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Business

Corporate Layoffs Spread Beyond High-Growth Tech Giants

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The headline-grabbing expansion of layoffs beyond high-growth technology companies stands in contrast to historically low levels of jobless claims and news that companies such as

Chipotle Mexican Grill Inc.

and

Airbus SE

are adding jobs.

This week, four companies trimmed more than 10,000 jobs, just a fraction of their total workforces. Still, the decisions mark a shift in sentiment inside executive suites, where many leaders have been holding on to workers after struggling to hire and retain them in recent years when the pandemic disrupted workplaces.

Live Q&A

Tech Layoffs: What Do They Mean?

The creator of the popular layoff tracker Layoffs.fyi Roger Lee and the head of talent at venture firm M13 Matt Hoffman sit down with WSJ reporter Chip Cutter, to discuss what’s behind the recent downsizing and whether it will be enough to recalibrate ahead of a possible recession.

Unlike

Microsoft Corp.

and Google parent

Alphabet Inc.,

which announced larger layoffs this month, these companies haven’t expanded their workforces dramatically during the pandemic. Instead, the leaders of these global giants said they were shrinking to adjust to slowing growth, or responding to weaker demand for their products.

“We are taking these actions to further optimize our cost structure,”

Jim Fitterling,

Dow’s chief executive, said in announcing the cuts, noting the company was navigating “macro uncertainties and challenging energy markets, particularly in Europe.”

The U.S. labor market broadly remains strong but has gradually lost steam in recent months. Employers added 223,000 jobs in December, the smallest gain in two years. The Labor Department will release January employment data next week.

Economists from Capital Economics estimate a further slowdown to an increase of 150,000 jobs in January, which would push job growth below its 2019 monthly average, the year before pandemic began.

There is “mounting evidence of weakness below the surface,”

Andrew Hunter,

senior U.S. economist at Capital Economics wrote in a note to clients Thursday.

Last month, the unemployment rate was 3.5%, matching multidecade lows. Wage growth remained strong, but had cooled from earlier in 2022. The Federal Reserve, which has been raising interest rates to combat high inflation, is looking for signs of slower wage growth and easing demand for workers.

Many CEOs say companies are beginning to scrutinize hiring more closely.

Slower hiring has already lengthened the time it takes Americans to land a new job. In December, 826,000 unemployed workers had been out of a job for about 3½ to 6 months, up from 526,000 in April 2022, according to the Labor Department.

“Employers are hovering with their feet above the brake. They’re more cautious. They’re more precise in their hiring,” said

Jonas Prising,

chief executive of

ManpowerGroup Inc.,

a provider of temporary workers. “But they’ve not stopped hiring.”

Additional signs of a cooling economy emerged on Thursday when the Commerce Department said U.S. gross domestic product growth slowed to a 2.9% annual rate in the fourth quarter, down from a 3.2% annual rate in the third quarter.

Not all companies are in layoff mode.

Walmart Inc.,

the country’s biggest private employer, said this week it was raising its starting wages for hourly U.S. workers to $14 from $12, amid a still tight job market for front line workers. Chipotle Mexican Grill Inc. said Thursday it plans to hire 15,000 new employees to work in its restaurants, while plane maker Airbus SE said it is recruiting over 13,000 new staffers this year. Airbus said 9,000 of the new jobs would be based in Europe with the rest spread among the U.S., China and elsewhere. 

General Electric Co.

, which slashed thousands of aerospace workers in 2020 and is currently laying off 2,000 workers from its wind turbine business, is hiring in other areas. “If you know any welders or machinists, send them my way,” Chief Executive

Larry Culp

said this week.

Annette Clayton,

CEO of North American operations at

Schneider Electric SE,

a Europe-headquartered energy-management and automation company, said the U.S. needs far more electricians to install electric-vehicle chargers and perform other tasks. “The shortage of electricians is very, very important for us,” she said.

Railroad CSX Corp. told investors on Wednesday that after sustained effort, it had reached its goal of about 7,000 train and engine employees around the beginning of the year, but plans to hire several hundred more people in those roles to serve as a cushion and to accommodate attrition that remains higher than the company would like.

Freeport-McMoRan Inc.

executives said Wednesday they expect U.S. labor shortages to continue to crimp production at the mining giant. The company has about 1,300 job openings in a U.S. workforce of about 10,000 to 12,000, and many of its domestic workers are new and need training and experience to match prior expertise, President

Kathleen Quirk

told analysts.

“We could have in 2022 produced more if we were fully staffed, and I believe that is the case again this year,” Ms. Quirk said.

The latest layoffs are modest relative to the size of these companies. For example, IBM’s plan to eliminate about 3,900 roles would amount to a 1.4% reduction in its head count of 280,000, according to its latest annual report.

As interest rates rise and companies tighten their belts, white-collar workers have taken the brunt of layoffs and job cuts, breaking with the usual pattern leading into a downturn. WSJ explains why many professionals are getting the pink slip first. Illustration: Adele Morgan

The planned 3,000 job cuts at SAP affect about 2.5% of the business-software maker’s global workforce. Finance chief

Luka Mucic

said the job cuts would be spread across the company’s geographic footprint, with most of them happening outside its home base in Germany. “The purpose is to further focus on strategic growth areas,” Mr. Mucic said. The company employed around 111,015 people on average last year.

Chemicals giant Dow said on Thursday it was trimming about 2,000 employees. The Midland, Mich., company said it currently employs about 37,800 people. Executives said they were targeting $1 billion in cost cuts this year and shutting down some assets to align spending with the macroeconomic environment.

Manufacturer

3M Co.

, which had about 95,000 employees at the end of 2021, cited weakening consumer demand when it announced this week plans to eliminate 2,500 manufacturing jobs. The maker of Scotch tape, Post-it Notes and thousands of other industrial and consumer products said it expects lower sales and profit in 2023.

“We’re looking at everything that we do as we manage through the challenges that we’re facing in the end markets,” 3M Chief Executive

Mike Roman

said during an earnings conference call. “We expect the demand trends we saw in December to extend through the first half of 2023.”

Hasbro Inc.

on Thursday said it would eliminate 15% of its workforce, or about 1,000 jobs, after the toy maker’s consumer-products business underperformed in the fourth quarter.

Some companies still hiring now say the job cuts across the economy are making it easier to find qualified candidates. “We’ve got the pick of the litter,” said

Bill McDermott,

CEO of business-software provider

ServiceNow Inc.

