Companies use AI as ‘heat shield’ for layoffs: Trump advisor

A senior Trump administration official says companies are increasingly using artificial intelligence as cover for job cuts they had already planned.

President's Science and Technology AdviserMichael Kratsios made the claim during a recent appearance on the "Moonshots with Peter Diamandis" podcast.

Kratsios said businesses often attribute layoffs to AI simply because it sounds better publicly than admitting to routine cost-cutting. Podcast host Peter Diamandis pointed out that framing job cuts around AI can also lift a company's stock price if investors believe fewer staff are driving more revenue. Kratsios agreed without hesitation, replying, "Precisely."

The concept of "AI-washed" layoffs is something that has become well-known within the industry. OpenAI CEO Sam Altman explained in February that while there were cases where the layoffs were due to AI displacement, there were other cases where companies used AI as an excuse to lay off people.

According to Business Insider, there have been 17 companies, including Uber, Snap, and Block, which used AI as the reason behind their layoffs despite arguments from economists on the matter.

While scepticism has surrounded potential job cuts due to AI, Kratsios has stated that he still sees a positive outcome of AI in relation to employment in the long run. Additionally, he has critiqued the negative outlook of some sections of the AI sector, stating that constant talk of job cuts and the dangers to biology has increased distrust.

These sentiments are similar to those of Jensen Huang, the CEO of Nvidia, who has been equally critical of AI "doomers".

Kratsios, a contributor to the AI Action Plan by Trump and previously of Scale AI, has become more aggressive globally, having accused Chinese Moonshot AI of improperly harvesting capabilities from Anthropic's Fable 5.