In an effort to reduce costs, Google has paused development of a sizable campus in the Silicon Valley city of San Jose, according to CNBC on Friday.

Earlier this year, Alphabet, Google's parent firm, said that it will eliminate 12,000 jobs worldwide as a result of difficult economic conditions.

Due to the slowdown in its ad business, Alphabet reported lower revenue and profit in the previous fiscal year than anticipated in the prior quarter. The tech giant's ad sales division has been severely impacted by the economic crisis. The business will announce its most recent quarterly profit results the following week.

A San Jose location for a Google "Downtown West" campus has reportedly been cleared, and construction is expected to begin before the end of the year.

According to a report quoting unnamed sources, the project was put on hold and no notice was given to the contractors regarding when it may resume.

According to CNBC, the 80-acre (32-hectare) campus' authorised plan called for office space, residences, and public parks.

After going on a big hiring binge at the height of the coronavirus pandemic as internet companies hurrying to meet the demand as people turned to the internet for work, school, and entertainment, Alphabet is now experiencing financial difficulties and making budget cuts.

Analysts think that the business overspent during the period of high demand and failed to plan for the potential future economic decline.

With the release of Microsoft's leading AI chatbot ChatGPT, which can produce complex, human-like content in seconds, Google is up against substantial obstacles. Additionally, Microsoft is bolstering Bing, a long-standing competitor of Google's search engine, with the help of its AI chatbot.

Google has begun allowing users in the US and UK to test its AI chatbot named Bard as the tech giant continues on its steady path to overtake Microsoft-backed ChatGPT.