Google to cut back on free snacks and fitness sessions and invest more in AI

▶ Company reducing staff perks to reflect hybrid work culture and deliver savings through efficiency

Google is cutting costs by reducing employees’ incentives and perks – such as free snacks, shuttle services and fitness sessions – to help it meet its savings target.

This comes as the company seeks to boost investment in technologies such as generative artificial intelligence.

Google said it is adjusting its office services in line with the new hybrid culture and that one of its key OKRs (objectives and key results) is to deliver “durable savings through improved velocity and efficiency”.

Cafes, micro-kitchens and other facilities will be tailored to better match how and when they are being used, Google’s chief financial officer Ruth Porat told employees, in a memo seen by The National.

Decisions will be based on data, she said.

For example, if a cafe is seeing a lower volume of use on certain days, the company will close it on those days and pivot its focus and resources towards other important services.

“Similarly, we will consolidate micro-kitchens in buildings where we are seeing more waste than value. We will also shift some fitness classes and shuttle schedules based on how they are being used,” said Ms Porat.

“This work is particularly vital because of our recent growth, the challenging economic environment and our incredible investment opportunities to drive technology forward – particularly in AI.”

In February, the company launched a new conversational AI service, Bard, to rival Microsoft-backed ChatGPT. So far, Google has opened limited public access to select consumers in the US and the UK. Last week, the company’s chief executive Sundar Pichai said that Google will soon launch an upgraded version of Bard.

These latest cost-cutting measures by Google follow layoffs in different departments.

The company announced in January that it was making 12,000 staff redundant – more than 6 per cent of its nearly 190,000 employees – after a review across product areas and functions.

These redundancies come amid a wave of layoffs across the technology industry.

In January, Verily, a biotechnology unit of Alphabet, said it was cutting about 15 per cent of its staff.

In further cost-cutting measures, in recent months, Google has also cancelled its next-generation Pixelbook laptop and permanently closed its cloud-gaming service Stadia.

The company is also reducing costs on general office accessories and equipment – covering everything from staplers to laptops, it said in its latest memo.

“Today’s devices have a much longer lifespan and greater performance and reliability, so we have made changes to what’s available and how often it’s replaced … while making sure that people have what they need to perform their role,” said Ms Porat.

“Because equipment is a significant expense for a company of our size, we will be able to save meaningfully here.”

Google said it is also aiming to improve its external procurement processes – from software to equipment to professional services – in a bid to save money there. “As one part of this, we are piloting an improved buying hub that helps teams find suppliers that we’ve negotiated great rates with,” Ms Porat said.

“Most of the other large changes and savings won’t be visible to most Googlers but will make a noticeable difference to our costs … these are big, multi-year efforts.”

These latest moves come after Google parent company Alphabet, the world’s largest provider of search and video advertisements, reported a 33 per cent drop in 2022 fourth-quarter net profit on an annual basis.

The company’s net profit dropped to about $13.6 billion in the three months through to the end of December, compared with the same period in 2021, as advertising revenue fell.

Alphabet’s share price was up by about 1.1 per cent during premarket trading yesterday to $105.89.

The company’s stock has fallen more than 23 per cent over the past year.

Cafes, micro-kitchens and other facilities will be tailored to better match how and when they are being used