“We have so many applicants.”

At

Honeywell International Inc.,

CEO

Darius Adamczyk

said the job market remains competitive. With the layoffs in technology, though, Mr. Adamczyk said he anticipated that the labor market would likely soften, potentially also expanding the applicants Honeywell could attract.

“We’re probably going to be even more selective than we were before because we’re going to have a broader pool to draw from,” he said.

Across the corporate sphere, many of the layoffs happening now are still small relative to the size of the organizations, said

Denis Machuel,

CEO of global staffing firm Adecco Group AG.

“I would qualify it more as a recalibration of the workforce than deep cuts,” Mr. Machuel said. “They are adjusting, but they are not cutting the muscle.”

Write to Chip Cutter at chip.cutter@wsj.com and Theo Francis at theo.francis@wsj.com

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Business

DOJ Sues Google, Seeking to Break Up Online Advertising Business

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The Justice Department is seeking the breakup of Google’s business brokering digital advertising across much of the internet, a major expansion of the legal challenges the company faces to its business in the U.S. and abroad.

A lawsuit filed Tuesday, the Justice Department’s second against the

Alphabet Inc.

GOOG -1.98%

unit following one filed in 2020, alleges that Google abuses its role as one of the largest brokers, suppliers and online auctioneers of ads placed on websites and mobile applications. The filing promises a protracted court battle with wide-ranging implications for the digital-advertising industry.

Filed in federal court in Virginia, the case alleges that Google abuses monopoly power in the ad-tech industry, hurting web publishers and advertisers that try to use competing products. Eight states, including California and New York, joined the Justice Department’s lawsuit.

The lawsuit asks the court to unwind Google’s “anticompetitive acquisitions,” such as its 2008 purchase of ad-serving company DoubleClick, and calls for the divestiture of its ad exchange.

“For 15 years Google has pursued a course of anticompetitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics, insulate itself from competition, and forced advertisers and publishers to use its tools,” Attorney General

Merrick Garland

said at a press conference Tuesday. “Google has engaged in exclusionary conduct that has severely weakened if not destroyed competition in the ad-tech industry.”

Attorney General Merrick Garland said Tuesday that the digital-advertising industry was harmed by Google’s allegedly monopolistic conduct.



Photo:

Al Drago/Bloomberg News

A Google spokesman said the lawsuit “attempts to pick winners and losers in the highly competitive advertising technology sector.”

“DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow,” the spokesman said.

By calling for specific divestitures from Google’s ad-tech business, the Justice Department lawsuit went further in seeking a breakup than some antitrust experts had expected. Shares of Alphabet fell by about 2% in trading on Tuesday.

Though largely invisible to internet users, the ad-tech tools controlled by Google facilitate much of the buying and selling of digital ads that helps fund online publishers. Google’s business includes a tool publishers can use to offer ad space, a product for advertisers to buy those slots and an exchange that automatically links bidders with webpages as they are being loaded for individual users.

Big tech companies such as Google are under a barrage from lawmakers and regulators across multiple continents who have targeted the companies’ dominance in online markets. Justice Department officials also are investigating

Apple Inc.

The Federal Trade Commission has sued

Meta Platforms Inc.’s

Facebook unit over antitrust allegations and

Microsoft Corp.

to block its planned $75 billion acquisition of

Activision Blizzard Inc.

President Biden recently urged lawmakers from both parties to unite behind legislation seeking to rein in tech giants. The European Union also has opened cases looking at alleged anticompetitive conduct by Google, Meta and other companies.

The Justice Department’s 2020 lawsuit against Google targeted its position in online search markets, including an agreement to make Google search the default in Apple’s Safari web browser. Google is fighting the case, which is expected to go to trial this year.

Alphabet gets about 80% of its business from advertising. The Justice Department’s new suit targets the subset of that ad business that brokers the buying and selling of ads on other websites and apps. Google reported $31.7 billion in revenue in 2021 from that ad-brokering activity, or about 12% of Alphabet’s total revenue. Google distributes about 70% of that revenue to web publishers and developers.

Last year, Google offered to split off parts of its ad-tech business into a separate company under the Alphabet umbrella to fend off the most recent Justice Department investigation. DOJ officials rejected the offer and decided to pursue the lawsuit instead.

For years, Google has faced allegations from advertising- and media-industry executives, lawmakers and regulators that its presence at multiple points of the online ad-buying process harms publishers and gives it an unfair advantage over rivals. Google also operates the most popular search engine and the largest online video-streaming site, YouTube, giving rise to allegations it has tilted the market in its own favor.

Rivals say that Google’s power in digital advertising stems from a series of acquisitions Google used to build its ad-tech business, beginning with the company’s $3.1 billion purchase of DoubleClick. The FTC approved the merger in a controversial decision. Google went on to purchase a host of other startups including the mobile-advertising company AdMob.

“Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the complaint read.

Google has said it has no plans to sell or exit the ad-tech business. It has also strongly contested claims in a lawsuit filed by state attorneys general, led by Texas, containing allegations similar to the Justice Department complaint. A federal judge denied the bulk of Google’s motion to dismiss the case last year, allowing it to proceed to the discovery stage and ultimately toward trial.

Google’s Android operating system is the most popular in the world—you can find Android code on everything from Peloton bikes to kitchen appliances and even NASA satellites. WSJ’s Dalvin Brown explains why it is the world’s most-used OS. Illustration: Rami Abukalam

Any divestiture of parts of Google’s ad-tech business would cause big ripple effects across the online advertising industry, which has recently shown signs of weakness as consumers dial back purchases in response to worsening economic conditions.

Breaking off parts of Google’s ad-tech business from the rest of the company could take years of litigation to resolve. Depending on the outcome of the case, ad-tech executives have said the results could range from a higher share of ad dollars flowing to publishers to lower overall spending because digital ads would be less efficient without Google brokering them.

The 149-page complaint makes detailed allegations about the internal workings of Google’s ad-tech operations. The suit alleges, for instance, that Google used anticompetitive tactics to build up the market share of its own ad server, which issues requests for advertisements on behalf of websites, and then used that market power to effectively push publishers into sending their ad inventory only to Google’s in-house ad exchange, AdX.

The Justice Department argues, in part, that this conduct locked out rival ad-tech providers, increasing prices for advertisers and costs of publishers.

