NEW YORK (Realist English). The American tech sector is undergoing a paradoxical transformation. On one hand, companies are investing billions in artificial intelligence. On the other, they are laying off hundreds of thousands of employees whose functions are being automated.
In the first half of 2026, around 140,000 jobs were cut in the US IT sector — more than in any other industry.
At the same time, leading tech corporations, including Nvidia and Palantir, issued a joint open letter urging the Trump administration not to impose “premature restrictions” on open AI models, which are being actively developed by China.
Smart Machines vs. People: Who Is Losing Their Jobs
According to data from Challenger, Gray & Christmas, cited by CNBC, the number of layoffs in the tech sector in May 2026 reached its highest level since August 2024. Artificial intelligence is cited as the primary reason in 23% of all layoff announcements.
The most aggressive layoff policy is being pursued by Amazon. Since 2022, the company has laid off 57,000 employees, accounting for about 16% of its total workforce. In January 2026 alone, Amazon announced 16,000 job cuts, preceded by 14,000 three months earlier.
CEO Andy Jassy publicly stated that artificial intelligence would “significantly boost efficiency,” and that the company must “reduce bureaucracy” and “adapt to industry changes.”
Meta (designated as extremist and banned in Russia) laid off 8,000 employees in May 2026, representing 10% of its total staff. Microsoft cut about 4,800 jobs as part of its AI‑driven layoff wave. Oracle, Cisco, and other Silicon Valley veterans have also announced workforce optimization plans.
The paradox is that the cuts are happening amid record profits. As The Economist notes, AI is indeed capable of replacing repetitive and routine work — customer service, initial coding, data processing — forcing companies to “optimize the architecture” and reduce headcount.
The Battle for Open AI: China Advances, America Hesitates
While some employees lose jobs to automation, others are trying to preserve access to the technologies driving that automation. On July 24, more than 20 leading tech companies, including Nvidia, Microsoft, Meta, Palantir, and Dell, published a joint open letter addressed to the Trump administration.
The companies warn that attempts to ban or restrict access to “open‑weight models” — AI models with open‑source code that can be freely downloaded and modified — will backfire.
The trigger for concern was the success of Chinese company Moonshot AI, which released the Kimi K3 model in July 2026. According to several industry benchmarks, this product outperformed leading American models from OpenAI and Anthropic — at a significantly lower cost.
The White House has begun discussing possible sanctions, while Treasury Secretary Scott Bessent said the administration is investigating whether Chinese labs used “distillation” techniques to steal American intellectual property.
In their letter, the companies note that US small and medium‑sized businesses are increasingly using Chinese open models — because they are cheap and comparable in quality to expensive closed alternatives from OpenAI and Anthropic. A ban, they argue, would only push American businesses toward even greater reliance on China.
“Our leadership in AI will be determined not by a single frontier model, but by whether we can build a strong, open ecosystem that permeates every sector of the economy,” the letter states.
Nvidia CEO Jensen Huang and Microsoft CEO Satya Nadella posted links to the letter on their social media. OpenAI and Anthropic, which develop closed models and are preparing for IPOs, did not sign the letter.
The American tech sector finds itself in a paradoxical situation: in pursuit of efficiency, companies are destroying jobs, and then lobbying to preserve open access to the AI that replaces those very jobs.
The White House is trying to strike a balance between national security and competitiveness, but as practice shows, bans only spur Chinese developers, while American businesses prefer to deal with reality rather than political slogans.
