On April 10th, Amazon China was reported to have laid off employees.
According to sources close to the news, Amazon China has indeed received a layoff notice email from its headquarters. However, the related layoff plan is not only aimed at employees in the China region, but is part of Amazon AWS's global layoff plan.
According to reports, Amazon believes that there is a certain degree of duplication in job categories such as project management and sales operations. In order to improve efficiency, it has decided to reduce hundreds of positions in specific sales, marketing, and global service groups. At present, Amazon China has not responded to any layoffs.
It is reported that Amazon confirmed a week ago that AWS, the company's cloud computing department, is laying off its physical store technology, sales, marketing, and global service teams, with an expected reduction of hundreds of positions. This department has always been considered one of Amazon's most profitable departments. Amazon's cloud computing business saw annual growth of 29% and 38% in the third and fourth quarters of last year, respectively. In the fourth quarter of last year, AWS's net profit reached nearly $7.2 billion, accounting for more than 50% of Amazon's total operating profit.
However, Amazon AWS experienced a downturn in performance growth in the third quarter of last year, with a growth rate of only 12%, the lowest in nearly a decade. However, in the fourth quarter, its growth rate rebounded to around 13% year-on-year. It is worth noting that although Amazon's market share among cloud infrastructure providers was still far ahead in the fourth quarter, its 31% market share has begun to decline, and Microsoft Intelligent Cloud, which closely follows, surpassed AWS in total revenue of $25.9 billion in the fourth quarter of last year. It can be seen that Amazon's business in the AWS sector is facing significant market competition pressure.
During a conference call after the fourth quarter financial report last year, Amazon stated that they will focus more on the integration of generative AI and AWS for AWS business in the future. Previously, Matt Garman, Senior Vice President of Global Sales, Marketing, and Services at Amazon Cloud Technology, publicly stated that artificial intelligence would be an area for AWS's long-term deep investment.
In fact, news of layoffs related to Amazon has been circulating since 2022, until early 2023 when Amazon CEO Andy Jesse released a full staff letter stating that the company plans to lay off more than 18000 employees, which will affect multiple teams. However, the vast majority of layoffs occur in Amazon Stores and PXT departments. At that time, the open letter mentioned that "due to the uncertain economic outlook and our recent large-scale recruitment, this year's evaluation has become even more difficult. We conveyed the difficult decision to lay off employees in the terminal equipment and book businesses in November, and implemented a voluntary resignation plan for some employees in the Personnel, Experience and Technology (PXT) department." He also stated in 2022 that the annual plan has not yet ended, and further layoffs are expected in early 2023.
It seems that Amazon's overall layoff plan has been ongoing for over a year now. In the previous week's layoff plan for AWS, Amazon stated that such a "strategic shift" would help the company better invest in other business priorities and promote the sustained development of the overall business. This reason may also apply to the company's overall layoff plan.