My guess most of these companies were also borrowing money. You can look on their balance sheets for the stock. When that rate is low it makes a lot of sense to grow and borrow. When that rate goes up the math changes. No matter how profitable you are. There could be quite a bit of 'someone had to go first' fad going on too. Adding headcount just because you make tons of money does not necessarily make sense. It just means you are probably overcharging for your existing products and really should be passing those cost savings onto your customers. If you do not do that you risk a competitor doing exactly that. Interest rates plus decent inflation plays into how much debt/risk you can take on what your headcount will be plus what you charge your customers.
This is the important word. Although Alphabet, Meta and Microsoft overall are profitable there are parts of it that a) was (and still not profitable) and b) was in demand in the last three years but are now softened enough that it turns "okay, unprofitable but manageble" into "this has become a money pit". Since that they are cutting off anyway, why not throw laggards and undesirables into the mix? I estimate that around half is genuine cost-savings and another half is euphemistic firing, which I'll be honest muddies the explanation up a bit.
For Google, their focus was on the cloud and productivity products. Even discounting the already-planned Stadia layoffs, it is well-known that Google has targeted 2023 as its Google Cloud break-even point. If they can't profit on user acquisition then they need to cut up costs. This is why they're now aggressive on closing up GCP products so that the core GCP product can be operated with less expense. Additionally, their Workspace and ChromeOS team were also gutted because the Chromebook boom induced by the pandemic is now over (will expand over at Microsoft's explanation).
Microsoft's cuts are also focused on productivity suites. The boom times for PCs is over so they need to cut costs there, and it shows hard. Both the Windows and 365 subteams were gutted further since that companies have now time to actually count up how many licenses they need, plus since Windows 11 is "free" the only revenue is from OEMs and business. OEMs now buys fewer licenses because the boom times is over. Businesses are not thrilled at Windows 11 and are secretly waiting for a Windows 12 or a 10 ESU. Azure is now slightly profitable but as you might have guess "slight" is unacceptable to shareholders so some were also let go too.
Meta no longer grows in its traditional business in social media and fails to crack the secret to an enjoyable metaverse, with most people passing it off as a fad and even metaverse believers flocking to competitors that were already there and have better products. It's plain obvious why they need to reduce headcount.
> Meta no longer grows in its traditional business in social media
"Almost 20 years in, Facebook is still growing. The social network now has 2 billion daily active users, Meta reported alongside its fourth-quarter earnings. The report marks the first time Facebook, which added 16 million users last quarter, has reached 2 billion daily users." https://www.engadget.com/facebook-2-billion-meta-q4-2022-ear...
I'm guessing Google and Facebooks profit centers are much more narrow? Eg. Google Ads. Facebook has the Metaverse Black Hole whereas has Googles countless endeavours (eg. Chat)
Yeah but they’re still some of the most profitable companies in the world, and Google at least has many billions in the bank. I feel you’re moving goalposts?
Yes true but they overhired and most growth has stalled. The idea I'm getting are the layoffs are happening in the less profitable parts of the business.
Also, I was told because of the severance packages, these companies aren't going to be saving any money until a few months down.
That said I read a few days ago Apple may start doing cuts in the future. iPhone sales are down 8% and smartphone sales in general are down 18%!
Google? Facebook? Microsoft? All very profitable, all doing layoffs.