With millions of Americans under quarantine and stay-at-home mandates amid the coronavirus pandemic, Google has cut back on some expenditures.
The tech giant is reducing its marketing budgets by as much as 50% for the second half of 2020, according to internal materials viewed by CNBC. An email about the cuts that were disseminated to marketing employees this week referred to new budget cuts and a hiring halt for both full-time and contract employees, as Google looks to mitigate economic fallout from the coronavirus, and become more targeted in its advertising programs.
“As we outlined last week, we are re-evaluating the pace of our investment plans for the remainder of 2020 and will focus on a select number of important marketing efforts,” a company spokesperson said in an emailed statement to CNBC Thursday. “We continue to have a robust marketing budget, particularly in digital, in many business areas.”
This is not the first move by the company to curtail costs. Just last week Alphabet CEO Sundar Pichai said Google would be reigning in some of its investments for the remainder of the year, beginning with new hires. However, Pichai had been more measured in his comments, only mentioning that Google would restructure “non-business essential marketing” and “significantly slow down” hiring, and had avoided referring to more serious budget cuts or hiring freezes.
“Beyond hiring, we continue to invest, but will be recalibrating the focus and pace of our investments in areas like data centers and machines, and non-business essential marketing and travel,” Pichai said in the note to employees last week.
Google is not the only company to stem from new hiring. Microsoft also reduced job openings to almost 50% over the past few weeks. According to data platform Thinknum, from March 22, 2020, to April 20, 2020, Microsoft listed about 5,580 openings, a 46% decline in hiring/
Microsoft-owned professional network, LinkedIn has seen an even more dramatic fall in hiring, where ads went from 510 openings on March 1 to a meager 2 openings for its entire business, the data platform added.
“Just like the 2008 financial crisis, the entire global economy is hurting, and Google and Alphabet are not immune to the effects of this global pandemic,” Pichai stated in the memo sent to employees last week. “We exist in an ecosystem of partnerships and interconnected businesses, many of whom are feeling significant pain.”
ETFs with large an allocation of Google such as the Davis Select U.S. Equity ETF (DUSA) and the Fidelity MSCI Communication Services Index ETF (FCOM) were basically flat on the day Thursday, appearing unaffected by the news so far, despite a selloff in the broad stock indices into the close, as Google is showing extended losses in the after-hours trading session.
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