In the six months after taking control of Twitter, which became X, Elon Musk laid off 80% of the company’s employees, going from 8,000 to 1,500 people. Then there were many predictions about the coming throes of the social network, incapable of ensuring the proper functioning of things as basic as the publication of messages. A little over a year later, nothing has happened. THE bet on profitability is yet to be confirmed, as advertising revenues have fallen, but the site is operating with severely reduced teams. If this example is undoubtedly the most excessive – not to mention that certain functions formerly assumed, such as content regulation, have been abandoned – it well illustrates the idea that tech companies, small and large alike, live well beyond beyond their means.
According to the site Layoffs.fyi, which meticulously monitors press releases, 1,064 companies announced they would let go of 165,269 employees in 2022. There were 1,191 for 263,180 job cuts last year. And the movement does not seem to be stopping: over the first five months of the year, 289 companies have planned 83,749 layoffs. The movement is particularly palpable among the tech giants, judged by some to be the kingdoms of bullshit jobs. David Ulevitch, a partner at the venture capital firm Andreessen Horowitz, bluntly targeted Google, where “half of white-collar workers probably don’t do real work.” In these large groups, used to hiring thousands of engineers, developers and designers, who did not hesitate to showcase their relatively quiet days and their advantages – free food, gym, table football – on TikTok, the turn of the screw was severe.
No more 100% teleworking, the return to the office was forcefully demanded. Support functions, which had exploded, were put on a diet. Redundant teams were merged, such as those overseeing Android on one side and Pixel, Google’s smartphone, on the other. And the international division of labor has regained meaning. Just last week, Google abruptly fired its team of Python developers in California to replace them with cheaper developers in Munich.
Aggressive restructuring at Meta
The market welcomed this new cost control. The price of Alphabet, the parent company of Google, appreciated by 57% over one year. Meta, which has carried out an aggressive restructuring over the past two years with 20,000 layoffs, has seen its share price quadruple. It must be said that the results have been widely appreciated. Revenues continued to grow despite the departures. This is one of the lessons of this episode.
These companies are in a situation of extraordinary profits compared to the average for the rest of the economy. Now that their contribution to employment is decreasing, this will be even more visible. Enough to relaunch the debate on the monopoly that Gafam represents. The other lesson is the failure of corporate governance. These billions spent on the salaries and benefits of young American graduates are money that has not been returned to shareholders.
It must be said that through complex capital structures and multiple voting rights attached to their shares, the founders of Google or Meta can decide alone. Amazon and Apple, who are under pressure from their shareholders, have indulged in these excesses much less.
The question that now plagues the entire industry is the impact of artificial intelligence. According to analysis by CompTIA, the non-profit association that studies human resources in information technology, the number of jobs in the sector in the United States increased by 33% from 2014 to 2024, passing from 4.5 to 6 million. In the next decade, growth is expected to slow sharply, to 18%. And that doesn’t take into account new AIs that help coders work more efficiently. GitHub’s Copilot tool has already attracted 1.3 million users. Tabnine, Amazon’s CodeWhisperer, Replit Ghostwriter and soon Google’s Gemini Code Assist are also in this niche. A whole world of computer programming assistants that is progressing at a rapid pace.
Robin Rivaton is Managing Director of Stonal and member of the Scientific Council of the Foundation for Political Innovation (Fondapol)
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