US News: The parent company of Cash App, Square, and Afterpay has announced that it will cut more than 40% of its workforce due to artificial intelligence.
Getting into it: The announcement was made by Jack Dorsey, CEO of Block, Inc., who said the company would reduce its workforce from more than 10,000 employees to fewer than 6,000. Dorsey stressed that the move was not due to financial issues. Instead, he pointed to rapid advances in artificial intelligence, saying, “We’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company. And that’s accelerating rapidly.”
He added that he chose to act now rather than “cut gradually over months or years as this shift plays out.”
Dorsey held an all-hands video conference with employees, where some people were clearly pissed as he made the announcement. Hundreds of “thumbs down” emoji reactions flooded the screen as he spoke and took questions. According to the New York Times, Dorsey was wearing a black hat with the word “LOVE” on it during the call. One employee asked him whether his hat choice was appropriate, as he was laying off half the company.
While specific jobs being cut were not publicly revealed, the cuts represent one of the most direct acknowledgments by a major technology firm that AI is reducing the need for large teams.
Despite the backlash internally, investors reacted positively. Block’s shares jumped more than 20% in after-hours trading following the news.
This all comes as other major companies have linked layoffs to artificial intelligence over the past two years. Large tech and corporate employers such as Amazon have cut 10,000+ roles while noting that AI and automation will reduce the need for more jobs. Pinterest has planned cuts of up to 15% of its workforce to support its AI strategy, and HP has also linked workforce reductions or restructuring to shifting work toward “AI-centric operations.”
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