Jack Dorsey's Block Accused of 'AI-Washing' to Excuse Laying Off Nearly Half Its Workforce

Source: Slashdot

Background

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.

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.

Analysts’ View

Analysts see a different explanation: poor management.

“This is more about the business being bloated for so long than it is about AI,” said Zachary Gunn, a Financial Technology Partners analyst, in an interview with 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 5,000–10,000 jobs per month across all U.S. sectors, far fewer than would justify Block’s massive cuts.

AI‑Washing Context

European Central Bank President Christine Lagarde told lawmakers in Brussels that ECB economists are monitoring for signs that AI is causing job losses, but are “not yet seeing” the feared “waves of redundancies.” 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 efficiency gains that have not yet materialized.

Executive Commentary

A former senior Block executive questioned whether AI is truly the reason behind the cuts, as reported by Inc.

In an 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 AI is “just a convenient and flashy new cover for typical corporate downsizing.”

Zamost argued that the specific roles affected suggest traditional cost‑cutting rather than a sweeping AI transformation. Many eliminated responsibilities 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.”

He concluded that the sincerity of companies’ AI explanations may matter less than investors’ belief that the firm is on track to deploy AI.

Market Reaction

Regardless of the rationale behind Dorsey’s statement, Wall Street seemed unfazed. Block’s stock rose about 15 % after the announcement, according to Entrepreneur magazine.