The hedge fund of the billionaire Sir Christopher Hohn has written to Alphabet saying workers on the Google and YouTube dad or mum are paid an excessive amount of and its workforce must be drastically reduce.
London-based TCI, which has been a major investor within the firm since 2017 and holds a stake valued at $6bn (£5.1bn), has written to its chief govt, Sundar Pichai, urging it to emulate cost-cutting measures launched by huge tech rivals together with the Fb-owner, Meta, Amazon and Microsoft.
“We’re writing to specific our view that the associated fee base of Alphabet is simply too excessive and that administration must take aggressive motion,” stated Hohn, managing director at TCI, in a letter made public on Tuesday. “The corporate has too many workers and the associated fee per worker is simply too excessive.”
Hohn stated Alphabet, which employed virtually 187,000 workers on the finish of the third quarter, has doubled workers numbers since 2017, with headcount rising at 20% yearly throughout the interval.
“This development is extreme, each in relation to historic headcount development and what the enterprise requires,” Hohn stated. “Our conversations with former executives of Alphabet recommend that the enterprise might be operated extra successfully with considerably fewer workers.”
The four-page letter additionally factors the finger at pay, stating that Alphabet affords workers “among the highest salaries in Silicon Valley”.
Final yr, median compensation for a typical Alphabet worker was $295,884 in keeping with filings with the Securities and Alternate Fee (SEC), the letter stated. This was 67% greater than at Alphabet’s rival Microsoft and 153% greater than the 20 largest know-how firms within the US, in keeping with evaluation by S&P International.
“There is no such thing as a justification for this monumental disparity,” stated Hohn, who added that pc scientists and engineers who can command high pay packets symbolize solely a “fraction” of the worker base. “Many workers are performing normal gross sales, advertising and marketing and administration jobs, who must be compensated in keeping with different know-how firms.”
The decision for value financial savings comes as job cuts come thick and quick at Silicon Valley firms feeling the stress from a slowdown within the world economic system and revenue streams reminiscent of promoting. Final week, Mark Zuckerberg’s Meta, the dad or mum firm of Fb, Instagram and WhatsApp, reduce 11,000 workers within the first spherical of redundancies within the firm’s historical past. On Monday, experiences emerged that Amazon was making ready to eliminate as many as 10,000 workers in company and know-how roles, its largest layoffs ever.
Hohn’s letter additionally calls on Alphabet to cut back by at the very least half the massive annual losses being incurred by its “Different Bets” enterprise, which TCI says has made $3bn in revenues however $20bn in working losses during the last 5 years.
TCI singled out the self-driving automobile experiment Waymo, the most important supply of losses within the division, as an space for cutbacks. Sadly, enthusiasm for self-driving automobiles has collapsed and opponents have exited the market,” stated Hohn. “Ford and Volkswagen not too long ago determined to close down their self-driving automobile enterprise. Waymo has not justified its extreme funding and its losses must be diminished dramatically.”
TCI additionally known as on Alphabet to extend its already substantial share repurchase programme to run down its $116bn of money, provided that large-scale mergers and acquisitions are restricted owing to regulatory scrutiny. It urged it to repeat Apple’s method and change into “money impartial” over time.