Google started off the new year with more job cuts, laying off thousands of workers across multiple teams. Later, the company’s CEO Sundar Pichai told employees to expect more role eliminations throughout the year. Now, alongside its financial reports for Q4 2023 and FY 2023, Google shared how much its layoffs will cost the company. Google expects to pay $700 million in severance to laid-off workers, as reported by The Verge. This is just the total Google thinks it will pay in the first quarter of this year. As a result, it could increase throughout the year as Google’s layoffs continue.
The company’s strategy is to pay more now with the hopes of saving money down the road. The $700 million severance bill is just the tip of the iceberg. Across all of last year, Google paid a staggering $2.1 billion for severance “and related charges.” The lump sum of payments mostly represents Google’s widespread layoffs in January 2023. To start last year, the company laid off 12,000 workers, which represented about six percent of its total number of employees. Though there were layoffs again in January 2024, they were minuscule compared to the 2023 cuts.
As part of the moves to shed expenses, Google is suffering high costs in other areas. For example, as part of the downsizing efforts, Google is also trying to save money on real estate. The company has shuttered or downsized a number of office spaces, which cost Google $1.8 billion last year. Again, Google’s preference is to pay more now to save more later. Whether that strategy pays off remains to be seen.
Looking beyond Google’s $700 million severance payments
Just looking at the layoffs, it might be reasonable to assume that Google didn’t have a great 2023. However, the company’s financial reports paint a different picture. Google reported growth across many of its core businesses and had success in the fourth quarter of 2023. Overall, revenue for Q4 2023 increased by 16 percent year-over-year. Google posted a total of $86 billion in revenue for that quarter.
The company also expects more opportunities for growth this year centered around artificial intelligence. Google is starting to integrate Gemini AI models into many of its products and services. Its smallest AI model, Gemini Nano, is found on smartphones. Gemini Pro now powers the company’s Bard chatbot in more than 240 countries and territories. Finally, Gemini Ultra is set to debut sometime this year in Bard Advanced — a more powerful version of the chatbot. By integrating Gemini models with other services, Google hopes to compete with the likes of Amazon, Microsoft, and OpenAI.