Google search boss warns employees of ‘new operating reality,’ urges them to move faster

Wearing
a
hoodie
with
the
words “We
use
Math”
on
the
front,


Google
search
boss
Prabhakar
Raghavan
had
an
important
message
for
employees
at
an
all-hands
meeting
last
month.
But
he
first
wanted
them
to
settle
in
and
get
comfortable.

“Grab
your
boba
teas,”
Raghavan
told
the
crowd,
gathered
in
a
theater
at
the
company’s
headquarters
in
Mountain
View,
California.

Raghavan,
who
reports
directly
to
CEO

Sundar
Pichai
and
leads
key
groups
including
search,
ads,
maps
and
commerce,
was
addressing
Google’s
knowledge
and
information
organization,
which
consists
of
more
than
25,000
full-time
employees.

“I
think
we
can
agree
that
things
are
not
like
they
were
15-20
years
ago,
things
have
changed,”
Raghavan
said,
according
to
audio
of
the
event
obtained
by
CNBC.
He
was
referring
to
the
search
industry,
which
Google
has
dominated
for
two
decades,
emerging
as
one
of
the
most
profitable
and
valuable
companies
on
the
planet
along
the
way.

Raghavan
said
Google’s
digital
ad
business
had
become “the
envy
of
the
world.”
He
noted
that
over
the
last
three
years,
annual
revenue
has
grown
by
more
than
$100
billion,
exceeding


Starbucks,
Mazda
and
TikTok
combined.

At
a
company
long
known
across
Silicon
Valley
for
its
free,
gourmet
lunches
and
endless
on-campus
perks,
Raghavan’s
comments
serve
as
the
latest
warning
to
employees
that
growth
for
Google
is
getting
harder.

“It’s
not
like
life
is
going
to
be
hunky-dory,
forever,”
he
said.

Over
roughly
35
minutes,
Raghavan
peppered
his
reality
check
address
with
sports
metaphors
and
rallying
cries.

“If
there’s
a
clear
and
present
market
reality,
we
need
to
twitch
faster,
like
the
athletes
twitch
faster,”
he
said.

He
referenced
heightened
competition
and
a
more
challenging
regulatory
environment.
Though
he
didn’t
name
specific
rivals,
Google
is
facing
pressure
from
the
likes
of


Microsoft
and
OpenAI
in
generative
artificial
intelligence.

“People
come
to
us
because
we
are
trusted,”
Raghavan
said. “They
may
have
a
new
gizmo
out
there
that
people
like
to
play
with
but
they
still
come
to
Google
to
verify
what
they
see
there
because
it
is
the
trusted
source
and
it
becomes
more
critical
in
this
era
of
generative
AI.”

Raghavan
had
some
tangible
changes
to
announce.
He
said
the
company
plans
to
build
teams
closer
to
users
in
key
markets,
including
India
and
Brazil,
and
revealed
that
he’s
shortening
the
amount
of
time
that
his
reports
have
to
complete
certain
projects
in
an
effort
to
move
faster.

“There
is
something
to
be
learned
from
that
faster-twitch,
shorter
wavelength
execution,”
he
said.

Google’s
cloud
business
has
also
instructed
employees
to
move
within
shorter
timelines
despite
having
fewer
resources
after
cost
cuts,
sources
with
knowledge
of
the
matter
told
CNBC.

“With
a
huge
opportunity
ahead,
we’re
moving
with
velocity
and
focus,”
a
Google
spokesperson
told
CNBC,
when
asked
to
comment
on
Raghavan’s
address.
The
spokesperson
highlighted
the
addition
of
generative
AI
to
search
and
improvements
in
search
quality,
adding, “There’s
lots
more
to
come.”

In
March,
Google
named
company
veteran
Elizabeth
Reid
to
the
role
of
vice
president,
leading
search
and
reporting
to
Raghavan.

In
many
respects,
Raghavan’s
tone
was
nothing
new.
Google
has
been
in
cost-cutting
mode
since
early
2023,
when
parent
Alphabet

announced
plans
to
eliminate
about
12,000
jobs,
or
6%
of
the
company’s
workforce.
Job
cuts
have
continued
this
year,
with
more
layoffs
in
early
2024,
and
CFO
Ruth
Porat
said
in
a

memo
last
week
that
the
company
is
restructuring
its
finance
organization,
a
move
that
will
involve
additional
downsizing.

But
Raghavan
is
making
clear
that
what’s
happening
now
isn’t
just
a
continuation
of
2023.
He
noted
that
his
group’s
last
all-hands
meeting
was
three
months
ago,
though
for
some
it
felt
like
three
years.

“We’ve
had
a
lot
go
on
in
these
last
three
months,”
consisting
of “really
high
highs
and
low
lows,”
he
said.

