Fintech company Block announced that it will lay off 4,000 of its 10,000 employees due to increased AI productivity.
“Intelligence tools have changed what it means to build and run a company,” Block CEO Jack Dorsey said in a statement. letter to shareholders On Thursday. “We’re already seeing this internally. A fairly small team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are growing exponentially every week.” Block is the parent company of online payment platforms like Square and Cash App.
Analysts said investors so far seem encouraged by Dorsey’s claims that cuts and increased reliance on AI will boost profits. Shares rose more than 20% in pre-market trading on Friday.
Block’s layoffs reflect larger fears about job cuts due to the increased use of AI. Goldman Sachs noted in February that the pace of AI adoption could increase increase unemployment this year, and estimated that there had already been 5,000 to 10,000 monthly net job losses last year as a result of technology. A November study from the Massachusetts Institute of Technology found that AI could change already About 12% of the workforce in the US.
The tech sector is the most affected, and employees at other tech companies are also feeling the heat. Marc Benioff’s Salesforce Nearly 4,000 jobs cut Last year, the CEO said he “needs fewer heads” given the efficiency of AI.
Dorsey claimed on Thursday that the decision to nearly halve the bloc’s workforce was not made because the business was in trouble, and that economic performance was actually strong. (Bloc reported total revenue of $6.25 billion in its fourth quarter, beating Wall Street expectations).
Dorsey said on x He had two options: gradually cut his workforce over months and years – “or be honest about where we are and act on it now”.
He wrote: “Repeated rounds of cutbacks are devastating to morale, focus and the confidence placed by customers and shareholders in our ability to lead.”
Block officials said thursday earnings call The company has been increasing its reliance on AI for years, noting that some AI work streams are “almost fully launched, others are in their maturity”.
was blocked has already been fired Hundreds of employees in early February. According to WIRED, earlier this month, employees at the company reported that employee morale was falling rapidly and that there was a need to use generative AI.
WIRED said it reviewed an employee complaint submitted to Dorsey at a recent all-hands meeting, which said “morale is probably the worst I’ve felt in four years” and “the broader culture at the block is collapsing”.
Dorsey acknowledged the risk of a cut at X in his message to shareholders. of the company Most recent 10-K filing Explains how its AI gambles can go wrong. “Our ability to operate successfully with a reduced workforce is expected to depend in part on the effectiveness, reliability and adoption of our proactive intelligence and AI tools,” the company said. “These technologies may not perform as expected, require more time or expense to implement effectively, present operational or cybersecurity risks or fail to increase productivity and maintain expected operational efficiency.”
Stephen Innes of SPI Asset Management told The Associated Press, “For years, we have debated whether AI will lead to the marginalization of jobs. Now we have a public case study in which a CEO says clearly that intelligence tools have changed what it means to build and run a company.”
He said: “Other large employers have announced thousands of cuts in recent months. Some have downplayed the AI link. Block has not.”
