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With much fanfare, Elon Musk began a wave of layoffs within Twitter, but for several months now, with low noise, many Silicon Valley companies have taken off. Several thousand employees of Meta, Snapchat, Lyft, Amazon… find themselves out of a job. Fear of recession? Overstaffing in the sector? Bleak future of tech? The causes are varied. RFI interviewed Silicon Valley players to better understand the causes of this crisis.
Real-time updates of layoffs in the technology sector (primarily in California) are conducted on this site. The numbers are big and we’ve learned that: Amazon is preparing to lay off around 10,000 employees, less than 1% of its payroll (1.54 million employees worldwide). Meta, the parent company of Facebook, announced the loss of 11,000 jobs, or 13% of its workforce. Snapchat has cut nearly 20% of its workforce, more than 1,200 employees. Twitterjust got it Elon Musk, laid off half of its 7,500 employees. Same style workforce cuts at Intel, Salesforce… and a systematic hiring freeze at Apple and Alphabet (Google).
On the site trueup.io/layoffs you can follow the evolution of layoffs.
BREAKING: Amazon plans to lay off around 10k staff this week
It’s been a brutal year for tech layoffs. pic.twitter.com/lTnfZVDL1o
— Margot Rubin (@margot_rubin) November 14, 2022
“Moderation is not an American cultural virtue”
The wave of layoffs is impressive, but according to Yann, a French entrepreneur who has lived in Silicon Valley for 10 years: ” Work in the United States is not comparable to work in France. It is much more flexible for both employees and employers ” He added : ” In the USA, no one thinks of keeping the same job or even staying in the same city for the rest of their lives. ” Same process on the business side: ” American companies are used to growing according to market and demand. They will always be preventive and not wait to be at the wall to correct the course. Right now they are leaving a lot and fast, but they will rent soon. ” According to Jean-Louis Gassée, formerly of Apple: ” Here too, we are going too far. One day everything is good, and the next day everything is bad. That’s how in the United States, everything has to be BIG! Cultural moderation is not an American virtue. »
The decline in Meta’s revenue and revenue decline
The economic crisis is affecting most major technology companies that have hired heavily during the pandemic. ” Following the Covid crisis, a lot of money was injected into the economy, from the American government, and California in particular », explained Yann. But other factors appear. In a message to employees, Mr. Zuckerberg explained: “ Today, I’m sharing some of the most difficult changes we’ve made in Meta history. The group, which has around 87,000 employees worldwide, reported a disappointing financial performance in the third quarter, marked by falling revenue and a decline in profits. “ Amazon has also seen sales on its platform decline, as the American population fears recession and layoffs. », explains Jean-Louis Gassée. Even Amazon Web Services (AWS), the group’s remote computing (cloud) activity, which has so far shown lackluster growth and profitability, saw its revenues rise more modestly this summer, climbing of 27% , compared to 39% last year. ” Amazon’s new CEO, the one with the intuition of AWS, is therefore examining what is wrong with the company, like Alexa not causing much. Layoffs are expected in several divisions, including personal assistant Alexa as well as Luna, its cloud gaming unit that launched in March in the United States.
► To also read: A travelogue to understand the intricacies of Silicon Valley
“Elon Musk wonders what to sell”
But can we talk about the recession? Jean-Louis Gassée reflects: “ The question is legitimate, the answer is dangerous. In which country will the layoff take place? Outside the USA? In India or Bangladesh ? ” He explains : ” valley engineers have to sell, and they don’t want to do that. But it was a blessing in disguise. Elon Musk has a real problem at Twitter: he thinks what to sell? A social network is not like a car or an electric charger service. ” He added : ” When money is no longer free, we invest less. In the same vein, advertising doesn’t work as well because of the economy at half mast and it affects everyone. Metaverse remains very expensive in the case of Meta. »
Elon Musk was able to rehire employees who were laid off last week.
It’s important to admit when I’m wrong and letting them go was definitely one of my biggest mistakes
— Elon Musk (@elonmusk) November 15, 2022
” Generally, in the United States, when one large company begins to lay off work, others do the same thing in leaps and bounds. One might think that this only affects a portion of employees, such as low-paid or precarious jobs. No, it affects everyone », commented Yann: « The principle is simple, we separate the jobs that are not or are not close to the “core” (hard core) of the company and the goals of tomorrow. Overnight, everything can change. At night, we are on a new task, we fix a bug, we have an important meeting, and in the morning everything stops. It was a cold and massive shower for many. »
► Also read: Why GAFA bites the dust
“I got fired. But I think it will be okay too”
In the department of Artificial Intelligence (AI) and machine learning (Machine Learning) from Meta, the cut is severe. Teams of more than 50 people are left behind. said Yann The day before the layoffs, I read an article that said the entire Machine Learning team had been laid off. I look directly at a friend. I contacted him via Messenger to ask him if he was affected by the thought that some of his colleagues had to be fired, but he was safe. He replied at the end of the day: “Hey Yann, I got laid off. But I think I’ll be fine — there are a lot of exciting opportunities in AI right now.” (Hi Yann, I got fired. But I think it’s fine, there are many opportunities in AI right now). For Chinese and Japanese, the word crisis consists of two ideograms: Wei (risk) and Gee (chance). A crisis is a paradox: a difficult situation that allows you to seize new opportunities and bounce back. In California, we speak this language. Yann continued: We spoke after the news and, like many, he was not expecting it. He sees that something is happening, but nothing more. It was also a shock for me. I never thought that my friend, who was part of a team that Zuckerberg loved and had been a big contributor to Facebook for 10 years, could be deleted as easily as deleting a word by writing an email. » In French, crisis comes from Greek Crisis which means decision, like what…