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Amazon is cutting 10,000 jobs - even putting Alexa at risk

The online giant Amazon has known only one direction since it was founded: growth.

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Amazon is cutting 10,000 jobs - even putting Alexa at risk

The online giant Amazon has known only one direction since it was founded: growth. Founder Jeff Bezos has long been known to not care about profits, despite the prophecies of doom from shareholders and analysts. Sales alone should increase, and with it the number of employees in the group.

25 years ago, shortly before the IPO, the group had just 614 employees - ten years later there were already 17,000, today Amazon employs over 1.6 million people. The news that the group wants to cut 10,000 jobs seems downright banal.

Because: The number of workers fluctuates more than that every Christmas business, would affect about three percent of employees in management and development. Bezos has cut jobs on individual teams a few times, such as during the company's Fire smartphone debacle in 2014, but it's always been done inconspicuously.

The imminent austerity round is also evidence of a fundamental change of direction because it is so public: Andy Jassy, ​​Bezos' successor, has to bow to cost pressure and cancel, even though sales in the past third quarter grew by a whopping 15 percent. Because the group's profit fell significantly - and Jassy cannot free himself from the constraints of the stock market as much as Amazon's father, Bezos.

He wants to react in good time to the collapsing economy and inflation and is pulling the brakes. HR manager Beth Galetti explained the reasons for this in a blog post at the beginning of November by announcing a hiring freeze. "We are facing an unusual macroeconomic environment," writes the top manager. "This is not the first time in our past that we have faced an uncertain and challenging economy."

The fact that Jassy is now cutting jobs is not least a direct consequence of the boom in the two pandemic years 2020 and 2021: Amazon benefited like no other Internet giant from the fact that its customers were forced to sit at home and only spend their money on online shopping could.

In these two years alone, the group doubled the number of its employees, from 800,000 to 1.6 million. The giant Amazon had perhaps largely ignored the fact that this was perhaps an overly optimistic investment, that the pandemic was almost inevitably followed by an economic crisis - now, under the new CEO, reality is taking hold.

The news about the austerity program first appeared in the “New York Times”, which quotes anonymous managers from the Seattle headquarters – but the company does not yet want to officially communicate the job cuts. In any case, at the request of WELT, the German subsidiary could not say anything about whether jobs would also be cut in Germany.

According to the US media, however, the job cuts will by no means affect the simple workers in Amazon's ranks, the parcel drivers or warehouse workers - on the contrary, all hands are currently needed here in the Christmas business, traditionally the group hires additional temporary workers from October to December every year.

Instead, Amazon is laying off developers and managers in product development who were desperately wanted and hired en masse just a few months ago, as well as external temporary workers in recruitment - apparently Galetti assumes that the hiring freeze will last longer.

According to the reports, Andy Jassy is particularly questioning a sacred cow in which his predecessor Jeff Bezos saw perhaps the group's greatest consumer success: Amazon's hardware team is to be reduced, the further development of the smart assistant Alexa and the Echo Smart Home Loudspeakers can be turned down a bit.

Although the combination of Echo speakers, Fire TV devices and voice recognition is currently the most successful smart home ecosystem, it far exceeds the sales figures of Google and Apple's competing offers.

In the home market of the USA, Amazon has a market share of 70 percent in the smart home segment. So far, however, she has not been able to fulfill the promise that Bezos has always associated with Alexa: users will not buy via voice control.

Hardly any customer knows or uses the dozens of skills that Amazon's programmers have taught the artificial intelligence - most customers can't get beyond shouting music requests, asking about the weather or commands like "Alexa, lights out in the living room".

The constant advertising emails to all users in which Amazon asks them to have Alexa tell them jokes in Bavarian or to keep shopping lists sound almost desperate. Saving a little here seems downright necessary at first glance.

But this is exactly where the austerity wave could also hit Amazon's German employees: In Berlin, the group operates a large development center for artificial intelligence, from which many algorithms for the Amazon hardware come. The group only opened a development center for speech recognition in Aachen in 2017, which has grown rapidly since then. Many German Alexa developers work here too, and they may now have to fear for their jobs.

However, the fact that Amazon is now cutting jobs in no way means that the group is not continuing to build capacities - the austerity measures also bring a change in direction: less consumer hardware, more business. Andy Jassy wants to continue to grow, especially in the crisis-resistant healthcare market.

Almost unnoticed, Amazon announced a completely new telemedicine service for the US healthcare sector called “Amazon Clinic” on Tuesday. It could grow into a marketplace for health services in the future - and would then probably be more important and profitable for the group than all Alexa devices.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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