With mass layoffs, Big Tech drops the good-guy act

Noam Cohen is the author of The Know-It-Alls: The Rise of Silicon Valley as a Political Powerhouse and Social Wrecking Ball. He lives in Brooklyn, N.Y.

In 2023, we learned how Big Tech does mass layoffs. They announce themselves as technical glitches.

Ashish Kalsi, a member of Google’s trust and safety team, was half-asleep early one January morning when he was roused by his wife, a fellow employee, who told him her work profile wasn’t appearing on her phone and that she couldn’t access company material on her laptop. “I told her that she had probably missed a security update,” he wrote in a much-discussed LinkedIn post. “That must be it, right? What else in the world could it have possibly been?”

The couple, who have a two-year-old daughter, are both living in the United States on work-related visas. Mr. Kalsi then checked his own phone: “Everything looked normal, except that it wasn’t. My wife walked into the room, shell shocked. I just held out my phone to show her the e-mail I received – she had got one too.”

Justin Moore, a former senior software engineering leader at Google, also learned of his fate through what he called “an automated account deactivation.” His disbelief quickly turned to anger.

The takeaway from his LinkedIn post, which got more than 150,000 likes: “Work is not your life, and employers – especially big, faceless ones like Google see you as 100-per-cent disposable. Live life, not work.”

Open this photo in gallery:

There is plenty of support for Mr. Moore’s claim about big, faceless employers in the remarkably consistent, detached way the leaders of giant tech firms such as Google, Facebook and Amazon announced their layoffs. They were full of pronouncements about how the future is bright, the pandemic was a horrible distraction and regrets about having to let so many people go. But the platitudes couldn’t cover the shock that such a day had come.

There is shock not only that the elevator they had all been riding up for more than a decade could go down, too, but that when circumstances changed, these proud, independent-minded tech leaders would be unable to resist demands for cuts by outside market forces.

The veteran journalist, Steven Levy, hones in on this changed reality in an essay that concludes paradoxically that the layoffs and other cost-saving steps at Google “aren’t very Googley.”

Yes, Mr. Levy wrote, the perks at Google – access to massage therapists, meals by acclaimed chefs – may seem expendable to outsiders, but they were true to the founders’ “core belief that treating workers like royalty was good business.” Similarly, the company’s pursuit of speculative “moonshot” projects may seem wasteful to Wall Street, but they, too, spoke to a core value – “a healthy disregard for the impossible.” What’s going on? These companies were supposed to disrupt the economy, not be disrupted!

Open this photo in gallery:

A telling example of how the ground has shifted is the case of Airtable, a fast-growing startup that facilitates online collaboration. In December, it published a memo explaining the way its service could revolutionize job searches for recently laid-off people. Just days later, the company announced that it would itself be laying off 20 per cent of its staff, about 250 employees, and soon deleted the memo.

Airtable’s actions came despite its strong financial position. In an interview late last year, its chief executive, Howie Liu, pointed to a successful US$735-million round of investments while observing, “We’re a private company, so we’re not under the gun to show short-term results of profitability.”

The big tech companies have exponentially better cushioning than Airtable: Alphabet, Google’s parent, for example, has US$114-billion cash on hand, while Meta, Facebook’s parent, has US$41-billion. Clearly these cutbacks weren’t meant to forestall imminent calamity. Adding to the muddled picture is that right around the time of the announcement of layoffs at Google, Facebook and Amazon, their stocks gained back much of the value they had lost. The rebounded stock price can make the layoffs seem impulsive – were things really so bad after all?

But, of course, the rebound can be attributed to the layoffs. Shopify, the Ottawa-based online e-commerce platform, was among the first of the tech companies to make sweeping cuts. In July, it laid off 1,000 employees, or 10 per cent of the total, citing over-hiring during the the pandemic. The move is credited with boosting Shopify’s prospects and inspiring companies such as Meta to think boldly about cuts.

This sort of calculating is evidence of a new way of thinking, or, if you prefer, a new stage in the lifecycle of big tech companies. Startups that began intent on remaking a stultified, bottom-line-driven economy have become integral parts of that stultified, bottom-line-driven economy. We’ve gone from claims of “making the world a better place” to “making the business more profitable.”

Such a transition is surely meaningful. Beware Silicon Valley companies when they don’t even pretend to be following a more noble path in business.

From their inception around the turn of the millennium, Silicon Valley companies claimed to be leading us to a wondrous new existence through digitalization and the Internet. Google was organizing the world’s information in a way even the Library of Alexandria hadn’t; Amazon was building “the everything store,” even beyond the ambitions of Sears, Roebuck & Co.; and Facebook was connecting the world’s population in ways even a global religion couldn’t imagine.

Amazon had always been conceived as a business proposition – Jeff Bezos came up with the idea while working at a prestigious hedge fund, and was drawn by the potential fortune to be made from taking a cut of every online transaction. But Facebook and Google were born in universities, and their creators said they were impelled to serve humanity.

Google’s founders, Larry Page and Sergey Brin, while still Stanford PhD students, wrote a paper that warned against search engines funded by advertising – unlike Google at the time – since they “will be inherently biased towards the advertisers and away from the needs of the consumers.” Soon, however, Google was raising money from investors on the promise that it would be trying to make money; targeted advertising offered the big payday.