“Google keeps at least thirty cents—and sometimes far more—of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools,” the lawsuit alleges. “Google’s own internal documents concede that Google would earn far less in a competitive market.”

The lawsuit also alleges that Google executives worked to kill a rival online-bidding technology called “header bidding,” which the lawsuit says the company referred to internally as an “existential threat.” As part of a plan dubbed Project Poirot, the company allegedly changed its own ad-buying tools to underbid on behalf of advertisers when they turned to outside ad exchanges that used header bidding, so those rivals would lose more auctions and “dry out,” the complaint says.

At one point, Google also approached

Amazon.com Inc.,

to ask “what it would take for Amazon to stop investing in its header bidding product,” the complaint alleges, adding that Amazon rebuffed those requests.

“Google uses its dominion over digital advertising technology to funnel more transactions to its own ad tech products where it extracts inflated fees to line its own pockets at the expense of the advertisers and publishers it purportedly serves,” the complaint read.

The Justice Department case overlaps in some ways with the late 2020 lawsuit from the group of U.S. states led by Texas.

In Tuesday’s complaint, the Justice Department quotes some of the same internal communications as the Texas-led lawsuit, including how one Google executive compared the company’s control over ad-tech to the financial sector: “The analogy would be if Goldman or Citibank owned the NYSE,” referring to the New York Stock Exchange.

The case also shares similarities with an investigation that the EU’s top antitrust enforcer, the European Commission, opened in 2021, as well as one by the U.K.’s Competition and Markets Authority. Those probes are exploring allegations that Google favors its own ad-buying tools in the advertising auctions it runs, but also look at other elements of Google’s ad-tech business. The EU, for instance, is also looking at Google’s alleged exclusion of competitors from brokering ad-buys on its video site YouTube.

Mr. Garland said Tuesday that the Justice Department filed its own lawsuit because the federal government was harmed by Google’s allegedly monopolistic conduct. Federal agencies have since 2019 spent over $100 million on display ads, the complaint says. The government paid inflated fees and was harmed by manipulated advertising prices because of Google’s anticompetitive conduct, the lawsuit alleges.

Microsoft is deepening its partnership with OpenAI, the company behind ChatGPT and Dall-E. That has investors and analysts speculating whether Microsoft could challenge Google’s dominance in search. WSJ Heard on the Street columnist Dan Gallagher joins host Zoe Thomas to discuss how AI could affect search and at what cost.

Jonathan Kanter,

the assistant attorney general for antitrust, said while there are similarities with other lawsuits against Google, the Justice Department’s complaint is based on its own investigation that yielded “meticulous detail” about Google’s ad-tech business.

“We detail many facts, many episodes that in the individual and in the aggregate have maintained numerous monopolies,” Mr. Kanter said.

Google has attempted to settle the claims against its ad-tech business. In addition to offering to split off parts of its ad-tech business to avoid the Justice Department suit, the company last year discussed with the EU an offer to allow competitors to broker the sale of ads directly on the video service.

In 2021, the company agreed to give U.K. antitrust regulators effective veto power over elements of its plans to remove a technology called third-party cookies from its Chrome browser to settle an investigation there into the plan.

In France, Google agreed to pay a fine of 220 million euros, equivalent to about $239 million, and to improve data access to competing ad-tech companies, to not use its data in ways rivals couldn’t reproduce to settle a similar antitrust investigation in the country.

—Keach Hagey contributed to this article.

Write to Miles Kruppa at miles.kruppa@wsj.com and Sam Schechner at Sam.Schechner@wsj.com

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Business

Microsoft to Deepen OpenAI Partnership, Invest Billions in ChatGPT Creator

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Microsoft Corp.

MSFT 0.98%

said Monday it is making a multiyear, multibillion-dollar investment in OpenAI, substantially bolstering its relationship with the startup behind the viral ChatGPT chatbot as the software giant looks to expand the use of artificial intelligence in its products.

Microsoft said the latest partnership builds upon the company’s 2019 and 2021 investments in OpenAI.

The companies didn’t disclose the financial terms of the partnership. Microsoft had been discussing investing as much as $10 billion in OpenAI, according to people familiar with the matter. A representative for Microsoft declined to comment on the final number.

OpenAI was in talks this month to sell existing shares in a tender offer that would value the company at roughly $29 billion, The Wall Street Journal reported, making it one of the most valuable U.S. startups on paper despite generating little revenue.

The investment shows the tremendous resources Microsoft is devoting toward incorporating artificial-intelligence software into its suite of products, ranging from its design app Microsoft Designer to search app Bing. It also will help bankroll the computing power OpenAI needs to run its various products on Microsoft’s Azure cloud platform.

At a WSJ panel during the 2023 World Economic Forum, Microsoft CEO Satya Nadella discussed the company expanding access to OpenAI tools and the growing capabilities of ChatGPT.

The strengthening relationship with OpenAI has bolstered Microsoft’s standing in a race with other big tech companies that also have been pouring resources into artificial intelligence to enhance existing products and develop new uses for businesses and consumers.

Alphabet Inc.’s

Google, in particular, has invested heavily in AI and infused the technology into its operations in various ways, from improving navigation recommendations in its maps tools to enhancing image recognition for photos to enabling wording suggestions in Gmail.

Google has its own sophisticated chatbot technology, known as LaMDA, which gained notice last year when one of the company’s engineers claimed the bot was sentient, a claim Google and outside experts dismissed. Google, though, hasn’t made that technology widely available like OpenAI did with ChatGPT, whose ability to churn out human-like, sophisticated responses to all manner of linguistic prompts has captured public attention.

Microsoft Chief Executive

Satya Nadella

said last week his company plans to incorporate artificial-intelligence tools into all of its products and make them available as platforms for other businesses to build on. Mr. Nadella said last week at a Wall Street Journal panel at the World Economic Forum’s annual event in Davos, Switzerland. Mr. Nadella said that his company would move quickly to commercialize tools from OpenAI.

Analysts have said that OpenAI’s technology could one day threaten Google’s stranglehold on internet search, by providing quick, direct responses to queries rather than lists of links. Others have pointed out that the chatbot technology still suffers from inaccuracies and isn’t well-suited to certain types of queries.

“The viral launch of ChatGPT has caused some investors to question whether this poses a new disruption threat to Google Search,” Morgan Stanley analysts wrote in a note last month. “While we believe the near-term risk is limited—we believe the use case of search (and paid search) is different than AI-driven content creation—we are not dismissive of threats from new, unique consumer offerings.”

