Block lays off nearly half its staff because of AI. Its CEO said most companies will do the same
Block Announces Major Workforce Reduction Due to AI Integration
Square, Cash App, and Afterpay parent company Block has announced a 40% workforce reduction. Co-founder Jack Dorsey cited “intelligence tools” in a shareholder letter as the primary driver of the cuts. The layoffs affect over 4,000 employees, bringing the total staff count to just under 6,000. This shift follows AI’s transformation of roles within the tech industry, sparking debates about job market evolution.
CEO Emphasizes AI-Driven Efficiency
Dorsey argued that smaller teams using AI tools can achieve greater productivity. “A significantly smaller team, using the tools we’re building, can do more and do it better,” he stated in the letter. Block’s CFO, Amrita Ahuja, reinforced this in financial guidance: “We see an opportunity to move faster with smaller, highly talented teams using AI to automate more work.”
Strategic Move Amid Tech Industry Trends
Dorsey clarified that the layoffs reflect a proactive strategy, not financial strain. “Our business is strong… gross profit continues to grow,” he wrote. The decision aligns with a trend seen across tech giants, including Amazon, Meta, Microsoft, and Verizon, which have also reduced staff linked to AI adoption. Many of these firms expanded rapidly during the pandemic, reaching pre-pandemic headcount levels now.
Severance and Investor Response
Employees impacted by the cuts will receive 20 weeks of severance, equity vesting until May, and six months of health coverage. Additional benefits include corporate devices and a $5,000 bonus. Investors welcomed the move, with Block’s shares rising 24% after the announcement.
AI’s Role in Shaping Future Workforces
As AI tools like Anthropic’s Claude Cowork gain traction, concerns over job displacement persist. This week, Anthropic enhanced its Claude model to handle roles in human resources, design, and wealth management. Earlier, software stocks fell after Anthropic released updates to its enterprise AI tools. Dorsey positioned Block as a leader in this shift, claiming tech leaders are “operating more leanly” due to AI’s rapid evolution.
