The job cuts affect 6 percent of its workforce and Sundar Pichai, Alphabet's boss since 2019, said in the memo on Friday that he took "full responsibility" for the decisions that led to the layoffs.
Shares in Mountain View, California-based Alphabet, which boosted its workforce by nearly a third through 2020 and 2021, rose 4 percent on Friday (local time). They have fallen 30 percent in the past 12 months, echoing a 24 percent slump in the broader tech industry .
Reuters reports the cuts come as Alphabet, long a leader in key areas of artificial intelligence (AI), is facing competition from Microsoft Corp, which is reportedly looking to boost its stake in ChatGPT - a promising chatbot that answers queries with human-like responses.
Advertising dollars are Alphabet's mainstay revenue source, but it is feeling the squeeze from businesses chopping budgets as consumers pull back spending.
"It is clear that Alphabet is not immune from the tough economic backdrop, with worries about a US recession growing," said Susannah Streeter, an analyst at Hargreaves Lansdown.
"Ad growth has come off the boil ... Competition is also heating up, with Alphabet facing a powerful rival in TikTok, and Instagram also vying for its important YouTube viewers," Streeter said, noting that Alphabet has also racked up billions in regulatory fines.
Evercore ISIS analyst Mark Mahaney said Alphabet's record-high headcount had created major margin risk going into fiscal 2023 and Bernstein analyst Mark Shmulik said the job cuts could save the company Alphabet US$2.5 billion to $3 billion in costs.
Microsoft said on Wednesday recession worries were forcing it, too, to shed 10,000 jobs, but it would focus on imbuing its products with more AI.
Pichai echoed the sentiment and said Google was gearing up "to share some entirely new experiences for users, developers and businesses."
The company has been working on a major AI launch, two people familiar with the matter told Reuters. One of the sources said it would take place in the spring. The New York Times also reported that Google planned to unveil more than 20 new products and a search engine including chatbot features.