When Block cut 4,000 jobs — nearly half its workforce — co-founder Jack Dorsey “pointed to AI as the culprit,” writes Entrepreneur magazine. “Dorsey claimed that AI tools now allow fewer employees to accomplish the same work.”
“But analysts see a different explanation: poor management.”
Block more than tripled its employee base between 2019 and 2022, growing from 3,835 to 12,430 workers. The company’s stock had fallen 40% since early 2025, creating pressure to cut costs. “This is more about the business being bloated for so long than it is about AI,” Zachary Gunn, a Financial Technology Partners analyst, told Bloomberg.
The phenomenon has earned a nickname: “AI-washing,” where companies use artificial intelligence as cover for traditional cost-cutting. Goldman Sachs economists estimate that AI is eliminating only 5,000 to 10,000 jobs per month across all U.S. sectors, hardly enough to justify Block’s massive cuts.
“European Central Bank President Christine Lagarde told lawmakers in Brussels last week that ECB economists are monitoring for signs that AI is causing job losses,” reports Bloomberg, “and are ‘not yet seeing’ the ‘waves of redundancies that are feared’…” And “a recent survey of global executives published in the Harvard Business Review found that while AI has been cited as the reason for some layoffs, those cuts are almost entirely anticipatory: executives expect big efficiency gains that have not yet been realized.”
Even a former senior Block executive “is questioning whether AI is truly the reason behind the cuts,” writes Inc.:
In a recent opinion piece for The New York Times, Aaron Zamost, Block’s former head of communications, policy, and people, asked whether the layoffs reflect a genuine “new reality in which the work they do might no longer be viable,” or whether artificial intelligence is “just a convenient and flashy new cover for typical corporate downsizing.” Zamost acknowledged that the answer is unclear and perhaps unknowable, even within Block itself…
Looking more closely at the layoffs, Zamost argued that the specific roles affected suggest more traditional corporate cost-cutting than a sweeping AI transformation… Many of the responsibilities being eliminated, he argued, rely on distinctly human skills that AI systems still cannot replicate. “A chatbot can’t meet with the mayor, cast commercial actors, or negotiate with the Securities and Exchange Commission,” Zamost wrote. “Not all the roles I’ve heard that Block is eliminating can be handled by AI, yet executives are treating it as equally useful today to all disciplines.”
Ultimately, Zamost suggested that the sincerity of companies’ AI explanations may not really matter. “It matters less whether a company knows how to deploy AI and more whether investors believe it is on track to do so,” he wrote.
Indeed, whatever the rationale for Dorsey’s statement, ” Wall Street didn’t seem to mind…” Entrepreneur magazine — since Block’s stock shot up 15% after the announcement.
Read more of this story at Slashdot.
