Google spent billions of dollars to lay people off

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Google spent $2.1 billion on severance and other expenses as it laid off more than 12,000 employees over the course of 2023. And the layoff charges keep coming: in just the one month of 2024 so far, the company has already spent $700 million on employee severance charges as part of layoffs targeting another 1,000-plus roles. Alphabet, Google’s parent company, revealed the figure alongside its fourth-quarter earnings release on Tuesday.

Despite the cuts, Google ended 2023 with growth across most of its core business lines. Google posted $86 billion in revenue for the fourth quarter of 2023, a 13 percent increase year over year. The search giant’s core digital ads and cloud computing businesses also showed steady growth, which CEO Sundar Pichai credited to Google’s investments in generative AI.

Google’s primary revenue generator, its search engine business, generated $48 billion, a nearly 13 percent jump year over year. The company’s subscription services and devices segment generated $10.7 billion, thanks primarily to subscriptions to YouTube Premium and Music, YouTube TV, and Google One, according to Pichai. YouTube’s advertising revenue was $9.2 billion, a 15 percent spike from last year.

On a call with investors, Pichai referred to 2024 as Alphabet’s “Gemini era,” referring to the company’s AI language model that it expects to work across all of Google’s core products. “Gemini is the first realization of the vision we had when we formed Google DeepMind, bringing together our two world-class research teams,” Pichai said. Coming around the bend is Gemini Ultra, an update of the original model which the company is still working on. “Gemini Ultra is coming soon. The team is already working on the next version and bringing it to our products, starting with Search.”

Google is currently the third-largest cloud provider in the world, trailing behind Microsoft’s Azure and AWS. But the cloud division picked up steam last year. The company reported $9.19 billion in revenue for Google Cloud, a considerable boost of 25.6 percent year over year.

Although layoffs cost Google a pretty penny, so did the real estate cutbacks due to said layoffs (including in locations like the pricey Bay Area). Shutting down physical office space cost Google a total of $1.8 billion for the entirety of 2023.

And Google’s continued investments in AI, or its “Gemini era,” means that even more layoffs are to follow in 2024 as the company makes cuts in other divisions to compensate.

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