A major Alphabet investor is calling on the Google parent company to take “aggressive action” to cut costs, including laying off workers.
“Our conversations with former executives suggest that the business could be operated more effectively with significantly fewer employees,” read a letter TCI Fund Management owner Christopher Hohn wrote to Alphabet CEO Sundar Pichai.
TCI holds a $6 billion stake in Alphabet, about 0.27%, which places it just outside of the top 20 largest shareholders, CNBC reported.
“We are writing to express our view that the cost base of Alphabet is too high and that management needs to take aggressive action,” Hohn wrote in the letter made public Tuesday. “The company has too many employees and the cost per employee is too high.”
In particular, Hohn said Alphabet pays too many employees too high of a salary. Alphabet disclosed median annual compensation at $295,884 for 2021.
Hohn acknowledge computer scientists command high salaries, but compensation for non-engineering staff should fall “in-line with other technology companies.”
Hohn said he agreed with Altimeter Capital’s Brad Gerstner who recently wrote that Google, Meta, Twitter, Uber and other Silicon Valley companies “could achieve similar levels of revenue with far fewer people.”
Alphabet is one of the few tech giants not to experience layoffs recently. The New York Times reported Monday that Amazon is planning to layoff 10,000 corporate workers. Meta Platforms last week laid off 11,000 employees, around 13% of its staff. New Twitter owner Elon Musk is expected to halve the company’s workforce to roughly 3,700 employees.
Shares of Google (GOOG) on Tuesday rose $2.69, or 2.80%. to close at $98.72.