Jack Dorsey Laid Off 4,000 People, Blaming ‘AI Innovation.’ Critics Blame ‘AI-Washing.’
The Block co-founder cut nearly half the company’s staff, claiming AI made them redundant, but analysts say poor management was the real reason.
When Block Inc. cut 4,000 jobs this week, nearly half its workforce, co-founder Jack Dorsey pointed to AI as the culprit. 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. Wall Street didn’t seem to mind the rationale, sending Block’s stock up 15% after the announcement.
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When Block Inc. cut 4,000 jobs this week, nearly half its workforce, co-founder Jack Dorsey pointed to AI as the culprit. 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. Wall Street didn’t seem to mind the rationale, sending Block’s stock up 15% after the announcement.
Sign up for the Entrepreneur Daily newsletter to get the news and resources you need to know today to help you run your business better. Get it in your inbox.
