"AI Ghost Stories" Premiere Ahead of Schedule? Block Cuts Nearly Half Its Staff, Claiming Most Companies Are Moving Slowly

Twitter’s former CEO Jack Dorsey said Thursday that his tech company Block is currently laying off nearly half of its employees because AI “fundamentally changes the meaning of building and running a company.”

Dorsey is one of Twitter’s co-founders. He stepped down as CEO in 2021 to focus on his mobile payments company Square, which was renamed Block that year.

In a letter to employees, he wrote, “The intelligent tools we are creating and using, combined with smaller, flatter teams, are opening up a new way of working.”

This round of layoffs means the company, which owns Square, Cash App, and Tidal, will reduce its workforce from 10,000 to less than 6,000 employees.

Since 2024, Block has undergone multiple rounds of layoffs, but this is the first to cite AI as the main reason. It also marks the latest in a series of major layoffs across the tech industry.

Due to lagging stock performance, Block has been restructuring its business model and staffing since 2024. Meanwhile, the company has invested heavily in developing AI tools to improve operational efficiency, including building a proprietary tool called “Goose.”

After announcing layoffs of nearly half its staff on Thursday, Block’s stock rose as much as 27% in after-hours trading.

Dorsey said he believes many companies will ultimately take similar actions due to AI.

“I don’t think we’re early in this,” he pointed out. “Most companies are actually slow to respond. Over the next year, I believe most will reach the same conclusion and implement similar structural adjustments. Instead of passively reacting to forced transformation, I prefer to proactively move forward at our own pace.”

Is the “AI horror story” playing out early?

This round of layoffs at Block is also a reflection of the latest wave of layoffs in the US fintech and broader tech sectors. Companies like Amazon and Salesforce have cited AI as a catalyst for reducing staff.

Block has not detailed how its AI tools specifically replace certain roles. Some analysts question whether the company is genuinely pursuing AI transformation or just using it as an excuse for cost-cutting plans already in motion.

However, a report titled “AI Horror Story” from Citrini Research earlier this week sparked widespread discussion and heightened market fears about AI’s disruptive potential. The report simulated scenarios where AI agents autonomously shift payments from credit card networks to lower-cost stablecoin channels, threatening the economic foundations of traditional payment giants.

Titled “The 2028 Global AI Crisis,” the report also depicted a hypothetical economic collapse: mass white-collar layoffs trigger deflationary spirals, causing US unemployment to soar above 10%, with stock markets losing most of their value. The resulting sell-off this week wiped out billions in market cap, dragging down stocks of payment companies, software firms, and delivery platforms, before a tentative rebound.

For a company like Block, involved in both payments and fintech, Citrini’s scenario hits close to home. Dorsey’s current bet seems to be on developing internal AI tools—rather than being overtaken by them—to maintain lean operations. But will this gamble pay off, or accelerate market fears of substitution? Investors are just beginning to price this in.

During a conference call, Dorsey admitted that the recent advances in AI models prompted this move.

“A major turning point occurred last December—model capabilities and intelligence levels made a leap by orders of magnitude, which pointed us toward applying them across nearly all business areas,” he explained. “Therefore, any current gaps in AI application are essentially gaps in application scenarios.”

Most tech companies now use AI tools capable of automatically writing the computer code needed to run software or websites, such as Claude Code from Anthropic or Codex from OpenAI. This automation of tasks traditionally performed by highly trained personnel has indeed raised concerns about AI disrupting the job market.

In late January, Amazon laid off another 1,000 employees on top of the 14,000 layoffs from previous months. During a subsequent earnings call, CFO Brian Olsavsky said that as the company increased AI spending, it was seeking other areas to cut costs.

Meta, Microsoft, and Google are also shifting focus to massive AI investments while laying off staff. Meta CEO Mark Zuckerberg said he expects “2026 will be a year of dramatic change in how we work” due to AI.

However, some analysts believe that top executives eager to appear forward-thinking may be exaggerating AI’s direct threat to employment.

(Source: Cailian Press)