Google Is Worried About Facing An Economic Crisis Due To The COVID-19 Pandemic

Illustration. (Photo: Unsplash)

JAKARTA - The various impacts of the coronavirus or COVID-19 outbreak are increasingly becoming. Many business sectors have closed and sent their employees home because they were unable to pay wages and continue their business. The same thing happened to Google, the largest search engine company in the world.

CNBC International saw a report from a Google insider who revealed that the company is now cutting its marketing budget by a staggering amount for the second half of this year.

One of these e-mails sent to his employees included cutting budgets and quitting to hire full-time and contract employees. "There are budget cuts and hiring freezes happening across marketing and across Google," said a message from a global director sent to employees recently.

"We, along with the rest of the marketing department, have been asked to cut our budget by about half for the H2," said a Google employee who did not want to be identified.

A company spokesman confirmed that some central companies in various countries had their budgets cut by half, but others may not have been affected as they are still in the process of recalibration.

"As we outlined last week, we are re-evaluating our investment plan steps for the remainder of 2020 and will focus on a number of key marketing efforts selected. We continue to have a strong marketing budget, especially in the digital sphere, in many areas of the business," he said. Google representative.

The surprising information is that Google's stock continues to fall by nearly 2 percent. The drastic move comes a week after Alphabet CEO Sundar Pichai said Google would withdraw some of its investment funds for the remainder of the year amid the COVID-19 crisis, starting with restricting the hiring of new employees.

However, Pichai, at the time, only said he would recalibrate marketing of non-business essentials and would significantly stop hiring employees. There was no mention of drastic budget cuts or hiring freezes.

The news also comes when the company is facing an economic crisis caused by the COVID-19 pandemic, which is also affecting the global economy.

Before the pandemic, Google expected an increase in marketing spending from the previous year. The company, which divides marketing and sales costs together, spent $ 18.46 billion on sales and marketing in 2019.

The fund includes advertising and promotional expenses related to products and services as well as compensation for employees in sales as well as marketing. Last year, Google increased its number of employees by at least 15 percent, the annual report shows. In addition, there was an increase in advertising and promotion costs of US $ 402 million.

"Just like the 2008 financial crisis, the entire global economy is at a disadvantage, and Google and Alphabet are not immune to the effects of this global pandemic. We are in an ecosystem of partnerships and interconnected businesses, many of whom are feeling significant grief," Pichai added in a memo that sent to employees last week.