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Tech company Block, the parent company of payment services Square and Cash App, said it would lay off some 40 per cent of its employees, citing gains in artificial intelligence as the reason. But some in the tech industry aren’t convinced.
In a letter posted to the social media platform X on Thursday, Block CEO Jack Dorsey said the decision wasn’t coming because the company is in any kind of trouble, but because AI tools are capable of doing more.
“We’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company,” the CEO, who also founded Twitter, wrote.
Dorsey added he could have cut jobs slowly or do it at once and be “honest about where we are and act on it now.”
“I chose the latter,” he said, adding he’d host a live video call to thank Block employees.
After the announcement, Block’s shares gained five per cent Thursday, jumping to $54.53 US. They shot up to nearly $69 US in after-hours trading. The mobile payments services provider also reported its fourth quarter earnings on Thursday with gross profit jumping 24 per cent from a year earlier.
A global technology company founded in 2009, San Francisco-based Block operates in the United States, Canada, parts of Europe, Australia and Japan.
Block did not disclose how many Canadian employees they have or how many employees in this country were part of the layoffs when asked by CBC News.
The layoffs are just the latest round of cuts in recent months among big tech names. Salesforce CEO Mark Benioff said in September that the slashing of nearly half that company’s workforce was because he needed “less heads” due to AI, while Amazon cut 30,000 workers and Pinterest cut some 15 per cent of their workforce, both in part to reallocate funds to AI initiatives.
Klarna’s CEO also said AI helped shrink his company’s workforce by 40 per cent in recent years, the company also later had to rehire workers because the AI capabilities weren’t robust enough.
Amazon has confirmed it’s cutting 16,000 jobs from its global workforce as part of its plan to ‘reduce layers’ and ‘remove bureaucracy’ while leaning more heavily on AI. It’s unclear how many Canadian jobs will be affected.
But some experts take issue with how big of a role AI is said to be playing in these cuts, including the latest ones from Block.
Many tech companies hired heavily during the pandemic — including Block, whose workforce jumped from about 3,800 employees in 2019 to more than 10,000 in 2025. Some experts point to overhiring as part of the reason for the cuts.
“In Block’s case, [the layoffs] looks like a mix of AI efficiency gains and an overdue clean-up of corporate bloat,” Matt Britzman, an analyst at Hargreaves Lansdown, told Reuters.
On X, Dorsey said his company did overhire during COVID, but that Block already corrected for that in 2024.
Tom Davenport, a professor of IT at Babson College, agrees that overhiring might play a role — as well as some wishful thinking about the current uses of AI.
Davenport surveyed over 1,000 executives in late 2025 as part of his research to understand the role that AI was having in the workplace. While many organizations had made cuts or were hiring fewer people because of the promise of AI, he found only two per cent were making cuts related to the implementation of AI.
Companies are using AI hiring bots to screen, shortlist and talk to job candidates. Advocates say the technology frees up human workers from tedious tasks, but some applicants say it adds confusion to the process, and there are concerns about HR job losses.
In other words, they were making cuts based on the promise of the tech, not what it was already able to do in their workplace.
While Davenport has no inside knowledge on how Block made its decision to cut workers, he expects it might be another case where businesses make cuts in anticipation of what AI will do.
“I’d like to see a lot more precision and analysis before [companies] make those kinds of announcements,” Davenport said.
Despite the layoffs in the tech industry, tech recruitment consultant at Robert Half Nathan Wawruck says workers can still find great careers in the sector.
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He agrees that overhiring has led to some high-profile layoffs at big companies. While the big names might not be hiring so much, Wawruck says tech job searchers are finding employment with medium-sized companies in other industries that need people to run the tech-based parts of their business — sometimes including these new AI tools.
“If you take all of those companies and you add them up … there’s actually quite a bit of new activity and new positions being created. And some of that is being driven by these new tools that are out there in the marketplace,” Wawruck said.
While he acknowledges there’s hardship especially for new grads with tech-related degrees, Wawruck says as technology gets further integrated into other industries, there will be more jobs to go around.
