Amazon has become the latest tech giant to make sweeping job cuts among its office staff.
Last week Meta, which owns Facebook, Instagram and WhatsApp, revealed that it will cut 13 per cent of its workforce, while Elon Musk axed half of Twitter’s employees following his successful takeover of the social media site.
The announcements are the latest in a slew of job cuts across Silicon Valley, as experts warn the tech industry is facing a ‘triple whammy’ of a slowing economy, inflation and an end to pandemic-driven growth.
Overall, US-based tech companies have scrapped over 28,000 jobs so far this year, more than double a year earlier according to a report by Challenger, Gray & Christmas, which tracks such announcements.
So just which firms have laid off employees, how many, and what are their reasons for doing so? Here MailOnline answers all the big questions.
US-based tech companies have scrapped over 28,000 jobs so far this year, more than double a year earlier according to a report by Challenger, Gray & Christmas, which tracks such announcements. The graphic above shows the job cuts from some of the major players
Layoffs: Amazon has become the latest tech giant to make sweeping job cuts among its staff
WHAT JOB CUTS HAVE BEEN ANNOUNCED?
Overall US-based tech companies have scrapped over 28,000 jobs so far this year, more than double a year earlier according to a report by Challenger, Gray & Christmas, which tracks such announcements.
Amazon – 10,000
Twitter – 3,700
Meta – 11,000
Microsoft – Fewer than 1,000
Stripe – 1,000
Apple – None as yet
Lyft – 680
Why have there been so many job losses?
The ‘triple whammy’ of a slowing economy, inflation and an end to pandemic-driven growth are all affecting the tech industry.
But according to tech analyst Paolo Pescatore, certain companies have made ‘huge gambles’ which will ‘take many years to come to fruition, let alone think about making a profit’.
He specifically cited Meta and its Metaverse.
Mr Pescatore also blamed the layoffs on ‘a poor earnings quarter for many of the big tech companies.
‘Huge concerns given that we are moving into a recessionary period,’ he told MailOnline.
‘This creates a lot of uncertainty as it is hard to predict consumer behaviour and spending.
‘There is a huge focus on cutting costs and driving greater efficiencies to improve margins for the year ahead.’
He added: ‘There will be further bumps on the road ahead for the next year.
‘Unfortunately it feels like an opportune moment to implement cost-cutting measures with others highly expected to follow suit.’
Tech companies are coming off a period of outsized growth, spurred on by the pandemic, according to Dan Wang, an associate professor at the Columbia Business School.
He told Business Insider that what is happening now is something of a correction, as the tech world recalibrates to a time when people are not spending all their time at home and stuck on their devices.
Amazon – about 10,000 job losses
Online retail giant Amazon had already warned in recent months that it had over-hired during the pandemic, forcing it to introduce a hiring freeze and halt some of its warehouse expansions.
But now it has revealed that some three per cent of its corporate employees will be laid off in what is expected to equate to around 10,000 job losses.
The move comes as the company reportedly lost $1 trillion over the year after its stock plummeted from a high during the pandemic.
As of this autumn, Amazon employed more than 1.5 million full and part-time workers around the world, many in warehouses.
As of Monday morning, the online retail giant was trading at $98.81, down 42 per cent from the same time last year
But a downturn in the global economy has forced the commerce company and many other tech firms to tighten their belts.
Amazon has not yet responded to the reports of job losses, but the cuts are expected to affect divisions such as personal devices, including Alexa – the company’s virtual assistant technology – and e-commerce.
Last week, the retailer said that reducing expenses would be a focus in its annual review of business operations.
‘As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimise costs,’ Amazon had said in a statement.
Founder Jeff Bezos also posted on social media that it was a time to ‘batten down the hatches’.
Earlier this month, Amazon announced a hiring freeze on corporate jobs.
Beth Galetti, the company’s senior vice president of people experience and technology, wrote: ‘We’re facing an unusual macro-economic environment, and want to balance our hiring and investments with being thoughtful about this economy.’
Twitter – around 3,700 job cuts
Twitter laid off half its workforce across teams ranging from communications and content curation to product and engineering following Elon Musk’s $44 billion (£38.7 billion) takeover.
The billionaire entrepreneur said he had ‘no choice’ but to make the job cuts because the firm is losing more than $4million (£3.5million) a day.
The cutbacks affect roughly 3,700 employees, who learned their fate by email earlier this month.
Twitter laid off half its workforce across teams ranging from communications and content curation to product and engineering following Elon Musk’s $44 billion (£38.7 billion) takeover
The billionaire entrepreneur (pictured) said he had ‘no choice’ but to make the job cuts because the firm is losing more than $4million (£3.5million) a day
It said the mass job cuts were ‘unfortunately necessary to ensure the company’s success moving forward’.
Almost all of Twitter’s revenue currently comes from advertising, but in difficult economic conditions many firms are cutting ad budgets.
