Andy Jaschy looking for next big play after mass layoff

Amazon CEO Andy Jassy sat on a stage at a Seattle conference center in September, looking out at an audience of thousands of salespeople from around the world visiting his company’s hometown.

He used the opportunity to lay out his vision for Amazon to run like “the world’s biggest startup,” cutting out bureaucracy to move faster and stay competitive.

“We’re working hard to flatten our organization and reduce hierarchies, because in the early days of Amazon, this has been true for many years, and we had very high ownership at every level of the organization, including on the front lines,” Jassy said at the event.

Jassy, ​​who took over the reins from founder Jeff Bezos in 2021, has embarked on a major overhaul of Amazon’s culture in recent years, including a major pivot to office work and encouraging employees to do more with less, with the coronavirus largely in the rearview mirror.

The most notable example came last week, when Amazon announced it would lay off about 14,000 corporate employees and said it expected more layoffs in the near future.

When asked about the price cuts during Amazon’s earnings call on Thursday, Jassy used a familiar line:

“As a management team, we are committed to operating like the world’s largest startup company,” Jassy said. “And that means removing layers.”

The next big wave of cuts is expected to begin in January, after the holiday season and Amazon’s annual cloud conference, re:Invent, in early December, CNBC reports.

Amazon’s stores and human resources department (known as People Experience and Technology) are among the departments affected, according to two people familiar with the matter who requested anonymity because the details are confidential.

In total, the cuts are expected to be the largest in Amazon’s 31-year history, CNBC previously reported. Amazon has been cutting its workforce company-wide since the second half of 2022, resulting in more than 27,000 layoffs. Although the scale is small, reductions have continued recently.

Job cuts have been announced at companies in the tech, retail, auto and shipping industries in recent months, with executives citing a myriad of reasons, from AI and tariffs to changing business priorities and broader cost-cutting efforts. Meta, google, intel and other companies are trying to reduce management layers and increase the size of their organizations in hopes of increasing efficiency.

Wall Street was skeptical of Amazon until it reported better-than-expected third-quarter earnings late last week. The stock has had very limited gains this year, lagging far behind the broader market and Amazon’s large-cap stock. But the stock held firm, rising 14% in two trading days, hitting a new high at Monday’s close.

But while Jassy is trying to restructure the company, many hurdles remain, including rising costs, increased cloud competition, delays with Alexa, and what some employees describe as low morale.

While Amazon’s core e-commerce sector remains healthy, it and other retailers have weathered uncertainty from President Donald Trump’s tariff changes that threaten to increase costs and dampen consumer demand.

Amazon Web Services, a leading cloud infrastructure provider, is under pressure from rivals microsoft and googleis growing rapidly. AWS is also battling the perception that it is lagging in awarding major artificial intelligence infrastructure contracts. Amazon’s $38 billion cloud deal with OpenAI announced Monday may help allay some of those concerns.

Meanwhile, Amazon’s 11-year-old Alexa service, an early leader in the voice assistant market, has been slow to bring an enhanced version to market due to competition from generative AI companies, or OpenAI.

Amazon released Alexa+ in February. But it’s unclear how well the upgraded Alexa and companion devices that debuted in September will fare against rivals, or whether consumers will rush to buy them during the holiday season.

Mr. Jassy has been searching for Amazon’s next opportunity, or “pillar” of growth, after e-commerce, cloud and the Prime membership program. The company has made big bets on satellite internet, health care, groceries, entertainment and self-driving cars, with varying degrees of success.

The layoffs affected nearly every business unit at Amazon, from logistics, AWS, retail and grocery stores to Prime Video, advertising and gaming, according to people familiar with the matter and employees posted on LinkedIn.

Jassy told investors last week that the layoffs were not due to fiscal stress or AI replacing workers. He said the company was dealing with “culture” issues, in part because years of recruiting efforts had made the company “more layered” and slowed down decision-making.

Current and former employees, most of whom requested anonymity to speak candidly, told CNBC that years of continued cost-cutting and layoffs have hurt morale, while increasing pressure to accelerate innovation, particularly around AI.

Amazon declined to comment.

Mr. Jassy outlined plans to flatten Amazon’s organization in September 2024, while also directing employees to return to the office five days a week. He set a goal for each major organization within Amazon to increase the ratio of individual contributors to managers by at least 15% by the end of the first quarter of 2025.

He also established a “less bureaucratic email alias” for employees to flag unnecessary processes and rules. In September this year, Jassy said this resulted in about 455 changes within the company.

Jassy’s cost-cutting efforts include more than just layoffs. He has shuttered several of Amazon’s brick-and-mortar chains and discontinued some unprofitable or unproven businesses, including sidewalk-moving robots, telehealth services, health and fitness wearables, and virtual tour initiatives.

Employees in Amazon’s cloud division said in interviews that efforts to reduce layers of management and lower costs have put staff under “incredible pressure” and made them feel “more on the hook” than before. The possibility of further job cuts next year is causing further uncertainty, the official added.

An Amazon customer support employee who was laid off last week after 15 years said the company’s push to flatten the organization means “people get fired, but jobs don’t get eliminated.” The official said senior leadership appeared to be “very disconnected from workers.”

In the memo announcing the latest layoffs, Human Resources Director Beth Galetti used the phrase “Staying Agile” in the headline.

It quickly became a meme on internal Slack channels and Reddit threads. One image posted to Slack shows Keanu Reeves from “The Matrix” trying to dodge a bullet labeled with the word “employee” and “Stay Agile, Get Stronger, Reduce Depths, Shift Resources.”

Another meme shows a cat with an animatronic bear from the popular horror video game “Five Nights at Freddy’s” hiding behind the cat, with a note labeled “Stay Agile and Stay Organized.”

This does not mean that the change is universally opposed. AWS employees told CNBC that some organizations are too bloated and that reducing the layers could help make decisions faster. A former manager of Amazon’s retail operations said the company had overhired in recent years and had too many layers of management.

Next is the impact of AI.

Jassy said in June that leveraging AI internally would improve efficiency and reduce Amazon’s internal staff over the next few years. The company has already curbed the growth in white-collar employees.

At the same time, Amazon is racing to catch up with other hyperscalers by aggressively investing in AI infrastructure. The company said in its earnings report last week that it plans to increase capital spending this year to $125 billion from the previously expected $118 billion. CFO Brian Olsavsky said that number is likely to increase further in 2026.

Amazon also encourages its employees to leverage AI in their work and regularly experiment with internal tools. The company has been monitoring its employees’ adoption of AI, and some employees have been advised to make more use of the service to speed up their work, or told that their usage could be factored into their performance reviews, according to three people familiar with the matter.

Workers want clarity.

Amazon Employees for Climate Justice, an internal advocacy group, published an open letter on the company’s website last week calling on Amazon executives to establish a “more responsible deployment of AI” and asking employees to co-sign it.

“We have a responsibility to intervene because we are the workers who develop, train, and use AI,” the AECJ wrote.

While Jassy argues that AI agents will transform work for the better, making it “even more exciting and fun” than it currently is, AECJ members suggest that AI agents may be sowing the seeds of their own demise.

“While Amazon forces us to use AI, it is investing in a future that is likely to discard us,” they write.

Preston Arquette, who was fired from Amazon’s e-commerce platform team last week, said he was not “anti-AI” but questioned whether the technology was producing tangible results at the company.

“In my role, I haven’t seen any efficiencies or improvements that would make me think all these layoffs are necessary,” Arquette said in a text message.

Watch: How Amazon built its largest AI data center in one year