Major investor calls on Google owner to ‘aggressively’ cut staff and pay

The hedge fund of the billionaire Sir Christopher Hohn has written to Alphabet saying staff at the Google and YouTube parent are paid too much and its workforce should be drastically cut back.

London-based TCI, which has been a significant investor in the company since 2017 and holds a stake valued at $6bn (£5.1bn), has written to its chief executive, Sundar Pichai, urging it to emulate cost-cutting measures introduced by big tech rivals including the Facebook-owner, Meta, Amazon and Microsoft.

"We are writing to express our view that the cost base of Alphabet is too high and that management needs to take aggressive action," said Hohn, managing director at TCI, in a letter made public on Tuesday. "The company has too many employees and the cost per employee is too high."

Hohn said Alphabet, which employed almost 187,000 staff at the end of the third quarter, has doubled staff numbers since 2017, with headcount growing at 20% annually across the period.

"This growth is excessive, both in relation to historic headcount growth and what the business requires," Hohn said. "Our conversations with former executives of Alphabet suggest that the business could be operated more effectively with significantly fewer employees."

The four-page letter also points the finger at pay, stating that Alphabet offers employees "some of the highest salaries in Silicon Valley".

Last year, median compensation for a typical Alphabet employee was $295,884 according to filings with the Securities and Exchange Commission (SEC), the letter said. This was 67% higher than at Alphabet's rival Microsoft and 153% higher than the 20 largest technology companies in the US, according to analysis by S&P Global.