Block’s AI-Driven Layoffs Spark Debate Over ‘AI-Washing’

A Bloomberg report has questioned whether massive job cuts announced last week at Jack Dorsey-led Block, are truly due to the impact of artificial intelligence (AI) as Dorsey claimed — or whether they’re a correction after the company over-hired during the early pandemic years.

The report, published March 2, suggests Block’s explanation of its decision to dump 4,000 of its 10,000-strong workforce is part of a larger trend in which companies are using the pretext of AI-innovation to spin large-scale layoffs, a phenomenon referred to as ‘AI-washing.’

Block is an NYSE-listed public company formerly known as Square — famous for mobile payments — founded in 2009 by Dorsey, who co-founded Twitter. Block also acquired Australian company Afterpay in 2022 and has a secondary listing on the Australian Stock Exchange.

According to Bloomberg, Block more than tripled its workforce between 2019 and 2022, and compared to similar tech companies, it had kept employee numbers at higher levels for longer before its recently announced cuts. Before the cuts were announced, Block’s share price had fallen a whopping 40% since the start of 2025, a fall that some analysts believe is due more to over-staffing and poor management practices than any kind of AI threat.

Speaking to Bloomberg, Zachary Gunn, a senior analyst at fintech-focussed investment bank, Financial Technology Partners, said that his analysis suggests Block’s decision is based more on reducing bloat than it is about AI.

While most analysts agree AI does pose a serious threat to jobs in the longer term, data from Goldman Sachs suggests the immediate threat is limited. In an investor note sent Friday, Goldman Sachs argued the imminent threat posed by AI is being exaggerated and forecast just a 0.5% rise in unemployment related to AI as the technology is more widely adopted.

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Dorsey Insists Cuts Due to AI Efficiencies, Not Bloat

In his announcement of the job cuts at Block, Dorsey said the business was in a strong position and the cuts were due entirely to AI.

“We’re not making this decision because we’re in trouble. Our business is strong. Gross profit continues to grow, we continue to serve more and more customers, and profitability is improving,” he said.

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. And that’s accelerating rapidly.

Jack Dorsey, CEO of Block

Dorsey further explained that he chose to make one large-scale cut, rather than slowly dwindling his team, because he believes one cut is less harmful to morale than ongoing smaller-scale cuts.

“I had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. I chose the latter. Repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead.”

Related: Block Shares Jump as Company Unveils Strong 2028 Growth and Profit Targets

Responding to an X / Twitter user who argued that Block’s job cuts were necessary due to “Jack Dorsey’s managerial incompetence,” not AI, Dorsey acknowledged the company had over-hired during the early stages of the pandemic, but said this situation had already been corrected in mid-2024.

Dorsey went on to say that Block is now targeting per-employee gross profit of over US$2 million (AU$2.82 million), four times higher than what the company had been able to achieve between 2019 and 2024.