OpenAI, led by technology investor

Sam Altman,

began as a nonprofit in 2015 with $1 billion in pledges from

Tesla Inc.

CEO

Elon Musk,

LinkedIn co-founder

Reid Hoffman

and other backers. Its goal has long been to develop technology that can achieve what has been a holy grail for AI researchers: artificial general intelligence, where machines are able to learn and understand anything humans can.

Microsoft first invested in OpenAI in 2019, giving the company $1 billion to enhance its Azure cloud-computing platform. That gave OpenAI the computing resources it needed to train and improve its artificial-intelligence algorithms and led to a series of breakthroughs.

OpenAI has released a new suite of products in recent months that industry observers say represent a significant step toward that goal and could pave the way for a host of new AI-driven consumer applications.

In the fall, it launched Dall-E 2, a project that allowed users to generate art from strings of text, and then made ChatGPT public on Nov. 30. ChatGPT has become something of a sensation among the tech community given its ability to deliver immediate answers to questions ranging from “Who was George Washington Carver?” to “Write a movie script of a taco fighting a hot dog on the beach.”

Mr. Altman said the company’s tools could transform technology similar to the invention of the smartphone and tackle broader scientific challenges.

“They are incredibly embryonic right now, but as they develop, the creativity boost and new superpowers we get—none of us will want to go back,” Mr. Altman said in an interview in December.

Mr. Altman’s decision to create a for-profit arm of OpenAI garnered criticism from some in the artificial-intelligence community who said it represented a move away from OpenAI’s roots as a research lab that sought to benefit humanity over shareholders. OpenAI said it would cap profit at the company, diverting the remainder to the nonprofit group.

—Will Feuer contributed to this article.

Write to Berber Jin at berber.jin@wsj.com and Miles Kruppa at miles.kruppa@wsj.com

Corrections & Amplifications
The design app Microsoft Designer was misidentified as Microsoft Design in an earlier version of this article. (Corrected on Jan. 23)

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Business

Google Parent Alphabet to Cut 12,000 Jobs Amid Wave of Tech Layoffs

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Google’s parent company said it would cut its staff by 6% in its largest-ever round of layoffs, extending a retrenchment among technology companies after record pandemic hiring.

Alphabet Inc.

GOOG 5.72%

said the cuts would eliminate roughly 12,000 jobs across different units and regions, though some areas, including recruiting and projects outside of the company’s core businesses, would be more heavily affected.

The layoffs reached as high as the vice president level and affected divisions including cloud computing and Area 120, an internal business incubator that had already faced cuts last year, said people familiar with the matter.

The Google cuts make January the worst month yet in a wave of tech layoffs that began last year, according to estimates from Layoffs.fyi, which tracks media reports and company announcements. This week,

Microsoft Corp.

said it would eliminate 10,000 jobs, the largest layoffs in more than eight years. Online furniture seller

Wayfair Inc.

said it is laying off about 10% of its workforce, and

Unity Software Inc.,

which provides tools for creating videogames and other applications, also cut staff.

Earlier this month,

Amazon.com Inc.

said layoffs would affect more than 18,000 employees and

Salesforce Inc.

said it was laying off 10% of its workforce. Last year,

Meta Platforms Inc.

said it would cut 13% of staff.

Technology companies including Google expanded rapidly during the pandemic as life moved online. Recent cuts have been part of a broader pivot toward protecting profit and cementing the end of a growth-at-all costs era in technology. Google executives have in recent months said the company would be tightening its belt, reflecting a new period of more disciplined and efficient spending. But the company hadn’t announced cuts as deep as those of its Silicon Valley peers. 

Google hired aggressively as demand for its services rose during the health crisis, leading to more than 50% growth in total employee count across Alphabet since the end of 2019. The cuts this week appeared to fall short of the almost 12,800 employees Alphabet added to its roster in the third quarter last year.

“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 sent out Friday and posted on the company’s website.

“I take full responsibility for the decisions that led us here,” Mr. Pichai wrote. The corporate mea culpa for overhiring has become a recurring message in recent months at tech companies as executives realized that some of the hiring they undertook to keep pace with soaring demand for all things digital early in the pandemic left them overstaffed as the business environment soured.

Among the executives who have made such apologies are Salesforce Co-Chief Executive

Marc Benioff,

Meta Platforms CEO

Mark Zuckerberg

and Twitter Inc. co-founder

Jack Dorsey.

The recent headlines about tech layoffs don’t seem to match broader economic indicators, which show a strong job market and a historically low unemployment rate. WSJ’s Gunjan Banerji explains the disconnect. Illustration: Ali Larkin

Alphabet recorded $17.1 billion of operating income in the third quarter last year, an 18.5% decrease from the same period in 2021. Google executives partly blamed a slowdown in revenue growth on the company’s historic performance during the tail end of the pandemic. Alphabet shares rose 4.5% to $97.24 in morning trading Friday.

Alphabet earlier this month said it would cut more than 200 jobs at its Verily Life Sciences healthcare business, accounting for about 15% of the roles at the unit. Before that, some of the last major cuts Google announced were in 2009, when the company said it was reducing the number of jobs in its sales and marketing teams by roughly 200 globally.

Activist hedge fund TCI Fund Management, which had called on Alphabet to cut costs aggressively in November, said Friday the company should go further.

“Management should aim to reduce headcount to around 150,000, which is in line with Alphabet’s headcount at the end of 2021,”

Christopher Hohn,

TCI managing director, said in a letter. “This would require a total headcount reduction in the order of 20%.”

Current and former Google employees said layoffs would likely affect the company’s famously loose and collegial culture, which has been widely imitated in the tech industry.

Google employees have long enjoyed one of the most accommodating environments among large U.S. companies. A letter to potential investors in Google’s 2004 initial public offering said the company provided many unusual benefits, such as washing machines, and would likely add more over time.

As job cuts have accumulated in the tech industry, many employees at Google have pressed executives about the possibility of layoffs at the company. At a companywide meeting in December, Mr. Pichai told employees that the company had tried to “rationalize where we can so that we are set up to better weather the storm regardless of what’s ahead.”

A Google spokesman said that Friday’s cuts would affect not just Google, but also other Alphabet subsidiaries, but didn’t specify at what levels. Alphabet subsidiaries include Verily and the Waymo self-driving-car unit. The spokesman didn’t comment on which specific products or engineering units would be affected.

