Google stops building a huge new campus

Google has halted construction of its new site in San Jose, Silicon Valley, which was to span 32 hectares with offices, gardens, shops, hotels and about 4,000 homes, according to local newspapers and the US CNBC series.

According to CNBC’s sources, the massive campus called Midtown West, valued at nearly $19 billion in total, may never see the light of day.

Like its neighbors, the California tech giant is facing an economic headwind, and a very different context than it was in before the pandemic.

Google did not immediately respond to a request from AFP.

According to local channel KRON4, the new location was expected to create 25,000 jobs in the area and bring in $155 million in revenue to San Jose.

Alphabet, the parent company of Google, received the construction permit in June 2021. The construction site was scheduled to begin in 2023 and last a decade, according to local newspaper Mercury News.

Right now, the site is “essentially a demolition area that risks becoming a landscape wart in the long term,” notes CNBC.

The group, which had more than 190,000 employees worldwide at the end of 2022, announced in January that it would cut about 12,000 jobs (just over 6% of its total workforce), following similar social plans at Amazon, Meta and Microsoft.

After the pandemic boom of the entire sector, the world’s number one in online advertising is suffering from budget cuts from advertisers facing higher interest rates. Its net profit fell 21% in 2022 to $60 billion.

Alphabet’s chief financial officer, Ruth Porat, warned in early February that the company would end some office leases “in line” with personnel adjustments, which are expected to cost it about $500 million in the first quarter of the year.

“We will continue to improve our real estate portfolio,” she said during a conference call with analysts.

Before the pandemic, Silicon Valley companies were known for their sprawling campuses, with free gyms and restaurants for employees.

But these working conditions are changing.

According to an internal letter from last February seen by CNBC, Google asked its cloud business employees to “share offices and rotate their days” in person in five US cities, including San Francisco, so that the “company” could continue to invest in the growth of the business.