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Meta CEO Mark Zuckerberg led the company through a “year of efficiency” that saw massive layoffs and record profits. Alex Wong—Getty Images
Many large technology companies are slimming and cutting their workforce. This corporate trimming of the fat has become common in the technology sector in recent years.
Well-known marketing professor and media entrepreneur Scott Galloway has a theory about what’s behind the layoffs: AI. The problem is that many executives are hesitant to admit that they are laying off employees with the intention of replacing their jobs with artificial intelligence.
Galloway compares the move to the open secret many people use to lose weight and calls the AI ”corporate Ozempic.”
“My thesis is that companies (especially tech companies) have also discovered a weight-loss drug and are also shy about it,” Galloway writes in his Blog, Without mercy/Without malice. “Recent financial news presents two stories: layoffs and record profits. These are related.”
A number of technology companies have made layoffs in recent months. Meta, a Silicon Valley stalwart, has fired around 20,000 employees from November 2022. Apple could be cutting back hundreds of employees of its self-driving car unit after canceling the project. Salesforce laid off about 700 employees earlier this year after laying off more than 7,000 people in 2023. In January, through two rounds of layoffs that affected its advertising sales and hardware teams, Alphabet laid off more than 1,000 employees after handing out 12,000 layoff notices in 2022.
All of this is happening, Galloway notes, as the tech industry has seen. stellar business results. Some of them even gave historical numbers: Meta announced a record $40.1 billion in revenue in the fourth quarter of 2023, while tripling net income compared to the same period last year. According to Galloway, the discrepancy points to a strategic change rather than the need to right-size a troubled company.
“I think AI is playing a bigger role in layoffs than CEOs are willing to admit,” Galloway writes in the post. “CEOs are shy about it, at least in public, because there is a sense of fear around the brave new world of AI.”
Galloway declined to comment.
So far, technology companies have not said that their layoffs were the result of a transition to AI. In fact, some like IBM CEO Arvind Krishna have said the company’s investments in AI mean headcount will increase. Others, like Alphabet, which has been a giant in AI with the acquisition of pioneering startup DeepMind in 2014 and the launch of tools like their chatbot Bard (now called Gemini), they were clear that AI and the layoffs were not related.
“We’re not restructuring because AI is taking away roles; that’s important here,” Alphabet Chief Commercial Officer Philipp Schindler said on an earnings call this month.
It was those denials that “first raised my antennae,” Galloway says. Expanding on his analogy with Ozempic, he compares these corporate statements to people saying they “eliminate gluten” to lose weight, rather than admitting that they have started taking the weight-loss drug. Ozempic makes it easier to lose weight because it essentially eliminates cravings; In business, AI can eliminate a longing that Galloway believes companies would be happy to eliminate.
“If consumers are willing to pay $1,000 a month to lose weight without cravings, what would a corporation pay to achieve what was previously unthinkable: reduce costs and increase revenue?” Galloway writes.
That doesn’t mean all jobs will be eliminated. Galloway believes AI will also help employees improve their work, allowing companies to do more with less. “Managers can take on new initiatives and domains without the headache of hiring more humans,” she writes.
The concept of a future workplace where AI and humans work in harmony is becoming more common. One of the most accepted opinions now is that AI will simply replace repetitive and rote work. In that scenario, AI is likely to replace certain job functions, if not entire roles. That doesn’t mean the effects of AI will be negligible: the International Monetary Fund predicts some 60% of jobs in advanced economies will be affected by AI. However, about half of them could see productivity increase. Other estimate Goldman Sachs says two-thirds of jobs, and up to a quarter of current work, could be affected.
All that new focus on AI means that the few people with experience in the field will be in high demand. Companies will be eager to hire these people, and many of the technology companies have already done so, but the trend is starting to proliferate in other sectors throughout corporate America.
Galloway predicts that over the next year executives will be open about the fact that they are replacing people with AI as its use in the workplace becomes more common. When that happens, “the experts will clutch their pearls for a hot minute until the stock explodes, and the secret hiding in plain sight will be visible to all: (AI is) Corporate Ozempic.” It is not about less bread, but about less desire for bread. Read: hire people,” Galloway writes.