“Alphabet leadership claims ‘full responsibility’ for this decision, but that is little comfort to the 12,000 workers who are now without jobs,” said Parul Koul, executive chair of the Alphabet Workers Union, in a statement. “This is egregious and unacceptable behavior by a company that made $17 billion dollars in profit last quarter alone.”

Alphabet said it would offer U.S.-based employees two months notice, plus 16 weeks of severance pay, along with two additional weeks for each year an employee being laid off from the nearly 25-year-old company has worked there. In other countries, the company will follow local processes and laws, which sometimes require consultations with employee representatives before workers are laid off.

The company will also offer former employees access to resources to help them with their immigration status, job placement and mental health, the spokesman said. Tech companies in the U.S. often have employees on work visas tied to their employment.

Write to Sam Schechner at Sam.Schechner@wsj.com and Miles Kruppa at miles.kruppa@wsj.com

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Business

Microsoft and Google Will Both Have to Bear AI’s Costs

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Microsoft said Tuesday that it is moving quickly to incorporate artificial-intelligence tools from OpenAI into its products and services. This includes OpenAI’s chatbot called ChatGPT, which launched just over a month ago and has skyrocketed in popularity as users have flocked to the tool, which spits out conversational answers to queries and—much to the chagrin of educators everywhere—can also pen full essays and even poems.

Chief Executive

Satya Nadella

told a Wall Street Journal panel at the World Economic Forum in Davos, Switzerland, that “every product of Microsoft will have some of the same AI capabilities to completely transform the product.”

Microsoft already invested $1 billion in OpenAI and is reportedly looking to put even more into the startup, so its interest in making use of the technology is unsurprising. But the news was also another unwelcome development for Google, whose core search business could be threatened by the question-answering function of technologies such as ChatGPT.

The New York Times reported last month that ChatGPT’s launch Nov. 30 triggered Google’s management to declare a “code red” internally. Microsoft is Google’s largest rival in web search, though its Bing search engine still only accounts for a low single-digit percentage of the global market.  

Shares of Google-parent

Alphabet

GOOG 0.92%

slipped nearly 1% on Tuesday and have fallen nearly 10% since the ChatGPT launch—the worst performance of the big techs and triple the percentage loss of the Nasdaq during that time. Microsoft’s shares rose Tuesday by a fraction while Nvidia, which specializes in artificial-intelligence chips used in data centers by both companies, jumped nearly 5%.

“We see ChatGPT’s prowess and traction with consumers as a near-term threat to Alphabet’s multiple and a boost for Microsoft and Nvidia,” UBS analysts wrote in a recent report. 

ChatGPT indeed seems more than a flash in the pan. Data from Similarweb shows daily visits to the tool’s home page recently surpassed 20 million—nearly double the daily hits the site was generating two weeks after its launch.

But investors might be getting ahead of themselves as far as the impact on Google goes. Not all web queries are created equal—especially ones that will generate revenue through advertising links. ChatGPT specializes in natural-language queries that generate humanlike answers.

Not all of those answers contain correct information, however, and tracing the source of that information is difficult. In a recent report, Bernstein analyst Mark Shmulik said there is “an ocean of difference between a general information search query and a monetizable one,” adding that ChatGPT’s shortcomings on the latter were “glaringly obvious.” 

Google also has the deeply ingrained behavior of the masses to fall back on. The company has powered more than 90% of global internet searches since at least 2009, according to StatCounter. Even Microsoft’s launch of Bing in the middle of that year didn’t really dent Google’s share.  

Ultimately, incorporating AI tools such as ChatGPT could be costly for both companies given the computing horsepower required.

Brian Nowak

of Morgan Stanley estimates that ChatGPT’s cost per query is about seven times as much as the cost to Google for a traditional search query.

That multiple could drop to four times if OpenAI is able to access the lowest price tiers of Microsoft’s Azure cloud service, Mr. Nowak estimates. But that is still quite a gap, and one that is reflective of the costs Microsoft might bear as it works ChatGPT and other OpenAI tools deeper into its products. 

Such pressure would be untimely. Investors are placing greater focus on both companies’ profits as revenue growth is projected to slow considerably this year. Alphabet’s operating margins are expected to come in at 27% this year—down from 2022 but still about 5 percentage points above what it averaged in the three years before the pandemic. Meanwhile, Microsoft is expected to keep its own margins above the 40% line for the third consecutive year—a feat not managed since 1999.

That may explain why Microsoft finally elected to follow other major techs in reducing its headcount. The company said Wednesday morning that it plans to lay off about 10,000 employees, or less than 5% of its workforce. Many expect Google’s parent to make a similar move soon.

How to spend more when investors want to see less going out the door is a question even ChatGPT wouldn’t be able to answer.

ChatGPT, OpenAI’s new artificially intelligent chatbot, can write essays on complex topics. Joanna Stern went back to high school AP Literature for a day to see if she could pass the class using just AI. Photo illustration: Elena Scotti

Write to Dan Gallagher at dan.gallagher@wsj.com

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Business

Alphabet Unit Verily to Trim More Than 200 Jobs

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Verily Life Sciences, a healthcare unit of

Alphabet Inc.,

GOOG 3.38%

is laying off more than 200 employees as part of a broader reorganization, the first major staff reductions to hit Google’s parent following a wave of layoffs at other technology companies.

The cuts will affect about 15% of roles at Verily, which will discontinue work on a medical software program called Verily Value Suite and several early-stage products, CEO Stephen Gillett said in an email to employees Wednesday. Verily has more than 1,600 employees.

Verily oversees a portfolio of healthcare projects largely focused on applying data and technology to patient treatments, including a virtual diabetes clinic and an online program for connecting research participants to clinical studies. 

“We are making changes that refine our strategy, prioritize our product portfolio and simplify our operating model,” Mr. Gillett wrote in the email. “We will advance fewer initiatives with greater resources.”

Originally known as Google Life Sciences, Verily is one of the largest businesses other than Google under the Alphabet umbrella, part of a group of companies known as “Other Bets.” Alphabet had 186,779 employees at the end of September last year, according to company filings.

The robotics software company Intrinsic, another unit in Alphabet’s Other Bets, also said on Wednesday it would let go of 40 employees. A spokesman said the “decision was made in light of shifts in prioritization and our longer-term strategic direction.”

