Big tech companies like Microsoft and Alphabet are crowing about AI as it lays off tens of thousands of workers

At the same time, many of those same tech giants are also plowing resources into artificial intelligence and gushing over its potential to transform the way business gets done.

Microsoft, for example, said it would be laying off 10,000 workers in a regulatory filing this week, citing “macroeconomic conditions and changing customer priorities.”

But CEO Satya Nadella, speaking onstage at Davos this week, told attendees, “A golden age of AI is underway and will redefine work as we know it.”

A few years ago, Microsoft invested $1 billion in OpenAI, the maker of AI chatbot ChatGPT. It’s now mulling an even bigger investment, while also incorporating the venture’s technology into a variety of products. That includes DALL-E, which lets users generate impressive images by simply typing a prompt, as well as ChatGPT, which can deliver well-written answers to all kinds of queries—and could help Microsoft’s Bing search engine challenge Google’s dominance.

“While we are eliminating roles in some areas, we will continue to hire in key strategic areas,” Nadella said at Davos. For example, he said, Microsoft will use advances in artificial intelligence to build a “new computer platform.”

It isn’t just Microsoft. On Friday, Google parent Alphabet announced it would cut 12,000 jobs. CEO Sundar Pichai said the company needed to “direct our talent and capital to our highest priorities.” He added that the company had “a substantial opportunity in front of us with AI across our products and are prepared to approach it boldly and responsibly.”

To be sure, Alphabet, Microsoft, and other tech giants have made it clear that the layoffs are about scaling back in the face of economic uncertainty following years of aggressive hiring during the pandemic. As Pichai noted in a memo about the layoffs: “We hired for a different economic reality than the one we face today.”

Alphabet recently called in help from founders Larry Page and Sergey Brin, who left their daily roles at the company a few years ago, to help with the threat posed by tools like ChatGPT, which it described last month as “code red.” (Another example of the threat is Perplexity Ask, which unlike ChatGPT offers both quick answers and links within those answers to up-to-date sources.)

According to the New York Times, Alphabet employees have been assigned the task of creating tools similar to DALL-E; Pichai has suspended some teams’ work to respond to the ChatGPT threat; and Google plans to demonstrate a version of its search engine with chatbot features this year.

As it does, many laid-off Alphabet employees will be watching from the sidelines.

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