In
that
time,

Google
introduced
its
AI
image
generator.
After
users
discovered

inaccuracies
that
went
viral
online,
the company
pulled
the
feature
in
February.
Google
has
been
reorganizing
to
try
and
stay
ahead
in
the
AI
arms
race
as
more
users
move
away
from
traditional
internet
search
to
find
information
online.

In
Alphabet’s

upcoming
earnings
report
on
Thursday,
Wall
Street
is
expecting
a
second
straight
quarter
of
year-over-year
revenue
growth
in
the
low
teens.
While
that
marks
an
acceleration
from
the
few
quarters
prior,
the
numbers
are
also
in
comparison
to
some
of
Google’s
weakest
reports
on
record.

Even
though
Alphabet

reported
better-than-expected
revenue
and
profit
for
the
fourth
quarter,
ad
revenue
trailed
analysts’
projections,
causing
the
company’s
shares
to
drop
more
than
6%.
Meanwhile,
the
AI
boom
is
forcing
a
renewed
focus
on
investments.

“We’re
in
a
new
cost
reality,”
Raghavan
said.
With
generative
AI,
the
company
is “spending
a
ton
more
on
machines,”
he
said.

Organic
growth
is
slowing
and
the
number
of
new
devices
coming
into
the
world “is
not
what
it
used
to
be,”
Raghavan
said.

“What
that
means
is
our
growth
in
this
new
operating
reality
has
to
be
hard
earned,”
he
added.

Raghavan
said
that
additional
challenges
are
emerging
as
the
company
is “navigating
a
regulatory
environment
unlike
anything
we’ve
seen
before.”

He
cited
the
European
Union’s
Digital
Markets
Act
and
said
the
company
is
still
learning
what
its
obligations
will
be
from
the
European
Commission.
The
DMA,
which
officially
became
enforceable
last
month,
aims
to
clamp
down
on
anti-competitive
practices
among
tech
companies.

“That
does
have
its
impact
on
us,”
Raghavan
said.

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

“It
won’t
be
easy,”
he
said. “But
these
are
the
moments
and
the
history
of
industries
that
will
define
us.”

Raghavan
said
Google
has
to
address
its “systemic”
challenges
and
build “new
muscles
that
maybe
we
have
let
fall
off
for
a
bit.” 

He
praised
the
teams
working
on
Gemini,
the
company’s
main
group
of
AI
models.
He
said
they’ve
stepped
up
from
working
100
hours
a
week
to
120
hours
to
correct
Google’s
image
recognition
tool
in
a
timely
manner.
That
helped
the
team
fix
roughly
80%
of
the
issues
in
just
10
days,
he
said.

However,
Google
still
hasn’t
brought
back
the
ability
to
generate
images
of
people.
Demis
Hassabis,
Google’s
AI
leader,
said
in
February
after
the
tool
was
taken
down
that
it
would
be

re-released
in
weeks.

Raghavan
clarified
that
the
failure
in
image
generation
wasn’t
due
to
a
lack
of
effort.

“I
want
to
be
clear,
this
wasn’t
some
case
of
somebody
slacking
off
and
dropping
the
ball,”
he
said.

Raghavan
said
the
company
has
shown
the
ability
to
move
quickly
on
important
matters.
As
an
example,
he
highlighted
an
effort
in
2023,
when
the
Bard
team
(now
Gemini)
and
Magi
team,
which
focuses
on
AI-powered
search,

launched
products
within
a
matter
of
months.

It
was
something
the
company
couldn’t
have
accomplished,
he
suggested,
with
bigger
numbers.

“The
realization
was ‘gosh,
if
we
had
thrown
2,000
engineers
at
these
projects,
we
wouldn’t
have
got
it
done,'”
he
said,
indicating
that
the
company
would
be
paying
close
attention
to
the
size
and
scope
of
teams.

Raghavan
also
spoke
to
critics
of
the
company’s
bureaucracy.

Employees
have

complained
for
years
that
Google’s
growing
bureaucracy
has
crippled
their
ability
to
launch
products
quickly.
That
worsened
as
the
company
rapidly
expanded
its
workforce
during
the
pandemic.

In
2022,
in
addition
to
Google’s
annual
survey
called
Googlegeist,
Pichai
launched
a “Simplicity
Sprint”
to
gather
employee
feedback
on
efficiency.

“The
number
of
agreements
and
approvals
it
takes
to
bring
a
good
idea
to
market
—
that’s
not
the
Google
way,”
Raghavan
said. “That’s
not
the
way
we
should
be
functioning.”

Raghavan
said
leaders
are
actively
working
on
removing
unnecessary
layers
in
the
hierarchy,
echoing

prior
comments
from
Pichai.
 

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