Chief executive Andy Jassy rose to power within Amazon by turning its cloud computing business into a massive profit center. Now he’s planning to slash 9,000 jobs at Amazon Web Services and other units, pointing to an “uncertain economy,” as the company’s growth cools.
Given the “uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount,” Jassy said in a note sent to employees and published online.
The Seattle company boomed during the early days of the coronavirus pandemic, when consumers leaned into online ordering. But growth has waned for Amazon and fellow tech giants Facebook, Google and Microsoft, which have all announced massive layoffs in the past several months. (Amazon founder Jeff Bezos owns The Washington Post.)
Amazon’s cloud business is still growing — it climbed 20 percent last quarter — but at a slower pace, in part because its business customers are looking for ways to save money.
“Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions,” Amazon Chief Financial Officer Brian Olsavsky said on the company’s earnings call in February.
It’s a significant reversal for an industry that some had perceived as “recession-proof.” But others say the companies grew too big, too fast and needed to rein in spending. The layoffs also have hit start-ups and smaller firms, and funding has been less accessible as the sector struggles.
The tech world was dealt another blow this month when its namesake financial institution, Silicon Valley Bank, collapsed and was taken over by regulators after it said it would need to sell shares to raise money and panicked customers caused a bank run.
The new layoffs will also hit Amazon’s advertising unit, as well as the video game streaming business Twitch and other corporate divisions.
Last week, Twitch co-founder Emmett Shear said he would step down as CEO, passing the reins to company president Dan Clancy. In a blog post Monday, Clancy announced that Twitch would lay off “just over” 400 people.
Most of Amazon’s 1.5 million employees work in its warehouses, but it had more than 330,000 corporate and tech employees worldwide before it started cutting tens of thousands of white-collar workers.
Amazon has pulled back in other areas as well — earlier this month, it announced it was pausing construction on its much-anticipated second headquarters in Arlington, Va.; it has also closed, canceled or delayed dozens of other development projects across the country.
The company recently introduced a return-to-office edict, which frustrated thousands of employees who joined an internal Slack group to protest the decision.
Jassy said the latest cuts were determined after divisions decided on their priorities and outlined investments for the next year in an annual planning process.
“Some may ask why we didn’t announce these role reductions with the ones we announced a couple months ago,” he wrote in an announcement Monday. “The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we’ve made them so people had the information as soon as possible.”
Teams are still making decisions about which exact roles will be cut, he wrote, and laid-off workers will be notified after that process finishes in mid- or late April.
Amazon shares fell more than 1.2 percent on Monday, closing at $97.71, on a day the major U.S. indexes moved higher. It has a market cap north of $1 trillion.