Google’s cuts to perks feel like a red herring to bigger issues facing tech

One internal email axing snacks and massages is hardly a sign of another dotcom-style crash. But massive industry job cuts could be

Imagine yourself having taken a six-figure salaried position at a certain ubiquitous internet search company only to find that your work entitlement of a Friday massage has been whisked away as a cost-cutting measure.

Not to mention the indignity of having to walk farther to find snacks in the “microkitchen”, as there will be fewer of them, despite everyone knowing adjacent muffins are essential to writing code.

And all of this perplexing cost-cutting is being done to enable said search engine to scrimp together the money to fund its lagging AI research because everyone agrees the company has been shown up by some upstart start-up in San Francisco.

Or so seems the implication of a recent story in the Washington Post, which looked at a leaked employee email from Google’s chief financial officer Ruth Porat and concluded Google was “cutting some of its perks as the tech giant scrambles to trim costs and reorient itself to focus more on artificial intelligence”.

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Both “as” and “and” are doing a lot of work there, suggesting that trivialities like fewer massages and free muffins will help poor Google, a breathtakingly wealthy company. Other news sites took this tack, too, and initially, I thought the Google email might be a dramatic sign of a dotcom crash reprise.

Twenty years ago, the end of wacky company perks were a favourite media marker of industry madness and failing tech companies. Where only a short time before, twisty slides as stair alternatives, corporate paintball and gourmet in-house cafes had entranced outsiders, now they represented foolish excess. As the Nasdaq plummeted, schadenfreude inversely expanded.

Reading the Google email, though, the curtailing of a few perks is a minor component. Offering fewer yoga classes and massages, closing some underused “microkitchens”, replacing laptops less frequently and “improving external procurement” are pretty bland savings measures, especially compared to cutting 12,000 jobs, the far more significant step under way at the company.

If anything, to a cynic (who, me?), that bit about perk cutbacks feels like a red herring designed to make more significant measures less noticeable. Sure enough, the headline item in just about every email story was the cuts in massages, free snacks and access to tape and staplers (alas, now employees have to ask to use a supervised stapler).

And while the sexy tech battle of the moment might be over AI, it isn’t all that clear in the hype competition, whose AI will triumph, or for that matter, what success even means, in an ethically shrouded area riddled with hyperbole and dramatic claims.

Meanwhile, Google remains one of the most valued companies in the world, with a market cap of a staggering $1.34 trillion (€1.23 trillion) plus some $113 billion (€103 billion) in reserves. Google still has vast computing infrastructure and deep intelligence and analytical capabilities to place at the service of its work in AI and other areas, a point Porat’s email makes.

She doesn’t mention the company’s secrecy and obscured intent behind so many past offerings, often free, which people rush to sign up for without noticing – generally, for years – that the product or service feeds a much larger and hidden project, generally involving mass data collection and analysis, data marketing and advertising (see Shoshana Zuboff’s monumental The Age of Surveillance Capitalism for the disconcerting details).

Google’s slippery, calculated past is why slashing a few perks doesn’t, on its own, make me question its future, but it definitely flags why no one should be complacent about AI or other developments happening behind closed Google doors.

A major thrust of the email is to argue that the company has been in a seriously challenging place before, namely the 2008 recession and tech crash. Back then, Porat says, Google cut costs and focused investment into promising growth areas.

While that may be true, Google’s new ventures tend to mean new ways in which we and our data are monetised (with far too belated regulatory scrutiny). For Google itself, a more worrying comparison remains the dotcom crash, which upended the tech world, and wiped out value that has taken 15 years for the Nasdaq to recover. Most Google, or tech employees generally, don’t remember the crash as part of working life, and few of today’s VCs were VCs back then. The same blindness can – will – repeat.

Google, “just” a search engine then, was in its infancy, and became one of the new internet-era companies that seized opportunities coming out of the crash, seeing what others did not, displacing industry stalwarts in the process. Two decades ago in that first big crash, even well-resourced tech giants struggled, some fell and others never fully recovered. The giants can stumble again.

One internal email axing snacks and massages is hardly a portent of such doom. But massive industry job cuts, and the current industry and market turmoil, could be. And don’t doubt that somewhere, some small start-up is already building towards the inevitable moment when it will rise and rise to rival, perhaps displace, even such a powerful company as Google.