After two years of fast expansion, several of the world’s largest technology companies, including Google’s parent company, Alphabet, Microsoft, Amazon, and the company that owns Facebook, Meta, have recently stated that they will be cutting a significant number of jobs. The executives have pointed the finger at many external economic causes, including rising inflation and interest rates and the energy crisis. However, the poor economic climate is compounding a more fundamental shift in approach.
Technology occupations are becoming increasingly unstable due to the pursuit of becoming a “super platform,” also known as a “one-stop shop” for various services. After laying off half of Twitter’s workers, Elon Musk recently challenged his workforce, asking them to put in “long hours at a high intensity” and for “extraordinary performance.” The precarious working conditions expected in the gig economy and “low-skilled” technology jobs are increasingly spreading into the world of knowledge workers.
We have too many employees for the market that we are in. This is the prognosis that Patrick Collison, the CEO of Stripe, provided. The American online payment corporation reduced its personnel by 14% at the end of the previous year, even though its business volume had tripled during the pandemic. After increasing its staff in the preceding year, food delivery firm DoorDash also terminated the employment of 1,000 of its employees.
Facebook’s CEO, Mark Zuckerberg, referred to a significant decision to increase investment as a “wrong” decision, and the company’s response was to lay off 11,000 employees because of it. The decision came after the company’s projections regarding the growth of online consumption did not come true. After rapidly expanding their workforces during the pandemic, Google and Microsoft announced plans to lay off more than 10,000 employees.
There should be clarity about this; these were not errors. This “hire and fire” growth strategy is required to keep up with the demand for new services and entry into new markets. Any pause inaction could result in businesses falling behind more aggressive competitors.
There are instances in which significant firings occur in specific departments at the same corporation while the company is aggressively hiring in other divisions. According to a memo that Microsoft CEO Satya Nadella sent to employees, the company will keep engaging in crucial areas such as artificial intelligence despite the layoffs. The corporation is also contemplating investing several billion dollars in OpenAI, which developed ChatGPT.
WeChat, a messaging platform popular in China, is the app that most exemplifies the financial potential of being a one-stop shop for everything and everyone. Tencent’s messaging app takes advantage of the extraordinary variety and depth of data on its one billion users by integrating banking, gambling, ride-hailing, retail, and house-seeking into its primary page. Tencent developed the software. This right here is the holy grail of mega-platforms.
Collecting user data in one section can make the services and products offered in other areas more effective and relevant. Food delivery and retail offerings can benefit from location data acquired for other purposes, such as real estate or ride-hailing. Banking, interest and even health data provide additional layers, opening new doors for advertising, dating, and insurance.
Tencent became a significant player in each new industry category it entered within a matter of years by utilizing networked data acquired from every part of life. This allowed Tencent to smash competing data providers that had worse data quality. The competition to create the only super app is fierce, and according to the logic behind the power of networked data, the winner will take everything.
The race to establish a super-platform that is as successful as WeChat has already begun, even though Western companies have yet to succeed. By utilizing its algorithmic management systems and a clientele that has a high degree of consumer overlap, the industry leader in ride-hailing, Uber, has quickly become the dominating player in the food delivery business. Uber has also expanded into additional categories, such as grocery delivery.
