IMO, these layoffs are not caused by AI or because Google suddenly doesn't need engineers. Instead, we're seeing at least four effects collide:<p>1. Growth can't last forever. Big tech is moving from an exponential phase to a sigmoidal one. Expect to see less spending and more focus on efficiency. It takes fewer people to keep the profit engine going than it does to build something totally new from the beginning.<p>2. What goes up must come down. Paradoxically, even though half of the world shut down, COVID led to a giant market boom. Head counts went up dramatically from 2020 to 2022. Tons of cash was thrown at the market.<p>3. 0% Fed rate is over (for now). It costs money to borrow money, and investors can get actual non-zero returns in a "risk-free" investment. Now companies need to justify their spending, reduce debt, and show returns that are commensurate with their risk in the new environment. Raising interest rates cools the economy precisely by forcing layoffs and cutbacks.<p>4. "R&D" (which includes a substantial amount of software engineering work) now must be capitalized and amortized over five years (at least in the US). This is a much less tax-advantageous position than existed before 2021, and new guidance in late 2023 made it clear that this applied to much of our industry.