The daily business briefing: January 20, 2023
Alphabet plans to cut 12,000 jobs as economic outlook darkens, Treasury starts 'extraordinary' measures to pay bills as government hits debt ceiling, and more
Alphabet to cut 12,000 jobs in latest tech layoffs
Google parent Alphabet said Friday it will cut about 12,000 jobs to reduce costs as concerns rise about a possible recession. The layoffs will reduce the company's staff by 6 percent, affecting employees companywide. "Over the past two years we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today," Alphabet Chief Executive Sundar Pichai wrote in a message to employees that was seen by The Wall Street Journal. Alphabet is the latest major technology company to announce layoffs. On Wednesday, Amazon started a new round of cuts affecting about 18,000 employees, and Microsoft announced that it would lay off 10,000.
Treasury starts taking 'extraordinary' steps as U.S. hits debt limit
The U.S. government hit its $31.4 trillion debt limit on Thursday, and the Treasury Department said in a letter to Congress that it had started "extraordinary" accounting measures, tapping retirement funds, to avoid default. "I respectfully urge Congress to act promptly to protect the full faith and credit of the United States," Treasury Secretary Janet Yellen wrote in the letter. The measures are expected to buy five months for Republicans and Democrats to negotiate a deal on raising the debt ceiling to avoid a default that could wreck the economy. Republicans say they won't increase the limit without big spending cuts. Democrats, including the White House, say lawmakers have a duty to raise the ceiling to cover spending Congress has already approved.
Neflix blows past subscriber-growth expectations, shares surge
Netflix shares jumped about 6 percent after the streaming video company reported that it added 7.7 million net new subscribers in the fourth quarter, beating the company's projections of 4.5 million. Revenue rose 1.8 percent from a year earlier to $7.9 billion roughly in line with expectations. Profits came in at 12 cents a share, falling short of expectations due to a cash charge, according to Barron's. "2022 was a tough year, with a bumpy start but a brighter finish," Netflix said in a statement. Netflix also announced that founder and co-CEO Reed Hastings was shifting into the executive chairman role to "complete our succession process." Chief Operating Officer Greg Peters is to join Ted Sarandos as co-CEO.
FAA blames 'unintentionally deleted' computer files for pilot-alert system failure
The Federal Aviation Administration said Thursday the malfunction of a system that notifies pilots of potential hazards, which grounded airlines nationwide for nearly two hours last week, was caused by contractors who "unintentionally" deleted computer files while working on the system. The outage delayed thousands of flights starting on the afternoon of Jan. 10. After efforts to fix the problem that evening fell short, the FAA "decided to reset the system and order a nationwide halt to air travel — the first of its kind since 9/11," according to The Washington Post. The FAA said a preliminary review uncovered no evidence that the problem was the result of a cyberattack or malicious intent, the Post said.
USDA tightens organic-label rules to crack down on fraud
The Agriculture Department on Thursday issued tougher new requirements for foods labeled "organic" to fight fraud in the industry, which exceeded $63 billion in 2021 sales. The rule is intended to boost enforcement of the USDA's strict definitions of organic, and requires the USDA's National Organic Program certification for all imported organic food. It also "increases certifications of more businesses in the supply chain and boosts authority for inspections, record-keeping, traceability, and fraud prevention practices," according to The Associated Press. The Organic Trade Association lobbied for the rule. The trade group said the change is the biggest since the USDA created its organic food program.