Google Investor Thinks Google Should Be More Like Twitter

Google’s mother or father firm, Alphabet Inc, was instructed it wanted to make aggressive cost-cutting strikes after receiving a letter from activist hedge fund TCI Fund Management.

The London-based hedge fund, TCI, is owned by billionaire Christopher Hohn who wrote a letter to Alphabet’s CEO Sundar Pichai on Tuesday requesting the corporate make swift choices to scale back its monetary output.

“This growth is excessive, both in relation to historic headcount growth and what the business requires,” Hohn mentioned within the letter. “Our conversations with former executives of Alphabet suggest that the business could be operated more effectively with significantly fewer employees.”

Alphabet Inc’s workers numbers have elevated at a fee of 20 p.c yearly, nearly doubling in development to a staggering 187,000 staff since 2017, and it has one of many highest salaries in Silicon Valley.

The letter additionally notes that Alphabet Inc’s 14A submitting confirmed workers’s median compensation was $295,884 in 2021, making it 67 p.c greater than Microsoft and “153 percent higher than the 20 largest listed technology companies in the US.” The median wage for the highest 20 know-how firms hovers round $117,000 whereas Microsoft presents an annual wage of $177,858. The letter argued in opposition to these numbers, saying, “There is no justification for this enormous disparity.”

Alphabet has also been told to eliminate costly long-term bets such as the self-driving car project Waymo, with the letter saying Alphabet’s outside bets cumulatively generated only $3 billion but incurred a substantial loss of $20 billion over the last five years.

TCI falls simply exterior Alphabet’s high 20 largest shareholders, in line with CNBC’s David Faber.

Alphabet Inc did not immediately respond to Gizmodo’s request for comment.

The company is one of the only outliers to so far refrain from cutting back on employees as other tech companies including Meta and Twitter have both made moves to significantly reduce their staff numbers.

“We acknowledge that Alphabet employs some of the most talented and brightest computer scientists,” the letter said, “but these represent only a fraction of the employee base.” However, for Alphabet’s nonengineering staff, the letter said their compensation should fall “in line with other technology companies.”

The information comes as Facebook’s mother or father firm Meta laid off about 11,000 staff, Twitter lowered its workers by 3,700 jobs, and The New York Times reported Amazon plans to put off 10,000 staff, marking what some are calling the tip of Silicon Valley’s golden period.

“This party couldn’t go on forever,” Margaret O’Mara, a professor on the University of Washington and writer of The Code: Silicon Valley and the Remaking of America instructed The Guardian. “In many ways, we are just going back to normal after a huge run-up during which everything became supersized.”

There have been greater than 121,000 layoffs throughout 789 tech firms in 2022 in line with layoffs.fyi, a website that tracks job cuts throughout the tech business. The numbers have jumped from 3,625 layoffs in February of this yr to 25,563 inside the first half of November.

O’Mara told The Guardian that inflation has played a role when it comes to layoffs in the tech industry, saying the low-interest rates in the past bolstered the tech boom, allowing companies like Uber and Airbnb to thrive.

However, despite the sudden uptick in layoffs and cost-cutting efforts, O’Mara told the outlet she does not believe this will be the end of the Silicon Valley tech industry. “The Bay Area and San Francisco has a resilient pull and distinctive qualities that are hard to replicate elsewhere,” she said.

“There is a reason people come there to live – they want to be there. The industry obituary has been written prematurely a few times,” she added. “It may be the end of an era for Silicon Valley, but it is unlikely to be the end of Silicon Valley.”