Jack Dorsey's Block Accused of 'AI-Washing' to Excuse Laying Off Nearly Half Its Workforce (entrepreneur.com) 28
When Block cut 4,000 jobs — nearly half its workforce — co-founder Jack Dorsey "pointed to AI as the culprit," writes Entrepreneur magazine. "Dorsey claimed that AI tools now allow fewer employees to accomplish the same work."
"But analysts see a different explanation: poor management." Block more than tripled its employee base between 2019 and 2022, growing from 3,835 to 12,430 workers. The company's stock had fallen 40% since early 2025, creating pressure to cut costs. "This is more about the business being bloated for so long than it is about AI," Zachary Gunn, a Financial Technology Partners analyst, told Bloomberg.
The phenomenon has earned a nickname: "AI-washing," where companies use artificial intelligence as cover for traditional cost-cutting. Goldman Sachs economists estimate that AI is eliminating only 5,000 to 10,000 jobs per month across all U.S. sectors, hardly enough to justify Block's massive cuts.
"European Central Bank President Christine Lagarde told lawmakers in Brussels last week that ECB economists are monitoring for signs that AI is causing job losses," reports Bloomberg, "and are 'not yet seeing' the 'waves of redundancies that are feared'..." And "a recent survey of global executives published in the Harvard Business Review found that while AI has been cited as the reason for some layoffs, those cuts are almost entirely anticipatory: executives expect big efficiency gains that have not yet been realized."
Even a former senior Block executive "is questioning whether AI is truly the reason behind the cuts," writes Inc.: In a recent opinion piece for The New York Times, Aaron Zamost, Block's former head of communications, policy, and people, asked whether the layoffs reflect a genuine "new reality in which the work they do might no longer be viable," or whether artificial intelligence is "just a convenient and flashy new cover for typical corporate downsizing." Zamost acknowledged that the answer is unclear and perhaps unknowable, even within Block itself...
Looking more closely at the layoffs, Zamost argued that the specific roles affected suggest more traditional corporate cost-cutting than a sweeping AI transformation... Many of the responsibilities being eliminated, he argued, rely on distinctly human skills that AI systems still cannot replicate. "A chatbot can't meet with the mayor, cast commercial actors, or negotiate with the Securities and Exchange Commission," Zamost wrote. "Not all the roles I've heard that Block is eliminating can be handled by AI, yet executives are treating it as equally useful today to all disciplines."
Ultimately, Zamost suggested that the sincerity of companies' AI explanations may not really matter. "It matters less whether a company knows how to deploy AI and more whether investors believe it is on track to do so," he wrote.
Indeed, whatever the rationale for Dorsey's statement, " Wall Street didn't seem to mind..." Entrepreneur magazine — since Block's stock shot up 15% after the announcement.
"But analysts see a different explanation: poor management." Block more than tripled its employee base between 2019 and 2022, growing from 3,835 to 12,430 workers. The company's stock had fallen 40% since early 2025, creating pressure to cut costs. "This is more about the business being bloated for so long than it is about AI," Zachary Gunn, a Financial Technology Partners analyst, told Bloomberg.
The phenomenon has earned a nickname: "AI-washing," where companies use artificial intelligence as cover for traditional cost-cutting. Goldman Sachs economists estimate that AI is eliminating only 5,000 to 10,000 jobs per month across all U.S. sectors, hardly enough to justify Block's massive cuts.
"European Central Bank President Christine Lagarde told lawmakers in Brussels last week that ECB economists are monitoring for signs that AI is causing job losses," reports Bloomberg, "and are 'not yet seeing' the 'waves of redundancies that are feared'..." And "a recent survey of global executives published in the Harvard Business Review found that while AI has been cited as the reason for some layoffs, those cuts are almost entirely anticipatory: executives expect big efficiency gains that have not yet been realized."
Even a former senior Block executive "is questioning whether AI is truly the reason behind the cuts," writes Inc.: In a recent opinion piece for The New York Times, Aaron Zamost, Block's former head of communications, policy, and people, asked whether the layoffs reflect a genuine "new reality in which the work they do might no longer be viable," or whether artificial intelligence is "just a convenient and flashy new cover for typical corporate downsizing." Zamost acknowledged that the answer is unclear and perhaps unknowable, even within Block itself...
Looking more closely at the layoffs, Zamost argued that the specific roles affected suggest more traditional corporate cost-cutting than a sweeping AI transformation... Many of the responsibilities being eliminated, he argued, rely on distinctly human skills that AI systems still cannot replicate. "A chatbot can't meet with the mayor, cast commercial actors, or negotiate with the Securities and Exchange Commission," Zamost wrote. "Not all the roles I've heard that Block is eliminating can be handled by AI, yet executives are treating it as equally useful today to all disciplines."
Ultimately, Zamost suggested that the sincerity of companies' AI explanations may not really matter. "It matters less whether a company knows how to deploy AI and more whether investors believe it is on track to do so," he wrote.
Indeed, whatever the rationale for Dorsey's statement, " Wall Street didn't seem to mind..." Entrepreneur magazine — since Block's stock shot up 15% after the announcement.
