AWS takes a hit in Amazon’s latest round of layoffs

When Amazon announced it was laying off another 9,000 employees today, AWS employees were not exempt with Amazon CEO (and former AWS CEO) Andy Jassy announcing that the cloud division would be included in today’s round.

TechCrunch learns that about 10% of the current total comes from AWS. The company did not confirm those numbers, instead referring to Jassy’s memo to employees that was released this morning as the bulk of its statement.

According to the memo, the reason the company is making the layoffs in stages is because some managers were still evaluating their departments and weren’t ready when the first round came around. “The short answer is that not all teams completed their analyzes by late fall; and rather than rush into these assessments without proper due diligence, we have chosen to share these decisions as we made them so people have the information as soon as possible,” Jassy wrote.

Ray Wang, founder and principal analyst at Constellation Research, says Amazon had to carefully consider all aspects of the organization, and AWS was no exception. “It’s part of a larger trend of tech companies going lean again, and Amazon had been inflated for the past few years. They finally completed their analysis a few weeks ago and now AWS has cuts as well,” he said. -he declares.

In the company’s latest earnings report early last month, the cloud division’s growth rate fell to 20% from growth of more than 39% the previous year. To make matters worse, Chief Financial Officer Brian Olsavsky telegraphed that growth was slowing even more. “Looking ahead, we expect these optimization efforts to continue to be a headwind to AWS’s growth for at least the next two quarters. So far in the first month of the year, AWS’ year-over-year revenue growth is in the mid-teens,” he said at the time.

In this context, the layoffs should come as no surprise. In fact, the cloud infrastructure market as a whole is experiencing a slowdown in growth. After years of skyrocketing numbers, cloud spend is down, and IIt’s starting to have an impact on the market. At the close of the last earnings reporting cycle, the cloud infrastructure market overall slowed at 21% growthagainst a growth of 36% the previous year.

Additionally, Amazon’s longtime rival Microsoft has been gaining market share. While Microsoft’s growth also slowed in the last quarter, the company has grown faster and is starting to slowly but steadily gain on AWS.