Like Elon Musk, Silicon Valley layoffs, crisis or upgrade?

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With great noise, Elon Musk embarked on a wave of layoffs within Twitter, but for several months now, with low noise, many companies in Silicon Valley have been laying off. Several thousand employees of Meta, Snapchat, Lyft, Amazon… find themselves unemployed. Fear of a recession? Overstaffing in the sector? Gloomy future of tech? The causes are various. RFI interviewed Silicon Valley players to better understand the reasons for this crisis.

Real-time update of layoffs in the technology sector (mainly in California) is carried out on this site. The figures are substantial and we learn that: Amazon is preparing to lay off around 10,000 employees, just under 1% of its payroll (1.54 million employees worldwide). Meta, the parent company of Facebook, has announced the loss of 11,000 jobs, or 13% of its workforce. Snapchat cut nearly 20% of its workforce, more than 1,200 employees. Twitterjust acquired by Elon Musk, fired half of its 7,500 employees. Same style of cuts in the workforce at Intel, Salesforce… and a systematic hiring freeze at Apple and Alphabet (Google).

On the site you can follow the evolution of the layoffs.

“Moderation is culturally not an American virtue”

This wave of layoffs is impressive, but according to Yann, a French entrepreneur living in Silicon Valley for 10 years: “ Employment in the United States cannot be compared to that of France. It is extremely more flexible for both employees and employers ” He adds : ” In the USA, no one considers keeping the same job or even staying in the same city all their life. ” Same process on the business side: ” American companies are used to growing according to market and demand. They will always be preventive and do not wait to be in the wall to correct the course. Right now they are laying off a lot and fast, but they will hire as soon as possible. ” According to Jean-Louis Gassée, former Apple: ” Here too, we are overdoing it. One day it’s all good, then the next day it’s all bad. That’s how it is in the United States, everything has to be BIG! Moderation is culturally not an American virtue. »

A decline in Meta revenue and a fall in profits

The economic crisis is affecting most major tech companies which have hired heavily during the pandemic. ” Following the Covid crisis, a lot of money has been injected into the economy, from the American government, and particularly in California », explains Yann. But other reasons emerge. In a message to employees, Mr. Zuckerberg explained: “ Today, I’m sharing some of the toughest changes we’ve made in Meta’s history. The group, which has some 87,000 employees worldwide, reported disappointing financial performance in the third quarter, marked by falling revenue and a drop in profits. “ Amazon has also seen declines in sales on its platform, as there is fear among the American population of recession and layoffs. », explains Jean-Louis Gassée. Even Amazon Web Services (AWS), the group’s remote computing (cloud) activity, which has so far shown insolent growth and profitability, saw its revenues increase more moderately this summer, climbing 27% , compared to 39% a year ago. ” The new CEO of Amazon, the one who had the intuition of the AWS, therefore reviews what is wrong with the company, such as Alexa which does not bring in much. The layoffs are expected in several divisions, including that of the personal assistant Alexa as well as Luna, its cloud gaming unit launched in March in the United States.

► To read also: A travel diary to understand the intricacies of Silicon Valley

“Elon Musk wonders what to sell”

But can we speak of a recession? Jean-Louis Gassée ponders: “ The question is legitimate, the answer dangerous. In which country will the layoffs take place? Outside the USA? In India or Bangladesh ? ” He explains : ” the engineers in the valley are going to have to sell, and they don’t really like to do that. But it is a blessing in disguise. Elon Musk has a real problem with Twitter: he wonders what to sell? A social network is not like a car or an electric charger service. ” He adds : ” When the money is no longer free, we invest less. In the same vein, advertising works less well because of the economy at half mast and this affects everyone. The Metaverse remains very expensive in the case of Meta. »

In general, in the United States, when a big company starts to lay off, the others do the same thing in stride. One might think that it only affects a part of the employees, such as low salaries or precarious jobs. Not at all, it affects everyone », comments Yann: « The principle is simple, we separate jobs that are not or no longer close enough to the “core” (hard core) of the company and the objectives of tomorrow. Overnight, everything can change. In the evening, 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. »

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“I was fired. But I think it will be okay”

In the Artificial Intelligence (AI) department and machine learning (Machine Learning) from Meta, the cut was severe. Teams of more than 50 people were left behind. Yann says: The day before the layoffs, I read an article that said the entire Machine Learning team was laid off. I think directly of a friend. I contact him by Messenger to ask him if he was affected by thinking that some of his colleagues had to be fired, but that he was safe. He replies at the end of the day: “Hey Yann, I got laid off. But I think I’ll be fine — a lot of exciting opportunities in AI nowadays.” (Hi Yann, I was fired. But I think it will be fine, lots of opportunities in AI at the moment). For the Chinese and the Japanese, the word crisis is made up of two ideograms: Wei (hazard) and Ji (opportunity). 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 continues: We talked after the news and, like many, he didn’t expect it. He could see that something was going on, but nothing more. It was a shock for me too. I never would have thought that my friend, who was part of a team that Zuckerberg loved and who had been a big contributor to Facebook for 10 years, could be fired as easily as erasing a word by writing an email. » In French, crisis comes from the Greek Krisis which means decision, like what…


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