Verily has recently looked to pare back a once-sprawling collection of projects spanning insurance to mosquito breeding. Last year, the company hired McKinsey & Co. and Innosight to do consulting work, The Wall Street Journal reported.

After a period of aggressive hiring to meet heightened demand for online services during the pandemic, tech companies are now laying off many of those workers. And tech bosses are saying “mea culpa” for the miscalculation. WSJ reporter Dana Mattioli joins host Zoe Thomas to talk through the shift and what it all means for the tech sector going forward.

The reorganization is a sign of the continued difficulties facing big tech companies trying to crack the healthcare industry.

David Feinberg,

the head of an ambitious health-focused group at Google, left the company in 2021 to become CEO of the healthcare technology company Cerner Corp.

In the email to employees, Mr. Gillett said Verily would largely focus on products related to research and care, while concentrating more decisions in a central leadership team rather than individual groups.

Mr. Gillett took over as Verily CEO this month, succeeding the well-known geneticist

Andy Conrad,

who moved to executive chairman.

“As we move into Verily’s next chapter, we are doubling down on our purpose, with the goal to ultimately be operating in all areas of precision health,” Mr. Gillett wrote to employees on Wednesday. “We will do this by building the data and evidence backbone that closes the gap between research and care.”

Google’s peers have cut jobs recently in response to worsening economic conditions and a decline in online advertising. Last week,

Amazon.com Inc.

announced layoffs that will affect more than 18,000 employees, the most of any tech company in the past year.

Tech Layoffs Across the Industry: Amazon, Salesforce and More Cut Staff

At a companywide meeting in December, Google CEO

Sundar Pichai

said he couldn’t make any forward looking commitments in response to questions about layoffs. Google has tried to “rationalize where we can so that we are set up to better weather the storm regardless of what’s ahead,” he added.

Activist investor TCI Fund Management called on Alphabet in November to reduce losses in Other Bets such as Verily, writing in a letter to Mr. Pichai that the company had too many employees.

Alphabet’s Other Bets recorded $1.6 billion in operating losses from $209 million in revenue during the third quarter last year, mostly from the sale of health technology and internet services. 

Verily said in September it received $1 billion in funding from Alphabet and other investors, without naming the backers. The private-equity firm Silver Lake, Singaporean fund Temasek Holdings and Ontario Teachers’ Pension Plan previously invested in the company.

Write to Miles Kruppa at miles.kruppa@wsj.com

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Business

Tesla is not alone: 18 (and a half) other big stocks are headed for their worst year on record

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In the worst year for stocks since the Great Recession, several big names are headed for their worst year on record with just one trading day left in 2022.

The S&P 500 index
SPX,
+1.75%
and Dow Jones Industrial Average
DJIA,
+1.05%
are both headed for their worst year since 2008, with declines of 20.6% and 9.5% respectively through Thursday. But at least 19 big-name stocks — and half of another — are headed for a more ignominious title for 2022, according to Dow Jones Market Data: Worst year ever.

Tesla Inc.
TSLA,
+8.08%
is having the worst year among the group of S&P 1500 constituents with a market capitalization of $30 billion or higher headed for record annual percentage declines. Tesla shares have declined 65.4% so far this year, which would be easily the worst year on record for the popular stock, which has only had one previous negative year since going public in 2010, an 11% decline in 2016.

Tesla may not be the worst decliner on the list by the time 2023 arrives, however, as another Silicon Valley company is right on its heels. Meta Platforms Inc.
META,
+4.01%,
the parent company of Facebook, has fallen 64.2% so far this year, as Chief Executive Mark Zuckerberg has stuck to spending billions to develop the “metaverse” even as the online-advertising industry that provides the bulk of his revenue has stagnated. It would also only be the second year in Facebook’s history that the stock has declined, after a 25.7% drop in 2018, though shares did end Facebook’s IPO year of 2012 30% lower than the original IPO price.

Only one other stock could contend with Tesla and Meta’s record declines this year, and Tesla CEO Elon Musk has some familiarity with that company as well. PayPal Holdings Inc.
PYPL,
+4.46%,
where Musk first found fame during the dot-com boom, has declined 63.2% so far this year as executives have refocused the company on attracting and retaining high-value users instead of trying to get as many users as possible on the payments platform. It would be the second consecutive down year for PayPal, which had not experienced that before 2021 since spinning off from eBay Inc.
EBAY,
+4.76%
in 2015.

None of the other companies headed for their worst year yet stand to lose more than half their value this year, though Charter Communications Inc.
CHTR,
+1.99%
is close. The telecommunications company’s stock has declined 48.2% so far, as investors worry about plans to spend big in 2023 in an attempt to turn around declining internet-subscriber numbers.

In addition to the list below, Alphabet Inc.’s class C shares
GOOG,
+2.88%
are having their worst year on record with a 38.4% decline. MarketWatch is not including that on the list, however, as Alphabet’s class A shares
GOOGL,
+2.82%
fell 55.5% in 2008; the separate class of nonvoting shares was created in 2012 to allow the company — then still called Google — to continue issuing shares to employees without diluting the control of co-founders Sergey Brin and Larry Page.

Apart from that portion of Alphabet’s shares, here are the 19 large stocks headed for their worst year ever, based on Thursday’s closing prices.

Company % decline in 2022
Tesla Inc.
TSLA,
+8.08% 		65.4%
Meta Platforms Inc.
META,
+4.01% 		64.2%
PayPal Holdings Inc.
PYPL,
+4.46% 		62.6%
Charter Communications Inc. 48.0%
Edwards Lifesciences Corp.
EW,
+2.87% 		41.9%
ServiceNow Inc.
NOW,
+3.67% 		39.9%
Zoetis Inc.
ZTS,
+3.00% 		39.3%
Fidelity National Information Services Inc.
FIS,
+2.03% 		37.8%
Accenture PLC
ACN,
+2.00% 		35.3%
Fortinet Inc.
FTNT,
+2.82% 		31.5%
Estee Lauder Cos. Inc.
EL,
+1.52% 		32.5%
Moderna Inc.
MRNA,
+1.34% 		29.6%
Iqvia Holdings Inc.
IQV,
+2.94% 		26.3%
Carrier Global Corp.
CARR,
+2.17% 		22.8%
Hilton Worldwide Holdings Inc.
HLT,
+1.63% 		19.2%
Broadcom Inc.
AVGO,
+2.37% 		16.2%
Arista Networks Inc.
ANET,
+2.27% 		15.2%
Dow Inc.
DOW,
+1.32% 		10.7%
Otis Worldwide Corp.
OTIS,
+2.16% 		9.2%

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Business

Opinion: The cloud boom has hit its stormiest moment yet, and it is costing investors billions

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The cloud boom has finally reached a resting altitude, but Wall Street is doing anything but resting.

