Automation: Effective or Efficient? Mass Layoffs and the Future of the Tech Industry

Mar 6, 2023 | Employment Discrimination, Whistleblower Law

This blog was co-authored by John McKnight and Danya Rangachar.

Microsoft recently invested $10 billion in OpenAI, the creator of the viral AI chatbot ChatGPT, which has taken over the internet since its launch in November 2022. Microsoft will receive a 49% stake in OpenAI, while acting as the main cloud computing provider for ChatGPT user data.

Simultaneously, in an internal email, Microsoft CEO Satya Nadella announced that the company planned to significantly scale back its staff, laying off 10,000 employees to “trim costs” and “refocus on priorities such as artificial intelligence.” Google’s parent company, Alphabet, also cut around 12,000 jobs while maintaining its pledge to continue developing artificial intelligence. Additionally, last November, Meta cut around 11,000 jobs while pouring billions into building its Metaverse products. These developments all appear to be part of a large-scale reorganization of corporate resources in the tech industry.  As companies adapt to a self-proclaimed new reality, this will surely have a widespread impact on tech employees and the industry for years to come.

The Impact on Tech Workers

Some predictions can be justified by analyzing the patterns of which departments were most affected by the recent layoffs. For example, employees in Human Resources (“HR”) departments were most affected by the layoffs at Microsoft, Amazon and Meta. 365 Data Science sampled 1157 laid-off employees, finding that 28% of them worked in HR & Talent Sourcing, 22.1% worked in software engineering, and 7.1% worked in marketing. This has fueled speculation that the layoffs more frequently affected jobs that tech companies wish to soon replace by automation.

In fact, the push to develop A.I. tools to replace HR began well before many of these layoffs took place. Last year, Amazon began replacing middle management human resources workers with an A.I. software programming app to hire and fire contracting employees. Why? In the face of competition, companies are prioritizing factors such as cost and business efficiency.

A.I. Amplifies Biases

Unfortunately, A.I. can increase the frequency and volume of many of the same negative consequences caused by humans performing the same roles.

For instance, some advanced A.I. models in the workplace have already exposed that biases and racist tendencies are embedded into their systems. In the face of budget cuts, the I.R.S. implemented automated systems to select which Americans were audited for further review. A recent study determined that this algorithm was racially biased, selecting Black Americans for audits at three times the rate of other racial groups. A.I. researchers like Sean McGregor concluded that biased content in A.I. is inevitable: “You can do your best to filter an instrument and make a better dataset, and you can improve that,” McGregor recently told Insider. “But the problem is, it’s still a reflection of the world we live in, and the world we live in is very biased and the data that is produced for these systems is also biased.”

While this may be true, it is also true that A.I. amplifies these biases far beyond what a smaller group of humans could. Especially considering that A.I. could allow companies to perform certain functions at such a mass scale.

Bias amplification certainly isn’t the only negative side effect of A.I. implementation. There is already fear that ChatGPT is prone to “hallucinations—making up information in detailed and sometimes convincing ways.” On that note, Alphabet recently lost $100 billion in market value after a Twitter ad for its A.I. product, Bard, produced false statements about the James Webb Telescope. A.I. that can lie and discriminate without negative repercussions can cause immense damage to employees, potential employees, and corporate investors who did not seek to invest in a future of discrimination and investor derivative lawsuits.

A.I. and the Future of the Tech Industry

As automation becomes a greater part of our lives, the public has a right to know how it’s being deployed, and what exactly the companies are doing to mitigate potentially catastrophic pitfalls. Fortunately, the same laws that have protected employees and investors to date should continue to do so as we venture into this new phase of A.I. partnership. Whether the concern is discrimination or material omissions and mistruths in an SEC report, our team at Sanford Heisler Sharp is available to help affected individuals navigate the process. We actively monitor the regulatory developments that might impact the trajectory of emerging technology. If you have any questions or concerns about the tech industry, please do not hesitate to contact our firm. You can fill out our online intake form to request an initial consultation.