Activist hedge fund TCI Fund Management is urging Google's parent company Alphabet to cut its head count and costs, similar to what the industry has seen with Amazon, Facebook and others.
The hedge fund told Alphabet executives that the company would be more efficient with fewer employees and reduced costs and long-term bets such as self-driving car unit Waymo, The Wall Street Journal reports.
TCI says it owns Alphabet shares worth more than $6 billion. It made the request in a letter sent Tuesday to Alphabet and Google CEO Sundar Pichai.
“We are writing to express our view that the cost base of Alphabet is too high and management needs to take aggressive action,” TCI wrote in the letter, signed by Managing Director Christopher Hohn. “The company has too many employees and the cost per employee is too high.”
TCI said Alphabet pays some of the highest salaries in Silicon Valley, and called the growth in headcount "excessive," noting that the company has increased it at an annual rate of 20% since 2017, as reported by Reuters.
The letter comes days after Amazon said it expects to lay off 10,000 workers as the industry struggles with a slowing economy, rising interest rates, and inflation. Meta, Facebook’s parent, and Twitter also laid off thousands of employees this month.
Trip Chowdhry, managing director at Global Equities Research, estimates Amazon’s layoff could be as high as 500,000 employees, noting that 40% of Amazon’s business is in consumer retail, and 16% of the business comes from Amazon Web Services.
“Almost 60% of ad-tech companies run on AMZN-AWS, and as ad spend declines, AMZN-AWS business will decline,” he wrote.