Amazon.com Inc.
AMZN,
-4.06%,
the original pioneer in cloud computing, confirmed Thursday what rivals Microsoft Corp.
MSFT,
-1.98%
and Alphabet Inc.
GOOGL,
-2.85%

GOOG,
-2.34%
suggested with their earnings reports earlier in the week: Cloud-computing growth has finally reached a plateau, as companies around the world cut costs to address the slowing economy. Amazon Web Services, the backbone of Amazon’s profit, saw revenue hit its slowest growth on record, and executives said that it will slow down even more.

“The back end of the quarter, we were more in the mid-20% growth range, so carry that forecast to the fourth quarter — we are not sure how it’s going to play out, but that’s generally our assumption,” Amazon Chief Financial Officer Brian Olsavsky told analysts after reporting quarterly growth of 27.5%.

It was a jarring slowdown for AWS, which recorded 33% growth in the second quarter, 37% growth in the first, 37% in the fourth quarter of 2021 and 39% growth a year ago. It shouldn’t have been too much of a surprise, though: Smaller rivals reported similar slowdowns earlier in the week.

Microsoft’s Azure cloud business grew 35% in its fiscal first quarter, down from 40% in the previous quarter and 50% the year before, and executives predicted another five-percentage-point fall this quarter. Alphabet’s Google Cloud is also slowing, even though it was the bright spot of double-digit growth in the disappointing quarter for the internet ad and search giant. Google’s Cloud Services grew 37.6% in the third quarter, up from 35.6% growth in the second quarter, but down from 43.8% in the first quarter, and 44.6% in the fourth quarter.

Regular readers of this column should also not be surprised, as we predicted three months ago (perhaps just a tad early) that a slowdown was coming. It probably should have happened in 2020, but the COVID-19 pandemic caused a rush of companies to boost their cloud services, as remote work suddenly made a move to the cloud essential for many businesses.

More recently, though, the largest businesses with the most complex workloads are shutting down or putting off major projects, and cutting their spending on the cloud-computing power they would have needed to support hem.

“There are three parts to the cloud slowdown,” said Maribel Lopez, principal analyst at Lopez Research, who joined MarketWatch in predicting a cloud-spending slowdown earlier this year. “One is related to reigning in and rationalizing the Wild West of spending that companies did during COVID to keep the lights on,” which is leading to the cutbacks we see now. Second, recent waves of cloud workloads by the industries that are still slow-rolling their move to the cloud — such as government, healthcare and education — “are the most complex, time consuming and challenging to move to the cloud quickly.” Lastly, is a general fear related to the macroeconomic environment, leading to cuts anywhere executives can find them.

Read also: The cloud boom is coming back to earth.

Wall Street has reacted swiftly and strongly, ripping more than $300 billion in market cap away from just Microsoft and Amazon this week, if Amazon’s steep decline in Thursday’s after-hours session persists. But this is where it helps to think about a longer-term view: Just because cloud growth is declining does not mean that the technology is still not core to the future.

Microsoft and Amazon will continue to develop and sell their cloud-computing offerings, and they will see healthy margins on them. Google is continuing to invest in its cloud business, adding 2,000 new employees via its acquisition of Mandiant last quarter, and executives said this week that businesses and governments are still in the early days of public cloud adoption.

“We’re pleased with the momentum in Cloud and do continue to be excited about the long-term opportunity,” Alphabet Chief Financial Officer Ruth Porat told analysts this week.

Many analysts agree. Dan Ives, an analyst with Wedbush Securities, said this week in a note about Microsoft that “the shift to cloud is still less than 50% penetrated.” Growth is slowing as inflation continues and the strong dollar outside the U.S. hits the revenue lines of many tech giants, causing many companies to pause in their spending, but that is a short-term problem.

Moving to a cloud provider is not for the faint of heart, and it is a transition that in some cases takes longer than expected. The same will hold true for investing in the cloud for the long term, even as there is some pain now. It’s still a massive and important part of the tech sector, an essential business that enabled companies to keep operating around the world during the pandemic. Whatever the future growth rate, the cloud appears here to stay.

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Business

Google randomly sent him $250K. This is what happened next.

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A self-described hacker was randomly paid almost $250,000 by Google. He was baffled by the payment.

On Tuesday, Sam Curry tweeted about the mysterious payment from Alphabet Inc.’s
GOOGL,
-0.11%
Google. “It’s been a little over 3 weeks since Google randomly sent me $249,999 and I still haven’t heard anything on the support ticket. Is there any way we could get in touch @Google?” he wrote.

“It’s OK if you don’t want it back…,” he quipped.

Curry describes himself as a hacker and a bug bounty hunter in his Twitter bio. He works as a staff security engineer at Yuga Labs, the crypto and non-fungible token (NFT) specialist that created the famous Bored Ape Yacht Club NFT project.

Opinion: Don’t dismiss Bored Apes — NFTs could turn out to be a practical platform for sales and smart contracts

NPR reports that Curry sometimes does bug bounty work for Google and other companies.

“Google did indeed contact me and I’m going to head into the bank today to pay it back,” Curry told MarketWatch on Friday.

“Our team recently made a payment to the wrong party as the result of human error,” a spokesperson for Google told MarketWatch. “We appreciate that it was quickly communicated to us by the impacted partner, and we are working to correct it.”

Bug bounties are paid out by companies and other organizations when someone discovers a vulnerability in their systems and reports the vulnerability, or “bug,” back to them. Last year, for example, the Department of Homeland Security launched its “Hack DHS” program, which invited vetted cybersecurity researchers and ethical hackers to identify potential vulnerabilities in certain DHS external systems.

In April 2022 the Department reported that more than 450 vetted researchers identified 122 vulnerabilities, 27 of which were determined to be critical. DHS awarded a total of $125,600 in bounties, it said.

Alphabet shares were down 0.9% before the market open on Friday. The stock has dropped 29.0% year to date through Thursday, compared with the S&P 500 index
SPX,
-0.72%,
which has dropped 18.2%.

