What hides the massive layoffs of Gafam

The new year begins with a hell of a hangover for the Gafam. More accustomed in recent years to brandishing their mega-profits or the launch of new products, the American tech giants are currently distinguished by spectacular cuts in their workforce.

This paradigm shift contrasts with years of crazy growth, which almost made people believe that these behemoths were so strong that they hovered above the laws of the market. The economic reality of a post-Covid world has come back to them like a boomerang in the face, with tens of thousands of employees as collateral victims.

The Gafam have stopped dreaming

These global tech heavyweights, with the exception of Meta which seems run to ruin by throwing themselves body and soul into the metaverse, are nevertheless very far from being at the edge of the abyss. For them, today is not a serious growth crisis, but a simple slowdown in their activity, inevitable in the current economic context which forces leaders to refocus on the essentials.

Exit all-round diversification with sometimes eccentric or ultra-futuristic projects to make shareholders dream. They want efforts to be concentrated on the most lucrative and promising activities for the future. It is no coincidence that Amazon, Microsoft and Google have made the cloud a priority for their development. On the other hand, more atypical projects, such as those from Area 120, Google’s internal incubator yet a contributor to the take-off of Gmail and Google News, have been shelved. Beyond the Gafam, companies such as Uber have stopped their experiments in new fields of action. In 2020, the VTC platform thus separated from its Uber Elevate flying taxi division.

Advertising, your content continues below

In a way, the Gafams, and by extension the Natu (Netflix, Airbnb, Tesla and Uber), have stopped dreaming. After indulging in every imaginable fantasy when the markets supported them against all odds, the violent return to Earth induced by the end of the critical phase of the Covid-19 pandemic signaled the end of recreation, and therefore of megalomania.

Amazon, symbol of the containment economy

It must be said that for two years, starting in the spring of 2020 and once the market backlash linked to the emergence of the pandemic had been absorbed, the US tech giants felt their wings growing, to the point of turning into Icarus. . With an online activity that has exploded, boosted by telework and e-commerce, the Gafam have become indispensable in the daily lives of hundreds of millions of people, when they found themselves stuck at home for long weeks. In a way, the Gafam had created the containment economy before its time.

The group that had seen just before everyone else in this unique period is Amazon with its multitude of services ticking all the boxes: cloud for teleworking, e-commerce for shopping and Prime Video offer for entertainment. This winning cocktail propelled Jeff Bezos’ firm into a cosmic dimension. Proof of this is its exceptional benefits during the first year of the pandemic. Amazon then earned $26.9 billion in profits between April 2020 and March 2021, nearly $2 billion more than the cumulative profit between 2017 and 2019 ($24.7 billion).

Advertising, your content continues below

Carried by this favorable wind, Amazon did not hesitate to recruit quickly without any other immediate concern than to cope with the jump in online orders. Between January and October 2020, the Seattle octopus recruited nearly 430,000 people, not counting the hiring of 100,000 seasonal workers during the holiday season. In total, Amazon has recruited 800,000 additional employees between 2020 and 2021 and therefore more than doubled its workforce.

954,000 people recruited during Covid

In the wake of Amazon, the other Gafams also strengthened during the period, but less spectacularly. 58,000 people have thus inflated Microsoft’s workforce between 2020 and 2021, 52,000 at Google, 27,000 at Meta and only 17,000 at Apple. In total, 954,000 additional employees joined Gafam teams during the blessed period of the pandemic.

But after the euphoria, it’s time for adjustments to adapt to a return to normal life, as well as inflation, as Wall Street showed itself ruthless with technology stocks in 2022, following the rise in key rates by central banks. And the easiest way to reduce costs without jeopardizing business lines is to reduce payroll and cut marketing expenses.

51,000 employees made redundant

Thus, the Gafam did not hesitate long to operate a bleeding, especially when the markets sanction the slowdown in growth. 10,000 job cuts were decided at Microsoft, 11,000 at Meta, 12,000 at Google and 18,000 at Amazon. 51,000 people in total who will leave the ranks of Gafam in the coming weeks, while the situation is far from critical for these companies, Meta being a special case.

Advertising, your content continues below

For example, Google saw its bottom line come out at $13.9 billion in third trimesterwhile Amazon generated $2.9 billion in profits and $127.1 billion in revenue over the same period. We are therefore more in a reflex of optimizing margins than a real rescue operation. We might have to think about throwing a buoy at Mark Zuckerberg, at the rate Meta squanders its money to build its metaverse ($20.9 billion burned in two years)…

The Apple Exception (for now)

In this flood of redundancy announcements, one actor is discreet. This is Apple, which has not yet announced any cuts in its workforce. However, the Cupertino company only recruited 17,000 employees during the pandemic, far from Microsoft’s 58,000 at the same time. By hiring more reasonably than the other giants of US tech, Apple has so far spared the trauma of a massive wave of layoffs for its employees.

Certainly, Forbes reported last August that the Apple brand had discreetly laid off about a hundred contract recruiters, but that’s not much for a firm of some 160,000 employees, and disproportionate to the 18,000 layoffs planned by Amazon.

However, we will have to wait for the quarterly results of the Californian group on February 1 to see if the company is on the right path. To look good in the current economic climate, Apple boss Tim Cook has agreed to reduce his salary by 40% under pressure from shareholders. The successor to Steve Jobs will however be able to console himself with a nice check for 49 million dollars. At the Gafam, not everyone knows about the crisis, especially not the leaders.

Advertising, your content continues below

What hides the massive layoffs of Gafam