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Amazon Is Reviewing Some of Its Businesses in a Cost-Cutting Effort

UTC by Godfrey Benjamin · 3 min read
Amazon Is Reviewing Some of Its Businesses in a Cost-Cutting Effort
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American multinational technology company, Amazon is reportedly undergoing a comprehensive review of its business units in an effort to identify areas it needs to prune workers from.

As reported by the Wall Street Journal (WSJ), the company’s Alexa business is one of the major areas it is critically scrutinizing. Per the report, Inc‘s (NASDAQ: AMZN) Chief Executive Officer Andy Jassy is leading the review process and with Alexa generating more losses than profit, the company is looking at laying off some of the 10,000 employees that are working in that unit. Retrenchment is one of the possibilities it is considering for Alexa as it is also likely to add new capabilities to the service.

The new capabilities it plans to add will require further investment, but it may make the gamble if the move helps it win new markets including for the older population as a whole house voice assistant.

“Even in the last year, Alexa interactions have increased by more than 30%,” Amazon spokesman Brad Glasser said in a statement to PYMNTS. “We’re as optimistic about Alexa’s future today as we’ve ever been, and it remains an important business and area of investment for Amazon.”

Reports have it that Amazon has advised the staff in some of the units that it is considering cutting costs in to look for jobs in other parts of the company. It is not sure when a mass job cut will be effected but there are indications that some of the unprofitable outfits will be suspended or scrapped in due course.

Alexa was noted to be printing a $5 billion loss annually and considering the current business climate fueled by sky-high inflation and the corresponding interest rate hikes by the Federal Reserve.

Amazon Still Optimistic About Its Larger Businesses

That Amazon is likely to halt some of its businesses does not mean the firm is struggling in the general sense. Glasser noted that the firm is optimistic about the prospects that lie ahead for its bigger businesses.

“Our senior leadership team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review, which occurs in the fall each year,” he said. “As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimize costs.”

Just like other tech giants like Meta Platforms Inc (NASDAQ: META) which cut off 11,000 jobs this week, Amazon has unveiled plans to tighten its belt across the board.

“As we’ve done in similar times in our history, we’re taking actions to tighten our belt“, CFO Brian Olsavsky told analysts, citing unspecified corrective actions such as “pausing hiring in certain businesses” or “winding down products and services” where Amazon believes its resources would be better utilized elsewhere.

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