The human cost of AI spending

Hello, this is Ed in San Francisco. Technology job cuts are back in the headlines as artificial intelligence trumps human resources. But fir [View in browser]( [Bloomberg]( Hello, this is Ed in San Francisco. Technology job cuts are back in the headlines as artificial intelligence trumps human resources. But first... Three things you need to know today: • Internet entrepreneur Kim Dotcom [will fight extradition from New Zealand]( • Games maker Ubisoft is cutting jobs [in San Francisco and North Carolina]( • Fox and Disney were blocked from [launching a sports streaming service]( Dear people Last time I hit your inbox, I told you about how big US firms are [pouring billions]( into AI data centers. Well, one dark side of that is a lot of people are finding themselves out of a job as a result, albeit indirectly. A relatively constant stream of tech companies have been cutting roles going back to early June, the most recent of which was Cisco Systems Inc. Days ago, the tech stalwart said it was [cutting thousands of roles]( in order to free up resources for a strategy shift favoring more AI products. Investors cheered the news. The newswire kept dinging Friday, as global credit card giant Mastercard Inc. [trimmed 3% of staff]( to “redeploy resources into growth areas.” The company wants to further embed artificial intelligence into its products and services, among other initiatives, a spokesperson said. Hyperscalers — cloud computing providers like Alphabet Inc.’s Google, which run server farms crunching data and training AI models — are ramping up their buildout of data centers in part because their clients are under pressure to come up with new AI-powered products. The stock market has shown an unwavering preference in favor of AI-first tech companies, whereas job cuts are seen as a good efficiency move. In aggregate, the numbers are large: more than 130,000 employees have been laid off across 400-plus companies so far this year, per [Layoffs.fyi](. If you want to look at it positively, the number is down 40% from the prior year — 2023 was the worst for cuts in the past decade, according to the layoff tracker — but with much of 2024 still to come, it’s likely to be the second worst in recent memory. “The economic environment is still tight,” Layoffs.fyi creator Roger Lee [told me]( on Bloomberg Technology this month. “Companies are finding that the only way to increase investment in AI is to cut cost elsewhere and hence all the layoffs that we've been seeing.” This thread runs through some of the highest-profile announcements this year. For example, Dell Technologies Inc. cut sales roles this month to [reallocate resources]( toward a new team that's developing AI products and services. In July, Intuit Inc. said it’s [cutting 1,800 staff]( to help it invest in building AI into its tax prep software. Others say that they’re cutting more because of the macroeconomic headwinds Lee was talking about. On Aug. 1, Intel Corp. announced [15,000 jobs would go](. The chipmaker’s sales just didn’t come in as the company had expected them. “The market has clearly not recovered like we had expected. These industries are cyclical. We will recover over time,” Intel CFO Dave Zinsner told me on the phone at the time, reflecting some of the lingering angst in global PC, smartphone and electronics markets. Even then AI — or Intel's failure to tap the AI boom — was part of the problem. “Data Center clearly we are a little overexposed in the CPU space as opposed to GPU,” Zinsner said. The company’s traditional CPU chips power much less lucrative conventional servers, whereas all that money invested in data center infrastructure today is going toward AI-adept GPUs like those made by Nvidia Corp. Elsewhere, you can see everyone from Sonos Inc. to Salesforce Inc. streamlining operations and roles. Even Match Group Inc. is trimming 6% of its workforce as it decided to [bow out from livestreaming services]( in its dating apps — which had been one of the few recent initiatives that wasn’t all about AI. Right now, everyone's in love with AI and ditching other interests and commitments to capture this promising long-term growth driver. But companies should also be mindful that tech cycles can be unreliable partners.—[Ed Ludlow](mailto:eludlow2@bloomberg.net) The big story Epic Games Inc. launched a new mobile storefront Friday after four years of legal wrangling with Apple and Google over their app-store practices. CEO Tim Sweeney expects Epic Games’ mobile versions of the popular titles Fortnite, Rocket League and Fall Guys to draw in gamers on Android devices worldwide and iOS products in the EU. By the end of the year, the company wants to attract [100 million new installs on mobile devices, which are responsible for half of the $188 billion games market.]( One to watch Josh Chapman, managing partner of Konvoy, weighs in on the new Epic Games mobile app store with Ed Ludlow and Caroline Hyde on Bloomberg Technology. Get fully charged Ericsson is selling its US call-routing business Iconectiv for $1 billion to [a private investment arm of Koch Inc.]( EQT has agreed to buy New York-listed PropertyGuru in an all-cash deal [valuing the online property search company at $1.1 billion.]( OpenAI said it removed a network of Iranian accounts that used ChatGPT to [try and influence the US presidential election.]( More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Stay updated by saving our new email address Our email address is changing, which means you’ll be receiving this newsletter from noreply@news.bloomberg.com. 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