Dive Brief:
- Amazon will let another 9,000 employees go in its second round of layoffs since the beginning of the year. The cuts will impact Amazon's AWS, Twitch, advertising and people experience and technology divisions, according to a memo sent to employees Monday.
- In the memo, CEO Andy Jassy cited "the uncertain economy in which we reside, and the uncertainty that exists in the near future" as drivers for the cuts.
- The company plans to finalize the layoffs by mid- to late-April. Amazon confirmed the news in an email to CIO Dive but declined to specify how many roles would be cut in each department.
Dive Insight:
Layoffs at Amazon exemplify a trend in big tech: the rationalization in headcount after years of sustained hiring. But the broader context includes higher customer scrutiny on tech spend, flagging economic indicators and slower growth rates in the saturated market where AWS leads.
AWS, a significant profit center for Amazon, posted $21.4 billion in sales during Q4, up 20% year-over-year for the period ending Dec. 31. That growth rate is significantly lower than the 37% it posted in Q1.
Amazon continues to dominate the cloud infrastructure market with AWS, a position it has held for years. But competitors have slowly been gaining ground.
In Q4, Amazon stayed within its long-standing market share band of 32-34%, according to Synergy Research Group data. But Microsoft's slice of the cloud pie has steadily climbed and reached 23%, up from an average of 21% in the previous four quarters.
Google Cloud's share has been inching up as well. It increased to 11% in Q4 2023 from 10% last year.
Still, cuts at Amazon follow another trend in recent big tech layoffs: they are single-digit impacts to very large workforces, said Tracy Woo, senior analyst at Forrester.
"The cloud providers and a lot of tech companies really had a significant boon in terms of business and usage during the pandemic," said Woo. Current cutbacks are in part an adjustment to new consumption levels, according to Woo.
But the inclusion of AWS in the cutbacks at Amazon is notable, according to Lee Sustar, principal analyst at Forrester.
"Given that AWS revenue has been keeping Amazon at or near profitability, layoffs at AWS will not have been taken lightly," Sustar said. "However, the slowdown in public cloud growth generally has apparently led Amazon to the conclusion that AWS must be part of overall cost cutting efforts."
