Inside one of the spheres at Amazon headquarters (company photo)
More bad news came from Amazon today, with 9,000 additional layoffs planned on top of 18,000 previously announced, and efforts to block the $1.7 billion iRobot acquisition both here and in Europe.
On the plus side, the Federal Trade Commission will reportedly not move to block Amazon’s purchase of One Medical – not for a lack of evidence of anticompetitive behavior but because the case is considered unwinnable, Politico reports.
In a memo to staff today, Amazon CEO Andy Jassy announced that the 9,000 new cuts will come mostly from Amazon Web Services (AWS), the people, experience and technology solutions group (PXT), Amazon advertising and the Twitch livestreaming platform. The longtime CEO of Twitch stepped down last month, the latest in a succession of executive exits dating back to Dave Clark’s departure for Flexport in June.
“This was a difficult decision, but one that we think is best for the company long term,” Jassy said. The CEO added the company was looking to streamline costs and headcount “given the uncertain economy … and the uncertainty that exists in the near future.”
“The overriding tenet of our annual planning this year was to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole,” Jassy said.
He added the new cuts weren’t announced until now as some groups had not yet completed their assessments in the late fall, and final decisions on affected roles will be made in mid-April.
Between the fourth quarter of 2019 and the end of 2021, Amazon’s headcount grew from 798,000 to more than 1.6 million, as pandemic-driven demand for ecommerce took off. “This made sense given what was happening in our businesses and the economy as a whole,” Jassy said.
Baird analyst Colin Sebastian said the latest headcount reduction signaled a “tone shift” as it cuts into key Amazon growth segments like AWS and advertising, unlike the previous announcement. “Amazon will continue to make hires in strategic areas where the company is allocating more resources, which we suspect may include healthcare, (internet satellite dish project) Kuiper and grocery,” Sebastian wrote. Project Kuiper is Amazon’s answer to Elon Musk’s Starlink system.
The Federal Trade Commission is considering a lawsuit in the coming months to block the acquisition of
Roomba smart vacuum maker iRobot, Politico reports. Actions involving both Ring cameras and Alexa virtual assistants, based on alleged violations of the Children’s Online Privacy Protection Act, are also under consideration. Alexa was called “a colossal failure of imagination” and “a wasted opportunity” by a former employee, Business Insider reported in December.
Many groups have voiced concerns over the triangulation of consumer data gathered from “smart homes” by Roomba devices, Ring and Alexa, and its privacy implications.
The European Union is investigating the iRobot deal for similar reasons, according to the Financial Times. In December, an MIT investigation found images from Roomba devices found their way onto Facebook and Discord groups.
As the Wall Street Journal reported last month, the FTC is still weighing an antitrust action involving allegations of anti-competitive behavior in Amazon’s ecommerce business, particularly its Prime subscriptions.
MCM Musings: It seems likely that the Amazon headcount reductions aren’t done yet, given how large a buildup was put in place, and the overall state of the business. And with increased regulatory pressure from both the U.S. and the EU, the iRobot purchase may go by the boards as well. Founder Jeff Bezos has avoided a good deal of heat from multiple quarters after stepping down as president and CEO in July 2021, with most of it now falling to Jassy.