Google search chief warns workers of ‘new operational reality’, urges them to move quickly

Prabhakar Raghavan, senior vice president of Google, speaks at the U.S. Conference of Mayors Winter Meeting, Wednesday, Jan. 17, 2024, in Washington, DC.

Julia Nicholson Bloomberg

Wearing a hoodie with “We Use Math” across the front, Google Prabhakar Raghavan, head of research, had an important message for staff at last month’s all-hands meeting. But first he wants them to settle in and feel comfortable.

“Bring your dumb tea,” Raghavan told the crowd gathered in the theatre Corporate headquarters in Mountain View, California.

Raghavan, who reports directly to CEO Sundar Pichai and leads key divisions including search, advertising, maps and commerce, is responsible for Google’s knowledge and information organization solutions, which comprise more than 25,000 full-time employees.

“I think we can all agree that things are not what they were 15-20 years ago, things have changed,” Raghavan said, referring to the search industry, which Google dominated for two decades and along the way became one of the most Become the most profitable and valuable company on the planet.

Raghavan said Google’s digital advertising business has become the “envy of the world”. He noted that over the past three years, annual revenue has grown to more than $100 billion. StarbucksMazda and TikTok have teamed up.

Raghavan’s comments were the latest warning to employees at a company known in Silicon Valley for its free gourmet lunches and endless campus amenities: Growth at Google is becoming increasingly difficult.

“Life will not always be easy,” he said.

For about 35 minutes, Raghavan interspersed his reality-checking speech with sports metaphors and rallying cries.

“If there is a clear and realistic market reality, we need to move quickly, just as athletes move quickly,” he said.

He cited fierce competition and a more challenging regulatory environment. While he did not name specific competitors, Google is facing pressure from the following companies: Microsoft and OpenAI in the field of generative artificial intelligence.

“People come to us because we are trustworthy,” Raghavan said. “They might have a new gizmo that people like to play with, but they still come to Google to verify what they see there because that’s a trusted source and that’s become more important in this generational AI age.”

Raghavan has some real changes to announce. He said the company plans to build teams closer to users in key markets such as India and Brazil, and revealed that he is reducing time to complete some projects at a faster pace.

“We can learn something from faster twitching, shorter wavelengths,” he said.

Google’s cloud business is also directing employees to move around on short notice, despite having fewer resources after cost cuts, according to people familiar with the matter.

Asked to comment on Raghavan’s comments, a Google spokesperson told CNBC: “We have a huge opportunity ahead of us, and we’re moving quickly and with focus.” Improvements, adding, “there’s more to come.”

In March, Google named company veteran Elizabeth Reed as vice president, responsible for leading search and reporting to Raghavan.

Raghavan’s music is nothing new in many ways. Google has been in cost-cutting mode since early 2023, when parent company Alphabet announced it plans to cut about 12,000 jobs, or 6% of the company’s total workforce. Chief Financial Officer Ruth Porat said in a report that layoffs are continuing this year, with more coming in early 2024. Memorandum Last week, the company is restructuring its financial organization, a move that involves more job cuts.

But Raghavan made it clear that what is happening now is not just a continuation of 2023. He noted that his team’s last all-hands meeting was three months ago, though to some it feels like three years.

“A lot has happened to us in the last three months,” he said, including “very high highs and very low lows.”

This time, Google Introducing an artificial intelligence image generator. The news went viral on the internet after users discovered the error. The company canceled the feature in February. As more users shift from traditional Internet searches to finding information online, Google is restructuring to try to stay ahead of the artificial intelligence arms race.

In Alphabet’s soon-to-be Thursday earnings report, Wall Street expects year-over-year revenue growth to remain in the low-teens for the second quarter in a row. While that marks an acceleration from the previous quarter, the numbers also compare to Google’s weakest reports on record.

Although Alphabet reported better-than-expected fourth-quarter revenue and profit, and advertising revenue lagged analysts’ forecasts, the company’s shares fell more than 6%. At the same time, the artificial intelligence boom is forcing a renewed focus on investment.

“We are facing a new cost reality,” Raghavan said. By building artificial intelligence, the company is “investing heavily in machines,” he said.

Raghavan said organic growth is slowing and the number of new devices entering the world is “not as good as it used to be.”

“This means our growth must be hard-earned in new operating realities,” he added.

This photo image taken on Feb. 8, 2024 in Brussels, Belgium shows a smartphone with a Google Gemini in the background.

Jonathan R

Raghavan said additional challenges are emerging as the company faces an “unprecedented regulatory environment.”

He cited the EU’s Digital Markets Act as saying the company is still understanding its obligations from the European Commission. The DMA, which came into effect last month, aims to crack down on anti-competitive behavior among technology companies.

“It really affected us,” Raghavan said.

Raghavan urged employees to “embrace the moment” and “act with urgency based on market conditions”.

He said, it is not easy. “But these moments and the history of art will define us.”

Raghavan said Google must address its “systemic” challenges and “build new capabilities that we have temporarily lost.”

He praised the work of the Gemini team, the company’s main artificial intelligence model group. He said they increased their work week from 100 to 120 hours to fix Google’s image recognition tools in time. He said that this helped the team solve about 80% of the problems in just 10 days.

However, Google still hasn’t restored the ability to create human images. Demis Hassabis, head of Google’s artificial intelligence division, said in February after removing the tool that it would be reposted in a few weeks.

Raghavan clarifies that the failure to build the image was not due to lack of effort.

“I want to be clear that this is not a case of someone being lazy and dropping the ball,” he said.

Raghavan said the company has demonstrated its ability to act quickly on important issues. As an example, he highlighted an effort in 2023 when the Bird team (now Gemini) and the Maggi team focused on AI-powered search, with products launched within months.

He said it was a job the company could not have done if there were more companies.

“We realize ‘Oh my God, if we throw 2,000 engineers at these projects, we’re not going to get it done,’” he said, suggesting the company keep a close eye on its team size and scope.

Raghavan also accepted criticism of the company’s bureaucracy.

Employees Have Complained Over the years, Google’s growing bureaucracy has limited their ability to launch products quickly. The situation worsened as the company rapidly expanded its workforce during the pandemic.

In 2022, alongside Google’s annual survey called Googlegeist, Pichai also launched “Simple Sprints” to collect employee feedback on efficiency.

“The number of contracts and approvals needed to bring a good idea to market – that’s not the Google way,” Raghavan said. “This is not how we should operate.”

Raghavan said leaders are actively working to eliminate unnecessary levels in the hierarchy, which is consistent with this. Previous comment is from Pichai.

“We’ve learned a lot in the last few quarters,” Raghavan said. “I can’t tell you that all the stumbles are in the past. What matters is how we respond and what we learn.”