Google and Amazon are laying off hundreds of workers. What does this mean for the tech industry as a whole?

Google cut “several hundred” employees in a variety of divisions, including its core engineering group, according to a new report in The New York Times. “We’re responsibly investing in our company’s biggest priorities and the significant opportunities ahead,” read a Google statement to the newspaper. “Some teams are continuing to make these kinds of organizational changes, which include some role eliminations globally.”

Amazon’s cuts, meanwhile, focus on its streaming video and studios division, including Prime Video. “Throughout the past year, we’ve looked at nearly every aspect of our business with an eye towards improving our ability to deliver even more breakthrough movies, TV shows, and live sports in a personalized, easy to use entertainment experience for our global customers,” Mike Hopkins, head of that division, wrote in an internal memo viewed by Bloomberg. “As a result, we’ve identified opportunities to reduce or discontinue investments in certain areas while increasing our investment and focus on content and product initiatives that deliver the most impact.”

Amazon and Google were just two of the many tech giants that cut tens of thousands of workers at the beginning of 2023. Are these new layoffs an early sign that the tech industry is due for another massive bloodletting? While trends are hard to predict, both companies suggest the layoffs are purely related to internal reorganization, not the widespread fears of recession that drove the industry-wide cuts a year ago.

Google cut into divisions that have struggled for years, including those responsible for building hardware such as the Pixel phone and augmented reality headsets. Those moves hint at significant changes in how Google builds and releases products; it may also invest the cost savings in cutting-edge initiatives such as artificial intelligence (A.I.), where it’s locked in fierce competition with companies such as Microsoft and OpenAI.

Meanwhile, the tech unemployment rate hit 2.3 percent in December, lower than the national unemployment rate of 3.7 percent, according to U.S. Bureau of Labor Statistics (BLS) data analyzed by CompTIA. It’s also important to note that in-demand tech jobs saw significant salary increases in the second half of 2023, based on the End of Year Pay Report from levels.fyi. Although some companies might be unleashing significant layoffs, others definitely need tech talent.