It shouldn’t surprise us that big tech is eating itself alive
Another day, another bloodbath on tech street.
This time it was Amazon swinging the axe, announcing plans to cut 18,0000 roles, while Salesforce – a software outfit – said it planned to take out 8,000. Amazon’s layoffs will affect its Stores unit – which includes the
core e-commerce business – along with (ugh) People, Experience and Technology (PXT).
To you, me and anyone else not addicted to corporate gobbledygook, that’s HR.
At Amazon, the people in this function “operate at the intersection of technology and empathy, reimagining HR conventions”. That there is exactly the sort of thing a hard-nosed finance chief looks at and thinks, you know what? It’s time to get real. We can do without this.
Amazon’s overall number actually represents only a small fraction of the group’s 1.5 million strong global workforce. Frontline roles – the people who process our orders in the “distribution centres” that William Blake would surely substitute for his “dark satanic mills” were he writing a 21st-century Jerusalem – won’t be affected.
But this is still the largest number of layoffs the group has imposed to date, and is far in excess of the 10,000 that were talked about when CEO Andrew Jassy embarked on a review of the business at the end of last year.
That this is happening across Silicon Valley and beyond shouldn’t surprise us. The pandemic-era bonanza these companies enjoyed has evaporated now we can all go out again. A retrenchment was inevitable after the hiring sprees big tech undertook during lockdown, even if the global economy wasn’t in a trough.
Amazon can sometimes look like a corporate death star. The sort of mega-cap monster that the writers of dystopian fiction dream of. A money-making machine. But outside the unequivocally stellar Amazon Web Services, its cloud computing business, the post-pandemic hangover has been brutal.
Alexa, could you find me one giant financial Alka-Seltzer?
Do you want to add that to your Amazon shopping order? Please. We really need your business.
Amazon has conquered shopping, made Oscar-winning movies, and produced the most expensive TV series of all time (Rings of
Power). It has rustled up a music service, has even trialled bricks and mortar stores in addition to owning the biggest cloud in the virtual sky. But it has been struggling to make any money from these businesses, and the shares have fallen off a cliff.
The fierce and disruptive competition that could restore their vim can be eliminated with the aid of a fat cheque
When making money gets hard, finding growth gets even harder, and the economy kicks you where the sun don’t shine, you tend to eat your own. You announce cost-cutting programmes, lay off staff, and hope that this will keep Wall Street quiet.
This is exactly what the giants of America’s corporate establishment have been doing since time immemorial. And the establishment is what Amazon and the other great corporate disruptors of Silicon Valley – the innovators, shapers of the lives we lead – now are.
They have entered corporate middle age, turning into corpulent giants. Their once starry-eyed investors, who formerly dined out on revenue growth, now want profits as well. They grouse about the parsimony of share buyback plans and look at the cost base with jaundiced eyes when the quarterly results are released.
There will be more of these announcements on the way. Count on it. The problem for us as these businesses enter a grouchy, job-cutting mid-life when costs are as much in focus as growth, is that for all their recent pains they can still pretty much gobble up anything that might one day become a threat to their dominance.
The fierce and disruptive competition that could restore their vim can be eliminated with the aid of a fat cheque. Why splash
out on innovating if you can take over anyone doing it and push them into a corner of your giant operation? Perhaps at the “intersection of technology and empathy” where original thought gets throttled.
These transactions are mostly too small for the competition authorities to notice. There have been signs of life from the latter, however. The EU has been dishing out fines and threats. The UK’s Competition & Markets Authority even told Facebook/Meta to sell Giphy, an animated image platform, out of its concern about the impact on the market for those.
#BreakUpBigTech? Yes please. Get on with it.
It will inevitably be tough on the people who work for these giant companies. But tougher than it is today? Maybe not. It might ultimately be in their long-term interests. It would certainly be in ours as consumers.
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