Amazon scours loss-making units for savings

Amazon is conducting a review of its loss-making business units as part of a broad effort to cut costs for the e-commerce and cloud group, two people familiar with its plans have confirmed.

The review, which is being overseen by Amazon chief executive Andy Jassy, ​​includes a review of the Alexa voice assistant division, the sources said.

Amazon has come under pressure from investors to limit company-wide spending, as its shares have fallen more than 40% this year amid macroeconomic pressure and rising costs of running its logistics operations. Details of the review were first reported by The Wall Street Journal.

“Our management team regularly reviews our investment outlook and financial performance, including through our annual operating plan review, which takes place each fall,” said Brad Glasser, an Amazon spokesperson. .

“As part of this year’s review, we are of course taking into account the current macro environment and considering opportunities for cost optimization.”

Investors seemed to welcome the news. Shares of Amazon closed up 12.2% on Thursday.

It’s the latest major tech group looking to drastically cut spending. On Wednesday, Facebook’s parent company, Meta, announced it would lay off 11,000 employees, or about 13% of its entire workforce. This news followed everywhere 3,700 job cuts at Twitter, which has just been acquired by billionaire Elon Musk.

Amazon has yet to announce such drastic changes to its business, although last week it announced that it was implementing a hiring “paused” due to current market conditions.

“We plan to maintain this pause over the next few months and will continue to monitor what we see in the economy and business to adapt as we see fit,” wrote Beth Galetti, Amazon’s chief human resources officer. , in a note to staff published later on his corporate blog.

In recent months, Amazon has also scaled back or shut down several small experimental units, like its autonomous robot concept, Scout.

He recently told investors that capital expenditure on logistics this year would be about $10 billion lower than in 2021, although the costs of expanding his AWS cloud business would rise.

“We’ve always had this heavy investment ebb and flow,” Joe Quinlivan, vice president of global robotics at Amazon, told the Financial Times. “And then a bit of a step back to see what investments are working, evaluate them and close some of them. Macroeconomic conditions have heightened everyone’s awareness of this.

As part of the business review, it looks at development costs regarding Alexa.

As the market leader in the so-called connected home sector, it has long been feared that most Alexa owners only use a small number of features, such as asking to set timers or play music. music, rather than using the device to make purchases.

“We are as optimistic about the future of Alexa today as we have ever been, and it remains an important business and investment area for Amazon,” Glassar said.

Speaking to the FT earlier this yearDave Limp, head of devices at Amazon, played down those concerns, saying half of Alexa users had interacted with some sort of shopping feature on the device.

“Are we done finding ways to monetize Alexa? No, I think for the developers and for us, we will find other ways as we continue this journey,” he said. “But I feel that progress has been substantial over the past two years.”

Amanda J. Marsh