Google will lay off more than 12,000 employees in 2023 and spend $2.1 billion on severance and other expenses. And the cost of layoffs keeps piling up: So far in just one month of 2024, the company has spent $700 million on employee severance packages, as part of layoffs targeting more than 1,000 additional positions. Google parent company Alphabet disclosed the figure when it released its fourth-quarter earnings on Tuesday.
Despite the layoffs, Google ended 2023 with growth in most of its core businesses. In the fourth quarter of 2023, Google achieved revenue of US$86 billion, a year-on-year increase of 13%. The search giant's core digital advertising and cloud computing businesses also saw solid growth, which CEO Sundar Pichai attributed to Google's investments in generative artificial intelligence.
Google's main source of revenue is its search engine business, whose revenue reached US$48 billion, a year-on-year increase of nearly 13%. Pichai said the company's subscription services and devices segment generated $10.7 billion in revenue, driven primarily by subscriptions to YouTube Premium and Music, YouTube TV and Google One. YouTube’s advertising revenue was $9.2 billion, a 15% increase from last year.
In a call with investors, Pichai called 2024 Alphabet's "Gemini era," referring to the company's artificial intelligence language model that is expected to play a role in all of Google's core products. Pichai said: "Gemini is the first realization of the vision we had when we founded Google DeepMind, bringing together two of our world-class research teams. Coming soon is GeminiUltra, an upgraded version of the original model that the company is still developing. GeminiUltra is coming soon. The team is already working on the next version and applying it to our products, starting with search."
Google is currently the world's third-largest cloud service provider, behind Microsoft's Azure and AWS. But the cloud computing sector has gained momentum in the past year. The company reported Google Cloud revenue of $9.19 billion, a significant year-over-year increase of 25.6%.
Although layoffs have caused heavy losses to Google, Google has also suffered heavy losses from real estate projects that have been cut due to layoffs (including in expensive places such as the Bay Area). Throughout 2023, closing physical office spaces cost Google a total of $1.8 billion.
And Google's continued investment in artificial intelligence, known as "Gemini," means more layoffs in 2024 as the company cuts staff in other departments to make up for the loss.