — or at least the promise of it.
In earnings calls this week, Meta and Amazon executives collectively referenced efficiency 15 times. Microsoft’s top finance executive said headcount would decline this year as the company stresses “pace and agility.”
The comments came as the otherwise healthy companies are jettisoning staff. Meta said it told workers about job cuts starting this month. Amazon has announced tens of thousands of white collar layoffs since last fall. And Microsoft is offering buyouts to about 7 percent of its staff in the United States, according to a person briefed on the plans who spoke on the condition of anonymity to describe private conversations.
Executives who are splurging on building out artificial intelligence while touting efficiency give the impression that they’re cutting back on everything but AI to prepare for a future that may require fewer humans to do the work.
But the tech giants’ age of austerity hasn’t looked very frugal so far. It suggests that a running a Big Tech company during Silicon Valley’s AI mania may not necessarily require fewer workers or cost less.
Amazon, Google and Meta together have roughly the same number of employees now as they did during an industry-wide hiring binge in 2022, company disclosures show. Growing costs for technical workers and related expenses have often outpaced sales recently.
Tech giants’ big AI bet hasn’t yet paid for itself. That means AI may be killing jobs not through its labor-saving wizardry but by increasing spending so much that CEOs are pressured to find savings, giving them cover to consciously uncouple from their workforces.
Marc Andreessen, a prominent start-up investor and a Meta board director, put it bluntly on a recent podcast. Big company layoffs are a fix for overstaffing and changing economic conditions, he said, but AI provides a convenient scapegoat. “Now they all have the silver bullet excuse: ‘Ah, it’s AI,’” he said.
Tech CEOs and investors grew infatuated with efficiency following pandemic-era hiring surges, which prompted regrets about out-of-control spending.
In the years after the coronavirus vaccines arrived, Amazon, Google, Meta and Microsoft pledged to do more with less, cut their combined staff by roughly 100,000 people and put a lid on employee costs — only to see them creep back up as the AI craze and its associated costs set in. (Jeff Bezos, Amazon’s founder and executive chairman, owns The Washington Post.)
The companies’ sales have soared in recent years, which allows them to support more workers. But even after adjusting for sales growth, some measures indicate that tech worker expenses haven’t declined.
Research and development expenses — which includes compensation for technical workers — are higher than they were in 2022 for each dollar of sales at Meta, Google and Amazon and a bit lower at Microsoft, according to Post calculations from company filings and data from S&P Global Market Intelligence.
This recent history suggests that Big Tech companies may not be moving toward a future with fewer workers but recalibrating to spend the same, or more, on different people and projects.
The efficiency pledges have come back now that the four companies plan to spend more than $700 billion this year on big-ticket projects that are mostly related to AI such as powerful computing equipment and buildings to house and power it.
AI might soon reduce hiring. But the reluctance or inability of the largest tech firms to cut too deeply so far could also show that the path to making a workforce AI-ready — whatever that means — isn’t a predictable straight line charting declining headcount.
“We don’t really know what the optimal size of the company will be in the future,” Meta’s top finance officer, Susan Li, said on a conference call Wednesday.
“My bias is these companies are going to continue to grow their headcount,” said Mark Mahaney, a technology industry analyst at the investment firm Evercore ISI. If software developers are more productive with AI, companies could opt to maintain or even grow their numbers to take on more revenue-producing work, he said.
Beyond Big Tech, business software firm Oracle, Square’s parent company Block and social media services Snap and Pinterest have also announced major layoffs in the past few months. In some cases executives said they were pushing out staff to shift resources to AI, or that the technology had made it possible to do the same work with fewer people.
Nicole Bachaud, a labor economist at the career site ZipRecruiter, said tech company job cuts get a lot of attention, but are essentially meaningless for the wider American labor market with 163 million workers. “I hesitate to look at those as any kind of signal” about the health of the labor market or AI’s potential reshaping of workplaces, Bachaud said.
Among AI boosters, the flurry of job cut announcements has opened a schism between those cheerleading for smaller workforces in the AI age, and those who believe that unfairly blaming the technology for layoffs risks further souring the American public on the technology.
“Almost every company that does layoffs is blaming AI, whether or not it really is about AI,” Sam Altman, CEO of ChatGPT owner OpenAI, said at a March conference when he listed explanations for AI’s unpopularity in the United States. (OpenAI has a content partnership with The Post.)
Citing AI as an explanation for job cuts has become so routine in technology that it stands out when companies go another way.
When the video game company Epic Games announced it would push out about 20 percent of its employees recently, its CEO cited waning interest in its “Fortnite” game series. “The layoffs aren’t related to AI,” Tim Sweeney added in a note to his staff.
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