Andy Jassy Seeks Next Big Move After Mass Layoffs

Amazon CEO Andy Jassy, addressing a crowd of sellers in Seattle this September, articulated a vision for the company’s future: to function as the “world’s largest startup.” This entails dismantling bureaucratic layers to enhance agility and maintain a competitive edge in an increasingly dynamic market.

“We’re committed to flattening our organization and minimizing hierarchical levels,” Jassy stated, emphasizing the importance of empowering employees at all levels, reminiscent of Amazon’s early days.

Since succeeding Jeff Bezos in 2021, Jassy has initiated a significant transformation of Amazon’s corporate culture. This includes a return to in-office work post-pandemic and a renewed focus on efficiency, urging employees to achieve more with fewer resources.

The most visible manifestation of this shift occurred last week, with the announcement of approximately 14,000 corporate layoffs, signaling further reductions to come.

During Amazon’s recent earnings call, Jassy reiterated the company’s commitment to operating like a startup, emphasizing the need to “remove layers” to streamline operations.

Sources familiar with the matter, speaking on condition of anonymity, indicate that the next wave of cuts is anticipated to commence in January, following the holiday season and Amazon’s re:Invent cloud conference in early December.

The impact is expected to extend to Amazon’s stores and human resources divisions, also known as people experience and technology, these sources revealed.

These measures are projected to constitute the most substantial round of corporate layoffs in Amazon’s 31-year history. Since late 2022, Amazon has been strategically trimming its workforce, resulting in over 27,000 job reductions. While reductions have continued recently, they have been at a smaller rate.

This cost-cutting drive aligns with broader trends observed across the tech, retail, auto, and shipping sectors. Companies like Meta, Google, and Intel have also implemented strategies to reduce management layers and streamline organizational structures, aiming for enhanced efficiency. Executives attribute these decisions to factors ranging from the rise of artificial intelligence and evolving tariff policies to shifting business priorities and comprehensive cost-cutting initiatives.

Ahead of Amazon’s better-than-expected third-quarter earnings report, Wall Street expressed skepticism regarding the company’s performance. While the stock had seen marginal gains for the year, it significantly trailed the broader market and its megacap peers. However, a subsequent 14% surge over two trading days propelled the stock into positive territory, culminating in a record close on Monday.

However, Jassy faces ongoing challenges as he seeks to reshape the company. These challenges include rising costs, increased competition in the cloud computing sector, delays in Alexa development, and reported employee morale issues.

While Amazon’s core e-commerce operations remain robust, the company, along with other retailers, is navigating uncertainties stemming from evolving trade policies, posing potential risks to cost structures and consumer demand.

Amazon Web Services (AWS), the leading cloud infrastructure provider, is encountering intensified competition from Microsoft and Google, both experiencing faster growth rates. AWS also faces perceptions of lagging behind in securing significant artificial intelligence infrastructure deals. Amazon’s recent $38 billion cloud agreement with OpenAI could mitigate some of these concerns, potentially bolstering its AI capabilities.

Meanwhile, Amazon’s Alexa service, despite its early lead in the voice assistant market, experienced delays in launching an updated version, while generative AI companies, notably OpenAI, intensified competition in the market.

Amazon introduced Alexa+ in February. However, the success of the upgraded Alexa, alongside companion devices launched in September, remains uncertain amidst fierce competition and consumer adoption during the holiday season.

Beyond e-commerce, cloud, and its Prime membership program, Jassy has been actively pursuing avenues for Amazon’s next major growth opportunity, or “pillar.” The company has invested heavily in areas such as satellite internet, healthcare, grocery, entertainment, and self-driving vehicles, with varying degrees of success.

According to individuals familiar with the matter and employee posts on LinkedIn, the layoffs have affected nearly all of Amazon’s business units, spanning logistics, AWS, retail, grocery stores, Prime Video, advertising, and gaming.

Jassy informed investors that the reductions were not solely driven by financial constraints or AI replacing workers. He attributed the decision to addressing a “culture” issue exacerbated by a multiyear hiring spree that resulted in “a lot more layers” and slower decision-making.

Current and former employees expressed concerns regarding the impact of persistent cost-cutting measures and layoffs on morale, coupled with increasing pressure to accelerate innovation, particularly in AI. Amazon declined to comment.

Jassy outlined his plan to flatten Amazon’s structure in September 2024, coinciding with the mandate for employees to return to the office five days a week. His goal was to increase the ratio of individual contributors to managers by at least 15% within each major Amazon organization by the end of the first quarter of 2025.

Additionally, he established a “no bureaucracy email alias” for employees to report unnecessary processes or rules. Jassy mentioned that the email alias led to approximately 455 changes within the company.

Jassy’s cost-cutting initiatives extend beyond layoffs, encompassing the closure of several of Amazon’s physical store chains and the discontinuation of less profitable ventures, including a roving sidewalk robot, telehealth service, health and fitness wearable, and virtual tours initiative.

An employee in Amazon’s cloud unit noted that efforts to reduce management layers and costs have created a sense of “incredible amount of pressure” and increased workload among staffers. The prospect of additional layoffs next year has amplified anxieties within the company.

A staffer in Amazon’s customer support division, who was laid off after 15 years at the company, highlighted how the push to flatten organizations meant “they remove people but not the work.” This individual perceived a disconnect between senior leadership and the workforce.

In the memo announcing the latest layoffs, human resources chief Beth Galetti used the phrase “staying nimble” in the headline.

The phrase quickly became a source of humor and criticism on internal Slack channels and Reddit threads. Memes circulated depicting employees navigating layoffs and organizational changes.

However, not all perspectives are negative. An AWS employee acknowledged that some organizations had become excessively bloated, suggesting that fewer layers could expedite decision-making. A former manager in Amazon’s retail business concurred, stating that the company had overhired in recent years, resulting in an excessive number of management levels.

The impact of AI remains a significant factor.

In June, Jassy indicated that efficiency gains from internal AI adoption would lead to a reduction in Amazon’s corporate staff over the coming years. The company is currently managing the growth of its white-collar workforce.

Simultaneously, Amazon is intensifying its investments in AI infrastructure to remain competitive with other hyperscalers. The company plans to increase capital expenditures to $125 billion this year, up from a previous estimate of $118 billion. CFO Brian Olsavsky anticipates further increases in 2026.

Amazon has also encouraged corporate employees to leverage AI in their work and experiment with internal AI tools. The company monitors AI adoption among employees, with some staffers being advised to increase their usage to accelerate their work or informed that their usage could be considered in performance evaluations.

Workers are requesting clarity and transparency around these initiatives.

Amazon Employees for Climate Justice (AECJ) published an open letter on its website advocating for a “more responsible rollout of AI.”

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

While Jassy argues that AI agents will enhance work and make jobs “even more exciting and fun,” AECJ members suggest potential risks associated with AI adoption.

“Amazon is forcing us to use AI while investing in a future where it’s easier to discard us,” they wrote.

Preston Arquette, who was laid off from Amazon’s e-commerce platform team, raised concerns about whether investments in AI have resulted in material benefits for the company.

“In my role, I didn’t see the kind of efficiencies or improvements that would make you think all these layoffs are necessary,” Arquette said.