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According to the Dropbox executive, artificial intelligence is a major factor in the decision to cut jobs.
Cloud storage company Dropbox announced on Thursday that it will be laying off 500 workers, 16 % of its staff of 3,125 due to slow growth and because “the AI era of computing has finally arrived.” The firm joins many tech companies that have laid off employees in the past months, including Google, Amazon, Microsoft, Yahoo, and Zoom. Layoffs.fyi tracker reports that over 184,000 people have been laid off in the tech sector in 2023 across almost 620 tech firms.
The last time Dropbox laid on employees was in January 2021 amid the Covid-19 pandemic when it laid off 315 workers. The latest round of job cuts was announced in a memo by the firm’s CEO and co-founder Drew Houston and a filing with the Securities and Exchange Commission (SEC). According to the SEC filing, the company expects to incur costs of about $37 million and $42 million as a result of the layoffs, which will be recorded in Q2.
Dropbox will announce its Q1 results on May 4 and expects that they will meet or possibly even exceed expectations. Despite the possibility of positive results and the company being profitable, its CEO says the job cuts are being made as a precautionary measure. Dropbox also plans to deal with slowing growth by investing in new areas.
“While our business is profitable, our growth has been slowing. Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business. As a result, some investments that used to deliver positive returns are no longer sustainable,” wrote Houston.
According to the Dropbox executive, artificial intelligence is a major factor in the decision to lay off part of the staff.
“Second, and more consequentially, the AI era of computing has finally arrived,” he continued. “We’ve believed for many years that AI will give us new superpowers and completely transform knowledge work. And we’ve been building towards this future for a long time, as this year’s product pipeline will demonstrate.”
He added that the affected team members would be notified during the course of the day and would be done with work by Friday, April 28. They will also be entitled to free job placement services, career coaching and up to 16 weeks of severance pay, and one additional week per year of Dropbox tenure. The company says it plans to hold internal town hall meetings today and next week to answer questions from employees.