CALIFORNIA – After Microsoft and Google parent Alphabet continued to talk about massive investments in AI during earnings calls on Tuesday, we’re past the point of wondering if the next big tech arms race is at our doors. It’s here.
But this week’s calls also give us a glimpse into how AI will disrupt the global workforce, starting with the biggest AI companies themselves. And for many, it looks like an uncomfortable future.
As these tech giants increase their spending on AI, both to sell to other companies and to help manage and simplify their own internal work, they are, at best, slowing down hiring in unrelated fields to AI and, at worst, eliminate jobs in other areas. these divisions.
Alphabet, for example, employed about 182,000 employees at the end of 2023, compared to more than 190,000 employees at the end of 2022. And layoffs at Alphabet continued through 2024, with about 1,000 additional cuts.
At the same time, Alphabet’s spending on capital investments increased in 2023 and is expected to increase “significantly” in 2024.
“With respect to capital expenditures, our reported capital expenditures in the fourth quarter were $11 billion, driven largely by investments in our technical infrastructure, with the largest component for servers, followed by data centers,” Ruth Porat, Alphabet’s chief financial officer, said on a call with Wall Street. analysts. “Increased investments in the fourth quarter reflect our outlook for the extraordinary applications of AI to deliver to users, advertisers, developers, enterprise cloud customers and governments around the world, as well as the growth opportunities long term that this offers.
Google’s parent company also appears to be investing in AI capabilities to reduce its own costs, with Porat highlighting “streamlining operations within Alphabet through the use of AI” as part of a realignment broader spending leading to job cuts and “a much slower pace”. hiring. »
Certainly, Alphabet will continue to hire. But Porat stressed that recruitment would focus on top technical talent.
At Microsoft, the focus on winning the battle for AI applications and services has been accompanied by a reduction in staff working in areas that are now taking a back seat.
A year ago, Microsoft laid off about 10,000 employees, followed this year by nearly 2,000 more cuts in its gaming unit. Even with new hires focused on workers with AI expertise, the company had 2% fewer employees at the end of 2023 compared to 2022.
And just like Alphabet, the company makes a point of advocating massive future investments in AI.
“We expect capital spending to increase significantly … due to investments in our cloud and AI infrastructure,” said Amy Hood, Microsoft’s chief financial officer.
“Our commitment to increasing our investments in cloud and AI is driven by customer demand and a substantial market opportunity,” Hood added. “As we increase these investments, we remain focused on improving efficiency at every level of our technology stack and disciplined cost management within each team. »
A translation: like at Alphabet, the safest jobs are those that play a role in the company’s AI ambitions. And that should be remarkable not only for the employees of these two companies, but also for the entire technology sector.
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