Do Google’s Job Cuts Matter?

By Douglas A. McIntyre Published Jun 4, 6:50AM EDT

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Sometimes, the news about a company is not news at all.
This is true of the Google cloud business layoffs.

One of the absurd things the media does is look at layoffs and assume they mean something special beyond saving a company money. That happened recently at Google, the search arm of tech giant Alphabet Inc. (NASDAQ: GOOGL | GOOGL Price Prediction).

There were dozens of headlines that Google had laid off 100 or so people in its cloud business. CNBC reported, “The latest downsizing comes as Google cuts jobs across the company to prioritize artificial intelligence.” But does a 100-employee layoff deserve this headline across the media? No. People who look at it as a sign of a change in strategy are naive.

Google’s cloud business is among its most significant and most profitable. Some of Alphabet’s revenue comes from artificial intelligence (AI) applications that are part of these cloud operations. Last quarter, cloud revenue rose 28% to $9.57 billion. Operating income for the business hit almost $1 billion.

Even if the AI business grows quickly, cloud computing will significantly contribute to revenue for years. This is not just true at Alphabet. It is true at Amazon.com Inc. (NASDAQ: AMZN), the cloud industry leader through its AWS divisions, and Microsoft Corp. (NASDAQ: MSFT) with its Azure cloud business.

Sometimes, the news about a company is not news at all. The media is chasing a story that is not there. This is true of the Google cloud layoffs.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.