Meta CEO Mark Zuckerberg has steered the company through a “year of efficiency” that brought massive layoffs and record profits. Alex Wong—Getty Images
Many large technology companies are slimming down or cutting staff. This corporate fat reduction has become common in the technology sector in recent years.
Renowned marketing professor and media mogul Scott Galloway argues that AI is behind the layoffs. The problem is that many executives are reluctant to admit that they are firing employees with the intention of replacing their jobs with artificial intelligence.
Galloway likens the move to an open secret that many people use to help themselves lose weight, calling AI the “corporate Ozempic.”
“My theory is that companies (particularly technology companies) have also discovered weight loss drugs, but are shying away from them,” Galloway wrote on his blog, No Mercy/No Malice. “Two of his articles have been featured in recent financial news: layoffs and record profits. They are related.”
Technology companies have cut jobs one after another in recent months. Meta, a leading Silicon Valley company, has laid off approximately 20,000 employees since November 2022. Apple could cut hundreds of employees from its self-driving car division after canceling the project. Salesforce laid off about 700 employees at the beginning of the year, after cutting more than 7,000 jobs in 2023. In January, Alphabet laid off more than 1,000 employees after handing out 12,000 pink slips in a double round of layoffs that hit its ad sales and hardware teams. In 2022.
Galloway points out that all of this has been possible because of the technology industry's stellar performance. Some have even announced historic numbers, with Meta announcing a record $40.1 billion in revenue for the fourth quarter of 2023, and a tripling of net income compared to the same period last year. Mr. Galloway said the discrepancy is more indicative of a shift in strategy than a need to right-size distressed companies.
“I believe AI is playing a bigger role in workforce reductions than CEOs are willing to admit,” Galloway wrote in the post. “CEOs are reluctant to talk about this, at least publicly, because they're afraid of the brave new world of AI.”
Galloway declined to comment.
So far, the tech company has not said the layoffs are a result of the shift to AI. In fact, people like IBM CEO Arvind Krishna say the company's investments in AI will mean an increase in its workforce. Companies like Alphabet, which became a powerhouse in the AI space by acquiring pioneering startup DeepMind in 2014 and releasing tools like its Bard chatbot (now called Gemini), He made it clear that the firing was unrelated.
“We're not restructuring because AI is taking over roles. That's the important thing,” Alphabet Chief Business Officer Philip Schindler said during an earnings call this month.
That denial “first got my antennae up,” Galloway says. Extending Ozempic's analogy, he compares these company statements to people who say they'll “cut out gluten” to lose weight, instead of admitting they've started taking weight loss drugs. Ozempic basically eliminates appetite, making it easier to lose weight. In business, AI can remove desire, and Galloway believes companies will be happy to do so.
“If consumers are willing to pay $1,000 a month to lose weight while suppressing their appetite, companies can achieve the previously unthinkable goal of cutting costs while increasing profits. How much would you pay to do that?'' Galloway writes.
That doesn't mean all jobs will disappear. Galloway believes that AI will also help employees do their jobs better, allowing companies to do more with less. “Managers can take on new initiatives and areas without the headache of hiring more people,” he writes.
The concept of a future workplace where AI and humans work in harmony is becoming increasingly popular. One of the more accepted views today is that AI simply replaces mechanical, repetitive tasks. In that scenario, AI could replace specific job duties, if not entire roles. That doesn't mean the impact of AI is negligible. The International Monetary Fund predicts that approximately 60% of jobs in developed countries will be affected by AI. However, about half of them are likely to be more productive. Another estimate from Goldman Sachs suggests that two-thirds of jobs, and up to a quarter of current jobs, could be affected.
A new focus on AI means there will be an increased demand for a small pool of talent with expertise in this field. Companies will be eager to hire these people, and many technology companies already are, but this trend is beginning to spread to other areas of corporate America as a whole.
Galloway predicts that over the next year, executives will be open about the fact that they are replacing humans with AI, as its use in the workplace becomes more commonplace. When that happens, “the pundits will clutch their pearls until the stock explodes, and the secrets hidden in plain sight will be revealed for all to see.” [AI is] Corporate Ozempic. It's not that we have less bread, it's that our desire for bread decreases. Read: Hiring people,” Galloway wrote.
