Jack Dorsey has long been an open admirer of Elon Musk. Now, it seems, he may have been taking notes.
On Thursday, Dorsey announced that Block, the payments company he founded that operates Square, Cash App, and Tidal, is cutting more than 4,000 employees, nearly half its global workforce, taking it from over 10,000 workers down to just under 6,000. Investors responded enthusiastically, sending the stock up more than 24% in after-hours trading.
It isn’t the first time a major tech company has done something of the sort. In November 2022, Musk slashed roughly 50% of Twitter’s staff in a single stroke after taking the company private, a move that rattled many in Silicon Valley and rewrote the unofficial rules for how far a CEO could go in one shot.
Dorsey was in an unusual position to watch it unfold. He’d rolled his roughly 2.4% ownership stake in Twitter into Musk’s takeover rather than taking a cash payout, making him one of the largest outside investors in what became X.
The two men have had one of tech’s stranger relationships, with warm words giving way to public shots, then back again. Dorsey championed Musk’s Twitter acquisition, then said Musk “should have walked away.” He helped launch Bluesky, the decentralized Twitter alternative, then quit its board and called X “freedom technology.” Both are also vocal Bitcoin advocates — Block and Tesla each carry the cryptocurrency on their balance sheets.
Dorsey framed Thursday’s cuts as a proactive, even empathetic, choice, and not a financial emergency. (The 4,000 people losing their jobs may see it differently.) “Repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead,” he wrote on X. He predicted that within a year, most companies will arrive at the same place. “I’d rather get there honestly and on our own terms than be forced into it reactively,” he said.
The cuts are being driven, at least officially, by AI. Block CFO Amrita Ahuja said the cuts will position the company to “move faster with smaller, highly talented teams using AI to automate more work.”
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Salesforce and Amazon are among a growing list of other companies that have made enormous staffing cuts citing the increased gains they are seeing from AI, though a Forrester Research report last month cast some doubt on how real those gains are versus the likelihood that many layoffs are financially drinks
The Bigger Trend Behind Tech Layoffs in 2026
The decision by Jack Dorsey to cut nearly half of Block’s workforce is not happening in isolation. Across the technology industry, companies are aggressively restructuring to become leaner, more automation-driven, and AI-focused. What was once considered aggressive downsizing is now being framed as “strategic optimization.”
Over the past year, major tech companies have shifted their priorities from rapid expansion to operational efficiency. Investors are no longer rewarding companies simply for growth — they want profitability, discipline, and scalable automation. This shift in mindset is reshaping hiring trends across Silicon Valley and beyond.
Block’s move signals that even companies founded on innovation are not immune to economic pressure and AI-driven transformation.
AI and Automation — The Real Game Changer?
Artificial Intelligence is increasingly being used to replace repetitive operational roles. From customer support automation to internal workflow systems, AI tools are enabling companies to operate with smaller teams while maintaining productivity levels.
Executives argue that AI enhances efficiency and reduces long-term costs. However, critics warn that over-reliance on automation may create instability in the job market, particularly for mid-level tech employees.
If Block’s strategy proves successful, it may accelerate a broader shift toward AI-powered corporate structures.
Frequently Asked Questions (FAQ)
Why did Jack Dorsey lay off 50% of Block employees?
Jack Dorsey stated that the layoffs were a strategic move to streamline operations and integrate AI-driven automation within Block.
Is AI the reason for tech layoffs in 2026?
Many companies cite AI efficiency improvements as a reason for workforce reductions, though financial restructuring also plays a role.
How many employees does Block have after layoffs?
Block reduced its workforce from around 10,000 employees to under 6,000 employees.
Will other companies follow Block’s decision?
Industry experts believe more tech companies may adopt similar restructuring strategies in 2026.
