This week, I want to talk to you about something that I have been thinking about for days. Something I think will mark a turning point in how companies justify mass layoffs. And that, honestly, leaves me with very mixed feelings.
On February 26, Jack Dorsey (co-founder of Twitter and CEO of Block, the company behind Square and Cash App) sent a letter to his shareholders announcing that he would lay off 4,000 employees. Almost half of its workforce. From 10,000 people to 6,000. Just like that, in one fell swoop.
The reason? Artificial intelligence.
Who Jack Dorsey is (and why what he says matters).
Before we get into the subject, a bit of context for those who don’t know him. Jack Dorsey is one of those characters that Silicon Valley produces from time to time: brilliant, controversial, and with an amazing ability to be at the center of everything.
He co-founded Twitter in 2006. Yes, the social network that Elon Musk later bought and renamed as X. In parallel, he created Square in 2009, a mobile payments company that revolutionized how small businesses accept card payments, and rebranded it as Block in 2021. Under the Block umbrella are Cash App (used by more than 50 million people in the U.S.), Afterpay (bought for $29 billion), and TIDAL, the music streaming platform.
For years he was CEO of Twitter and Square at the same time. Something he was heavily criticized for and which probably contributed to his departure from Twitter in 2021, just before Musk came on the scene.
Dorsey is also a peculiar character: he practices vipassana meditation, has done silent retreats in Myanmar, and is a staunch Bitcoin advocate. He is not your average CEO. And that makes what he says carry specific weight in the tech world.
The letter that changed everything
Well. In his February 26 letter, Dorsey didn’t mince words. He said Block had no problems. On the contrary, that business was good, and gross profits were still growing. But the “intelligence tools,” so he called them, even avoiding the word, had fundamentally changed what it means to build and run a company.
And he went further. He predicted that most companies would reach the same conclusion and make similar cuts over the next 12 months.
Twelve months. Most companies. Similar cuts. If that doesn’t make your hair stand on end, I don’t know what will.
And this is where the story gets interesting. Because Wall Street reacted… by applauding. Block’s stock jumped 22% after the announcement. Twenty-four percent up. For laying off 4,000 people.
What if it is not what it seems?
Now comes the part that has me scratching my head. Because not everyone has bought into Dorsey’s narrative. Far from it.
Aaron Zamost, who served as Block’s (then Square’s) director of communications from 2015 to 2020, wrote an op-ed in the New York Times where he basically said Dorsey was using AI as an excuse to “prove his tech credentials,” not because AI was actually doing the work of 4,000 people.
And there is one detail that Dorsey himself acknowledged, almost in passing: that he had overcontracted during COVID. He unnecessarily created two separate corporate structures (Square and Cash App), which were corrected in mid-2024. In other words, the overstaffing predated this. Long before generative AI existed as we know it.
Dan Dolev, analyst at Mizuho Americas, put it bluntly to the Wall Street Journal, “the vast majority of these layoffs are probably not due to AI.”
And if you look at the departments affected, the cuts to the policy team and the elimination of diversity and inclusion roles, that doesn’t exactly sound like “AI has automated these functions.” It sounds like lifelong corporate restructuring.
One former employee summed it up rather graphically on networks, “it’s organizational bloat disguised in an AI suit.”
Welcome to AI-Washing
And this is where a concept that I think we’re going to be hearing a lot about in the coming months comes in: AI-Washing.
Remember greenwashing? When companies sold themselves as green and sustainable, but didn’t really do much for the environment. AI-Washing is the 2026 version of that. It consists of attributing to artificial intelligence decisions that, in reality, respond to management problems, financial pressures or simply cost cuts.
Bloomberg headlined its analysis, “Block’s layoffs expose tech’s false narrative.” Gizmodo called it “the curious case of AI layoffs.” And it’s because the pattern repeats itself: the company announces mass layoffs, mentions AI as the cause, the stock goes up, and investors cheer. No one stops to ask if it’s true.
Because there is a perverse incentive here. If you say you fire people because of AI, Wall Street rewards you. If you say you fire people because you over-hired during the pandemic… it doesn’t look so good.
But beware, not everything is a lie
And now comes the thing that prevents me from positioning myself entirely on one side. Because it would be too easy to say that everything is AI-Washing and stay so broad.
The reality is that AI is changing the way people work. I see it every day. Tools that didn’t exist two years ago now allow me to do in a morning what used to take me three days. And I’m not talking about playing with ChatGPT. I’m talking about real automation, AI agents that execute complete tasks, content generation, data analysis, code…
According to the McKinsey report, 78% of companies already use AI in at least one business function. AT&T predicts that small, lean language models (SLMs) will be the dominant trend by 2026. And Gartner has already placed AI agents in its famous “hype cycle,” just after generative AI fell into the “valley of disillusionment.”
The question is not whether AI will eliminate jobs. The question is how many, when, and whether companies are being honest about it. Or whether they are seizing the moment to make up decisions they would have made anyway.
What I believe
After reading everything I can find on the subject, my opinion is that the truth lies somewhere in the middle. As is almost always the case.
Is AI transforming businesses? Yes, no doubt. Is Jack Dorsey using that narrative to justify a restructuring that was years overdue? Probably as well.
What worries me is not that Dorsey laid off 4,000 people. That, as harsh as it sounds, happens all the time in the big tech companies. What worries me is that from now on, any company that wants to make cuts will have the perfect excuse served on a silver platter. “It’s AI.” And no one is going to question it.
Because questioning the AI narrative in 2026 is like questioning the internet narrative in 1999. You risk looking like the one who doesn’t understand where the world is going.
And that, paradoxically, is what makes AI-Washing so dangerous. Not because AI isn’t changing things (which it is), but because when everything is attributed to AI, we stop distinguishing what’s real and what’s smoke.
If you are reading this from Spain, you may think that this is far away. That’s a Silicon Valley thing. But it is not. Dorsey himself said that most companies will follow the same path in the next 12 months. And Spanish and European companies, although more cautious (and more regulated), are not immune to this trend.
What I would recommend to any professional, and I say this both from my own experience and from what I see every day with my clients, is the following: don’t be afraid of AI, but don’t swallow all the headlines. Learn to distinguish between real transformation and AI-Washing. Educate yourself. Experiment. And above all, don’t wait for your company to decide for you whether AI makes you expendable or not.
Because the best defense against AI-Washing is not to ignore AI. It’s to understand it well enough to know when someone is selling you smoke.
Have a good week!
SOURCES:
- CNN Business – “Block lays off nearly half its staff because of AI”. (26 Feb 2026)
- Fortune – “Jack Dorsey lays off 40% of Block, saying AI has changed the game”. (27 Feb 2026)
- Fortune – “3 questions every CEO needs to ask about the AI jobs doom loop” (4 Mar 2026)
- Bloomberg – “Jack Dorsey’s 4,000 Job Cuts at Block Arouse Suspicions of AI-Washing” (1 Mar 2026)
- Inc – “Jack Dorsey Blamed AI for 4,000 Layoffs. A Former Block Exec Says That’s Not the Real Story.” (Mar 2026)
- Gizmodo – “The Curious Case of the Block ‘AI Layoffs'”. (Mar 2026)
- Josh Bersin – “Is Block’s Decision To Layoff 40% of Its Workforce A Bellwether Or Not?” (Mar 2026)
- CNBC – “Block shares to soar as much as 24%” (26 Feb 2026)
