Amazon Axes 16,000 Jobs as it Pushes AI and Efficiency

Reuters first reported last week that Amazon was planning a second round of layoffs as part of a broader push under CEO Andy Jassy to try to cut red tape and abandon underperforming businesses.

Amazon said Tuesday it will close its remaining physical Fresh grocery stores and Go markets, despite years of efforts, and discontinue its Amazon One biometric payment system, which scans a customer’s palm.

Although the 30,000 people represent a small portion of Amazon’s 1.58 million employees, who work mostly in fulfillment centers and warehouses, they account for nearly 10% of the corporate workforce and represent the largest layoffs in three decades, with the remaining 27,000 expected between late 2022 and early 2023.

Beth Galetti, Amazon’s senior human resources executive, said in a post that the layoffs were necessary to strengthen the company by “reducing layers, increasing ownership, and eliminating red tape” at Amazon.

Galetti left open the possibility of further reductions, saying some teams would continue to “make appropriate adjustments.”

The latest cuts mark the second major round of layoffs in three months after Amazon cut 14,000 jobs in October, which it blamed at the time on concerns about artificial intelligence and changing corporate culture.

Amazon also said it has been extremely useful during the COVID-19 pandemic, when demand for online shopping has skyrocketed.

“Some of you may ask whether this is the beginning of a new rhythm in which we announce large-scale discounts every few months,” Galetti said in a note Wednesday. “That’s not our plan,” he said.

‘PROJECT DAWN’

Amazon inconvenienced thousands of workers on Tuesday by mistakenly sending an email to some Amazon Web Services staff that referred to the layoff plan as “Project Dawn.”

The “full scope” of the outages was not known, but employees from multiple AWS units, Alexa voice assistant, Prime Video, devices, advertising and last-mile delivery, among others, said they were affected online and in emails to Reuters. Other roles affected include Kindle, a group within Amazon’s procurement unit, and supply chain optimization.

Amazon, which began corporate layoffs on Tuesday by announcing plans to close Fresh and Go stores, did not respond to Reuters’ request for comment.

The layoffs also underscore how artificial intelligence is changing corporate workforce dynamics. Significant advances in AI assistants are helping organizations perform tasks quickly and precisely, from routine administrative tasks to complex coding problems, driving widespread adoption.

Jassy said last summer that increased use of AI tools will mean greater automation of tasks, which will lead to corporate job losses.

Executives at the World Economic Forum’s annual meeting in Davos last week said that as jobs disappear, new ones will emerge; AI will be used as an excuse by companies planning to cut jobs, two executives told Reuters.

Tech giants including Amazon, Facebook parent Meta Platforms and Microsoft have sharply increased hiring during the COVID-19 pandemic demand surge and have recently begun restructuring. UPS, Pinterest and ASML have announced staff reductions in recent days.

For its e-commerce segment, Amazon is investing in robotics in its warehouses to speed up packaging and deliveries, reduce dependence on human labor and reduce costs.

Shares of Amazon, which will report quarterly results next week, fell 2.1% in regular trading Wednesday.