Google ordered by an investor to cut its workforce and reduce salaries
Google is not immune to the economic crisis affecting the new technologies sector. The American giant has been publicly reprimanded by one of the largest hedge funds (hedge funds) in the United Kingdom, Children’s Investment Fund Management (TCI).
Invested to the tune of $6 billion, the London fund has called on Google’s parent company to make savings. In a letter addressed to Sundar Pichai, Chairman and CEO of Google, and relayed by The GuardianTCI asks management to take “aggressive measures” to improve the financial situation of the Californian giant. “The company has too many employees and the cost per employee is too high”ensures the fund.
Towards a social plan?
Christopher Hohn, boss of TCI, talks about a growth of more than 20% in the workforce since 2017. “This growth is excessive, both in relation to the historical increase in the workforce and in relation to what the company needs. Our conversations with former Alphabet executives suggest the company could be run more efficiently with far fewer employees.“, he says. The missive also mentions the salaries within Alphabet, which are far too high, according to TCI, in view of the amounts practiced in the technological sector. Google would thus offer “some of the highest salaries in Silicon Valley.”
“Many employees perform general sales, marketing and administrative tasks, which should be compensated like in other technology companies. There is no justification for this huge disparity”, fumes the financial giant. Alphabet is therefore cordially requested by the investor to imitate the measures of Meta, Amazon or even Microsoft.
Big Tech crisis
This letter comes against a backdrop of an unfavorable stock market for technology stocks. Since the beginning of the year, the Alphabet share (Alphabet Inc Class A) is down 32%. Tech assets had seen historic stock market performance in 2021. But with the post-Covid economic recovery, the outbreak of war in Ukraine and soaring inflation, a significant drop is seen in the markets.
As a direct consequence, Big Tech are, at the end of 2022, forced to carry out massive layoffs. This is the case in recent weeks at Meta, Amazon or Twitter. A crisis which could prove to be much worse than that of the internet bubble of the year 2000, according to certain experts.