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Business

Google Loses Most of Appeal of EU Android Decision

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BRUSSELS—

Alphabet Inc.’s

GOOG 0.57%

Google suffered legal blows on two continents this week, a significant setback in the company’s efforts to fight allegations that it is abusing its dominance in digital advertising and on mobile phones.

The EU’s General Court in Luxembourg on Wednesday largely upheld a 2018 decision by the EU competition regulator that fined Google $4.33 billion for allegedly abusing the market dominance of its Android operating system for mobile phones to promote and entrench its Google search engine and Chrome browser on mobile devices.

The decision came shortly after a federal judge in the United States District Court for the Southern District of New York on Tuesday denied the bulk of Google’s motion to dismiss the claims brought by a coalition of states led by Texas alleging Google abused its dominance in digital advertising tools, allowing the case to proceed to the discovery stage and ultimately toward trial.

The EU ruling means Google will very likely continue applying some of the changes it has made since to comply with the 2018 decision, including offering users in the EU a choice screen of different search engines. The Android case was the biggest of three antitrust fines totaling more than $8 billion that the EU has levied against Google since 2017—and it focused on mobile phones, one of the company’s fastest growth areas.

The ruling is also a vote of confidence for the European Commission, the bloc’s antitrust enforcer, which has been aggressive in targeting big U.S. tech companies and other firms over concerns about anticompetitive behavior. Last week, the Commission blocked

Illumina Inc.’s

$7.1 billion merger with cancer-test developer Grail Inc., two U.S. companies.

In the U.S., Judge P. Kevin Castel’s decision was closely watched because the Justice Department has been preparing a similar antitrust case against Google over its position in the advertising technology industry.

In both cases, Google did score some partial victories.

In the EU, the court annulled one element of the decision that alleged Google had broken competition laws by making revenue-sharing payments to manufacturers to exclusively pre-install only Google Search, not competing search engines. As a result, the court reduced the overall fine by about 5% to €4.13 billion, about the same in dollars.

“We are disappointed that the court did not annul the decision in full,” a Google spokesman said, adding that Android has created more competition in the mobile phone industry. The company has previously said it should be able to recoup the money it spends developing Android by encouraging manufacturers to install Google Search.

The court’s decision can still be appealed to the EU’s top court, the Court of Justice. Google said it would review the decision before deciding whether to appeal.

In the U.S., the judge tossed out claims pertaining to Google’s “Jedi Blue” ad agreement with rival Facebook—now known as Meta Platforms Inc. The plaintiffs alleged the deal was part of a plan to “kill” an alternative ad technology called header bidding that Google executives feared would harm its business. He also knocked down the plaintiffs’ claim that Google’s Accelerated Mobile Pages, or AMP, technology was part of an anticompetitive plot to curtail header bidding, among several other claims from the plaintiffs.

In a blog post Tuesday in response to the U.S. decision, Google called the Jedi Blue allegations the “centerpiece” of Texas’s case, and cited the various allegations that were tossed out as evidence that the case was “deeply flawed.”

In a statement on Wednesday, Texas Attorney General

Ken Paxton

applauded the judge’s decision, calling it “a major step in the right direction to make our free market truly free.”

The 2018 EU Android case has been significant because it focused on Google’s efforts to increase its mobile business, but also because it underscored Google detractors’ arguments that antitrust enforcement takes too long. By the time the commission had issued its decision, those detractors said Android had already helped make Google Search as dominant on mobile devices as it had been on desktops.

Shortening the time it takes to force companies to make changes in the market was a major reason that the EU pursued new digital-competition legislation called the Digital Markets Act, passed earlier this year. The new law will eventually make it illegal for Google and other very large tech companies to engage in a range of practices that the bloc considers to be anticompetitive, including some of the practices the commission has previously issued fines for.

The 2018 decision focused in large part on how Google bundled together the licensing of its apps for Android devices. In that decision, the EU ordered Google to stop requiring smartphone manufacturers to pre-install the company’s search app and Chrome web browser as a condition for licensing Google’s popular Play app store. It also said the company would have to allow manufacturers to install Google apps on systems that run alternative versions of the Android operating system.

The EU argued Google’s practices had made it harder for potential competitors to emerge and were part of a strategy that was meant to ensure that Google’s search engine would remain dominant as consumers began using search engines on their smartphones.

Google quickly appealed the 2018 decision but also had to comply with it while its appeal was under way. Google changed its licensing deals for manufacturers and implemented what it called a Choice Screen on Android devices, allowing users of new phones in the EU to select alternate default search engines. So far that choice screen doesn’t appear to have had an appreciable impact on the market share for Google Search in Europe.

Google’s appeal of the case centered in part on whether its Android operating system is dominant, arguing that the Commission was wrong to consider Android devices as their own market without seeing them as competitors to

Apple’s

iPhone and iPad devices. The company also argued that requirements to bundle Google Search with its app store weren’t anticompetitive, and that restrictions on use of other versions of Android were needed to ensure Android phones would be compatible with the company’s apps. The court dismissed Google’s arguments on all those points on Wednesday.

Google also argued that the revenue-sharing agreements that required phone makers not to pre-install other search engines covered less than 5% of the market and didn’t have an impact on competitors. The court on Wednesday sided with Google, ruling that the Commission didn’t prove its case on that point.

It is the European Commission’s second court victory against Google in as many years. Last year, Google lost its appeal of a separate, $2.42 billion antitrust fine over allegedly directing users of its search engine to Google’s own comparison-shopping ads at the expense of other services. A second appeal to the EU’s top court is pending.

Google was also fined $1.49 billion in 2019 for limiting how some websites could show ads that were sold by the company’s rivals. Its appeal of that case is still under way.

Google continues to attract scrutiny from antitrust regulators in the EU. Last year, the commission opened a formal antitrust investigation into allegations that Google abuses its dominant position in advertising technology. Google said its ad-tech tools are competitive and that it would work with the commission to resolve its questions.

The Wall Street Journal reported earlier this year that Google had offered concessions to try to ward off a potential antitrust lawsuit in the U.S. targeting the company’s ad-tech business.

The Wall Street Journal reported earlier this year that Google had offered concessions to try to ward off the Justice Department’s antitrust lawsuit targeting the company’s ad-tech business, but people familiar with the matter say the offer wasn’t likely to satisfy regulators.

Write to Sam Schechner at sam.schechner@wsj.com and Kim Mackrael at kim.mackrael@wsj.com

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