I noted that Canva is restructuring 22% of its workforce, Microsoft has offered voluntary exits to approximately 60,000 eligible employees, Google has expanded voluntary buyouts across several countries, and Meta is reportedly offering voluntary exits.
I asked: Why are companies moving towards leaner teams while simultaneously investing heavily in AI?
Tasks that previously required hours of manual execution can now be completed with AI in minutes.
Businesses are reconsidering agency contracts, consulting retainers, software subscriptions, outsourcing arrangements and other B2B partnerships.
If something can be done sufficiently well at a lower cost, there's a strong incentive to reconsider what you're paying for it.
An agency losing clients may reduce hiring.
A software company losing subscriptions may cut vendor spending.
Those vendors may then reconsider their own expenses.
The people and businesses whose costs companies are trying to eliminate are also customers elsewhere in the economy.
Savings can be reinvested, passed on through lower prices or used to create new opportunities.
If enough businesses and individuals lose income faster than they can replace it, spending weakens.
Lower demand encourages further cost-cutting.
I argued that an investment bubble bursting doesn't mean the technology disappears.
Even if AI companies lose valuations or funding, businesses aren't necessarily going to abandon cheaper ways of operating that already work.
An economy needs more than productive companies. It needs customers who can afford to buy what those companies produce.
I explored both sides of this argument in a longer piece: Is AI a Bubble? What If It Bursts?