Open this photo in gallery:

Even so, Mr. Page and Mr. Brin asserted that their decisions would be dictated by their values, not the invisible hand of the market. In their 2004 “Founders’ IPO Letter,” they presented investors with some non-negotiable terms: The Google founders and their team would retain control of a majority of voting shares; they would think long term and decline to spin quarterly profit-and-loss statements with analysts; and they would, in sum, “be a company that does good things for the world even if we forgo some short term gains.”

Facebook’s Mark Zuckerberg was similarly high-minded to start. While still in college, and the social-networking website was thefacebook.com and had a mere 160,000 users, he explained his motivations.

“We can make a bunch of money – that’s not the goal,” he told the student newspaper in 2004. “Anyone from Harvard can get a job and make a bunch of money. Not everyone at Harvard can have a social network. I value that more as a resource more than any money.”

Open this photo in gallery:

As Facebook grew and brought in outside investment, Mr. Zuckerberg, too, retained ultimate control. When Facebook went public, he was briefly embarrassed, as the stock dropped because people doubted it could find a way to make money. He enlisted a senior executive to think about advertising, saying, “Wouldn’t it be fun to build a billion-dollar business in six months?” And, indeed, they did.

The money for these tech companies became so plentiful – just waiting to be collected by the dominant, if not monopolistic, online business in areas such as search, social networks, commerce, entertainment – that it was easy to keep Wall Street happy while pursuing a humane course with their employees. Things changed recently, however, when spikes in online engagement during the early months of the pandemic reversed, and the price of Silicon Valley stocks no longer inevitably climbed.

One prominent hedge-fund investor in Alphabet, not nearly satisfied by the layoffs announced, argued for immediate wage cuts. “Competition for talent in the technology industry has fallen significantly, allowing Alphabet to materially reduce compensation per employee,” Christopher Hohn wrote. The market had spoken on the value of Alphabet’s employees. Alphabet must follow. Based on its latest moves, it seemed inclined to agree.

Elon Musk’s recent purchase of Twitter has offered a glimpse of what a tech company divorced of any moral obligations would look like. Upon arriving as “Chief Twit,” Mr. Musk began trimming, if not excising, departments whose work he considered to have no market value, such as diversity and inclusion, communication with the media, content moderation. A total of more than 3,000 employees were laid off – 50 per cent of staff – in one round alone.

While some see such departments as benefiting the bottom line by, say, ensuring that users won’t be driven away by hateful and vile content, or by integrating different communities in important decision making, Mr. Musk isn’t one of them. His is a simpler story: These people are no longer drawing salaries yet Twitter is still up and running. Twitter just saved a lot of money.

In this way, Mr. Musk is a clarifying figure. He shows why Silicon Valley companies shouldn’t be allowed to self-regulate. They can’t be relied upon; all it takes is one leveraged buyout and the carefully tended defences against hate speech or conspiracy theories can be dismantled like so much scaffolding.

Why should these companies be any different than other profit-seeking firms? The high-minded mission statements – Google’s “don’t be evil,” Facebook’s “bringing the world closer together,” Amazon’s pledge to be “Earth’s most customer-centric company” – were really appeals for unchecked power meant to reassure us that the power would only be used for good. We’d watch YouTube send users down radicalizing rabbit holes, Amazon market knockoffs of its biggest sellers, Facebook allow its platform to encourage genocide and think they must not know what is going on.

Of course, they knew. They were chasing a buck, and governments didn’t hold them to account.

Open this photo in gallery:

The German playwright Bertolt Brecht memorably observed how conditional ethics are: “first food, then morals,” he would say. Brecht was describing a parent who steals food to feed a hungry child. However, if a dip in the ratio of earnings per employee has you ignoring your values, maybe you never had them at all.

In their eerily similar layoff memos, the tech executives identified artificial intelligence as an area they promised to grow even as the companies contract overall. It is another evasion; a “wondrous new tool” that will solve problems such as content moderation seemingly without an agenda – after all, who even knows what is happening in the “black box” of AI?

The salaries to be saved are never mentioned directly, but clearly are meant to please the markets. Sundar Pichai of Alphabet, for example, pivoted in his layoffs note to say, “We have a substantial opportunity in front of us with AI across our products and are prepared to approach it boldly and responsibly.” Mr. Zuckerberg similarly wrote, “In this new environment, we need to become more capital efficient,” identifying AI as helping to maintain Facebook’s infrastructure and make recommendations to users. “We do historically important work. I’m confident that if we work efficiently, we’ll come out of this downturn stronger and more resilient than ever.”

If these companies really do commit to AI to do their work, they can rest easy on one point: A computer won’t be confused by “an automated account deactivation.” It will understand immediately that its contributions are no longer needed.

Bad times for Big Tech: More from The Globe and Mail

The Decibel podcast

In depth

Ottawa's multibillion-dollar tech plan created ‘chaos’ instead of growth

Fewer meetings and no more ‘pineapple on pizza debates’: Shopify changes signal company’s renewed urgency

See Jane Run: How a B.C. startup ignored the tech bubble hype – and is thriving through the crash