At a City Hall meeting, Google employees demanded to know if the TCI hedge fund activist was behind this month’s mass layoffs.
- Last week, Google’s parent company Alphabet announced it was laying off 12,000 employees.
- TCI Fund Management has previously urged Alphabet to cut headcount after “excessive” growth.
- TCI stated that as of the end of 2022, it owned more than $6 billion worth of Alphabet shares.
Pressure from investors did not affect the decision to lay off 12,000 employees announced last week, Alphabet CEO Sundar Pichai and CFO Ruth Porat said at a general meeting on Monday.
Alphabet’s lead investor, UK-based TCI Fund Management, urged the tech giant in November to cut headcount after “excessive” growth since 2017. During Monday’s general meeting, Google’s management responded to a question submitted by an employee that asked what impact, if any, TCI had on Alphabet’s decision to cut its workforce by more than 6% globally.
In response, Pichai said that Alphabet communicates with investors throughout the year and does so consistently over time. Porat continued by stating that while he communicates with investors on a regular basis, “no single investor influences our decisions.” The recording of the meeting was listened to by Insider.
“Ultimately we have more information about what we are doing and priorities,” Porat said by phone. “We make decisions that, in the long run, are in what we believe are the best interests of the company.”
TCI said it owned more than $6 billion worth of Alphabet shares as of late November 2022 when it issued a letter urging Pichai to cut costs, in part by laying off employees and cutting salaries for remaining employees. He also stated that Alphabet may cut its investment in the “Other Bets” category, which includes long-term projects such as Waymo’s self-driving car division and Verily’s life sciences division. Alphabet laid off more than 200 Verily employees earlier this month.
While the company may deny that the hedge fund makes decisions, Alphabet nonetheless appears to be complying with many of TCI’s layoff requests. Vacancies in the “Other Stakes” divisions are almost non-existent, while the company primarily hires employees in revenue-focused divisions such as Cloud and YouTube.
In 2023, the company will face headwinds from a sagging economy in which advertisers must spend less, which does not bode well for a company like Google, which makes most of its money from advertising. Couple that with the company’s already slowing growth, and investors seem less inclined to accept Alphabet’s heavy spending on budding projects and employee benefits.
Alphabet is expected to report earnings for the last quarter of 2022 on February 2nd.
Google did not immediately respond to a request for comment.
Are you a Google employee? Contact Thomas Maxwell via email ([email protected]) or Signal: (+1-540-955-7134).
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