Google announces desk-sharing plan for employees following layoffs

Let's turn now to Google where life is about to get a little less roomy and recent layoffs. Google announcing it'll ask some employees to desk share in an effort to cut costs and to continue to invest in cloud's growth. The new initiative is known among Google leadership as C-L-O-E or cloud office evolution. CNBC.com tech reporter Jennifer Elias is here now. She covers all things Google. You can read her story on CNBC.

com. Jennifer joining us on set as well. Jennifer, let's start with you. Is this as strange as it sounds? Kelly, it is. It is strange. There's no going around that. I think especially for a workforce like Google's, which is used to this massive consistent real estate expansion and having sort of these endless perks and whatnot, to go from that to you need to only come in on these two days and that's when the team will be working together.

And you know the logistics too. I think a lot of employees have some are a little bit confused about how that will work out, who will decide which teams will be in on certain days. And you know I think it makes sense in some respects when we think about the hybrid. Let me ask you this Jennifer. Are times tight at Google? I mean you can't read a story like that. And as I was saying maybe there's something we're missing. I mean we're talking about sharing desks.

And I don't know, do they not have the money or are they just choosing not to spend it this way? Yeah, I think it's a little bit of both. They're definitely trying to I think in this case invest more in what they're doing around cloud and trying to grow that and cut losses that they still consistently have. They're not profitable and they have a lot of pressure from Wall Street around that. But you know if they wanted to there's always been enough space for everyone to have their own desks. And then I think also the behavioral patterns of people coming into the offices not as much and trying to figure out well when people come in they should be around their teams. So I think they're kind of trying to roll it into a combination of that. But it doesn't look good either way.

You know and employees are thinking this sounds a little bit desperate in some respects. John, let's set aside AI and search for now and focus on the cloud. Is Google third in a two-horse race here? Well, there might be third in a three horse race. Google's actually done pretty well in cloud under Thomas Kurian. They're mentioned in the same breath as AWS and as Azure Amazon. They deserve to be. They do.

They do. But the challenge that they're having here I think is part of the downside of in effect having your own P&L, right? Is Google cloud is trying to grow but at the same time they got to be careful about their capital outlight. Ruth Porat, the CFO of Alphabet and Google isn't messing around here. Right? And it's not like flush. We're going to open up more office space, build more buildings for Google cloud. Hey, work with what you've got here. Figure out how to do that while the business is going through this transition.

And that's really what's happening here. And you can't really separate out AI from this because a lot of that AI work as customers want it has to flow through Google cloud and that foundational relationship that customers have with cloud, having their data in Google's cloud before they start doing AI. What's your sense of the vibe at Google right now? Is this a place that is feeling heat or? Yes. Yeah. It is. I always like to be careful about, you know, about the heat that companies are feeling. But this is a culture that was a very in-person culture intentionally for a couple decades up to this point.

They were very careful about structuring things where you get your dry cleaning taken care of on campus in Mountain View. We got the ping pong tables. We want you physically there. We're managing you there. And then the pandemic hit and they were like, we don't want you here and they grew. Right? So you've got people who are not a part of that closely managed in-person culture. And you've got this challenge now from Microsoft with, you know, armed with open AI with Bing, at least calling out Google.

We'll see how effectively they're able to respond. That's their core business. So they've got a number of things to try to manage here while their culture as it existed in the past isn't working the way it used to. I guess just to put a point on it, what is the transition they're going through with Google cloud right now? What is triggering all of these changes? Well, Google cloud is the third horse in this race and Google cloud has had to stand up in enterprise culture inside Google instead of an academic culture. Google had a very good academic technical culture of, hey, here's Kubernetes. Here's why it's so great. You customers go figure out how to actually use it.

Enterprise culture is will actually figure out what your challenge is, how to solve your problem and help you do it. Kurian coming over from Oracle was able to start instilling that culture, but now they've got the AI challenge on top of that. It's not just establishing enterprise, but also showing, hey, we can help you with this AI thing, even a Satya Nadella and Microsoft are a first mover, at least in the conversation. Yeah, you have to wonder if maybe big acquisitions are next or something. They've already done some big acquisitions. And this isn't the environment where again, Ruth Porat is going to say, here's the checkbook. Right.

Jennifer, final quick thought. Yeah, everything John just said, I mean, this we're seeing the continuation, I think, of Google's culture internally looking a little bit more enterprise like, and we'll be interested to see what happens going forward with their real estate.

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