It's simple (Score:5, Insightful)
Re: It's simple (Score:2)
This.
As for Dorsey, his management of Twitter, his poor "optics" during the various hearings, appearing in public with various undesirables, and subsequent sale of Twitter all demonstrate his lack of judgment.
Re: (Score:2)
Most of the people who were not axed were given immediate raises of 90%, with a retention bonus that puts them around 110% of their current salary.
Considering 40% of the people were laid off, that's assuming their work simply gets redistributed to the remaining people who have to work much harder to justify their new raises. (Something likely to happen because hey, you got a huge raise in this day and age).
Or it could simply be a precursor to more layoffs - hey you're not wokring 16 hour days like we expect
Re: It's simple (Score:2)
Re: (Score:1)
I can find no evidence of anyone, apart from Naoko Takeda, being offered a retention salary increase offer.
In her case, that included a pay increase of around 75%.
Is there any hard evidence of anyone apart from data scientist Naoko being offered huge retention bonuses?
put up or shut up (Score:2)
If the claim is to be made that AI boosts productivity enough to cut staff in half, then show your work.
But they won't! They'll have a new excuse next quarter why their revenue and productivity isn't growing. And they'll ask for more capital to buy compute equipment they don't actually know what to do with. Great news for chip makers but bad news for another AI-entangled fintech.
Fraud Alert!! (Score:2)
actual troll comment, i apologize (Score:1)
gAIwashing
AI is the scapegoat maybe. (Score:5, Insightful)
While some jobs are being lost to AI, this former Amazon hiring manager says AI is not the real reason. [youtube.com]; AI is the excuse. In her experience at Amazon, they hired way too many and sometimes the wrong people during and following CoVID. Part of it was politics and power plays as more people meant more power for the manager. But Amazon would have to admit this was the reason for letting these people go now, especially to shareholders. It is far easier to sell to shareholders that they found a cheap and effective way to replace these jobs rather than admit these jobs should not have existed. That was her experience at Amazon.
Re: (Score:2)
That's a bloody long time to hang on to supposed dead weight. I'm taking a lot of salt on that excuse too.
I think it's more proactive layoffs. They're expecting AI to boost productivity and are spending on AI like it will. But the pudding is still to be proven.
Re: (Score:2)
Or the article is spot on and it's simple market downturn prompting belt tightening. ie: Tariffs are impacting.
Re: AI is the scapegoat maybe. (Score:2)
Re: AI is the scapegoat maybe. (Score:2)
Waves of tech layoffs have been going on way before the LLM craze when AI became a scapegoat. I've been saying it for years at this point, you can trace it all back to 2019-2022.
Everything you need to know is out there, look at hiring during the dumb money years, and look at their profits today.
Re: (Score:2)
Right, and everything is the fault of the great depression too. :roll-eyes:
Re: (Score:2)
Re: (Score:2)
That's a bloody long time to hang on to supposed dead weight. I'm taking a lot of salt on that excuse too.
Only if you haven't been paying attention since CoVID. For many people I know, these companies have been quietly trying to get rid of people since CoVID. First there were incentives to retire or voluntary severance. Then getting people to quit with measures like back to the office mandates even though the office could not hold that many people. Now with AI, it is just another excuse to get rid of people.
I think he probably did fire them for AI (Score:1)
So his plan is to Force the remaining employees to work themselves to death while he tries to get in on the ground floor of AI so that he can be one of
Not to mention (Score:2)
That AI washing also allows you to make you look better to investors. An AI layoff looks to investor like they're creating efficiency which will be better for business. A 'we hired too many people' layoff looks bad and that you were mismanaging. A CEO is more likely to send a positive message to investors. Just saying...
AI Bubble (Score:2)
So we want last years output at lower cost? (Score:3)
Re: (Score:2)
There are plenty of businesses that would rather improve margins than expand market share. If wealth is concentrated into the hands of a few individuals then that's the smartest play.
Are they publicly traded? (Score:2)
There are plenty of businesses that would rather improve margins than expand market share. If wealth is concentrated into the hands of a few individuals then that's the smartest play.
Wall Street wants GROWTH, GROWTH, GROWTH! I've seen many favorite stocks plummet for having a profitable quarter, but growth was 12%, when guidance was 13%. If you're publicly traded, they want growth. I've never personally seen an exception. I can think of some hypotheticals, like a monopoly with full saturation...but I can't think of a realistic example of that. Any business that focuses on improving margins alone when given a productivity-enhancing tool is privately held or the board of directors is
Re: (Score:2)
Growth doesn't require increase marketshare %. Margins can drive growth as well. Losing margin % while maintaining marketshare can turn a business into a moribund husk of its former self. See: Intel between 2021-2024. Now Intel is losing margins badly and is closing in on a death spiral, but for awhile they were just shedding margins while AMD was gaining margin %.
They can point to AI - but not for productivity (Score:2)
AI has another function beyond "increasing employee productivity". It can also find the employees who are under performing or not needed by the company.
So really there are three compounding reasons:
1) AI making some workers more productive
2) AI identifying workers who poor performers or not needed
3) AI recommending restructuring to cut costs
Completely legit to point to AI for these job cuts for any and all the above reasons.