A number of big brands have halted advertising spending with Twitter, including Pfizer, Volkswagen and General Motors.
This reliance on advertising is something Musk wants to change.
He has been looking for ways to cut costs and make money in different ways, including charging a monthly subscription fee for users to be verified on the platform.
What is the metaverse?
The ‘metaverse’ is a set of virtual spaces where you can game, work and communicate with others who aren’t in the same physical space as you.
Meta founder Mark Zuckerberg has been a leading voice on the concept, which is seen as the future of the internet and would blur the lines between the physical and digital.
‘You’ll be able to hang out with friends, work, play, learn, shop, create and more,’ Meta has said.
‘It’s not necessarily about spending more time online — it’s about making the time you do spend online more meaningful.’
While Meta is leading the charge with the metaverse, it explained that it isn’t a single product one company can build.
‘Just like the internet, the metaverse exists whether Facebook is there or not,’ it added.
‘And it won’t be built overnight. Many of these products will only be fully realized in the next 10-15 years.’
Meta – about 11,000 roles lost
Facebook’s parent company Meta said earlier this month that it would cut 13 per cent of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year.
The announcement was made as the firm grapples with a weak advertising market and mounting costs.
Michael Malone, a veteran tech journalist based in Silicon Valley, told the BBC the industry was facing the ‘triple whammy’ of a dwindling economy, inflation and an end to pandemic-driven growth.
‘No-one’s come up with a really great product, new product in the last few years,’ he said.
‘The possibility was going to be Facebook’s metaverse. But it’s not taking off and it’s draining an enormous amount of money.
‘So the fate of Facebook, I think, is up in the air.’
Like its peers, Meta aggressively hired during the pandemic to meet a surge in social media usage by stuck-at-home consumers.
But the Covid boom-times have petered out as advertisers and consumers pull the plug on spending in the face of soaring costs and rapidly rising interest rates.
After plunging billions into CEO Mark Zuckerberg’s metaverse vision with little to show for it, Meta has been faced with rising costs and shrinking profits.
Meta, once worth more than $1 trillion, is now valued at $256 billion after losing more than 70 per cent of its value this year alone.
Facebook’s parent company Meta said earlier this month that it would cut 13 per cent of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year
After plunging billions into CEO Mark Zuckerberg’s metaverse vision with little to show for it, Meta has been faced with rising costs and shrinking profits
‘Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,’ Zuckerberg said in a message to employees.
‘I got this wrong, and I take responsibility for that.’
Zuckerberg is banking on the metaverse – a virtual world in which people can work and play – being a success.
This could be five or 10 years away, but if it is extremely popular then Meta would see a significant bounceback.
Microsoft – Fewer than 1,000 employees axed
Microsoft laid off under 1,000 employees across several divisions last month.
The layoffs represent less than half of 1 per cent of the company’s 221,000 employees globally, ABC News reported.
But the job cuts affect everything from Microsoft’s Xbox console gaming division to its cutting edge Microsoft Strategic Missions and Technology organisation.
Job losses: Microsoft laid off under 1,000 employees across several divisions last month
In a statement, Microsoft executives said: ‘Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly.
‘We will continue to invest in our business and hire in key growth areas in the year ahead.’
Microsoft executives previously announced in July that the company was laying off less than 1 per cent of its workforce and significantly slow hiring, as its revenue fell short of investor expectations.
The firm recorded $51.9 billion in revenue during the second quarter of the year, having been expected to rake in $52.4 billion.
It had previously recorded blockbuster growth during the Covid pandemic, when consumers and businesses turned to its products as they shifted to a work-from-home model.
Stripe – About 1,000 job cuts
The payment processing platform Stripe is another firm to announce major job losses.
Earlier this month it said it was cutting 14 per cent of its workforce.
CEO Patrick Collison said the pandemic had spurred the company’s growth because of a move toward e-commerce, but in an email to staff he added that he and his brother John, Stripe’s co-founder, had made ‘two very consequential mistakes’.
These were being too optimistic about the internet economy’s near-term growth and growing Stripe’s operating costs too quickly.
“We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding. … [M]any parts of the developed world appear to be headed for recession,’ Collison wrote.
‘We think that 2022 represents the beginning of a different economic climate.’
Salesforce – Hundreds of roles lost
Last week cloud-based software company Salesforce quietly laid off hundreds of employees.
The exact number of jobs cut was unclear, but it was less than 1,000 according to CNBC.
‘Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition,’ a Salesforce spokesperson told CNBC in a statement.
Salesforce had 73,541 employees as of the end of January.
The company said in an August filing that headcount rose 36 per cent in the past year ‘to meet the higher demand for services from our customers’.
Chipmaker Intel is reportedly planning major layoffs, likely numbering in the thousands, in the face of a slowdown in the personal computer market.
The company said recently that it would reduce costs by $3 billion in 2023, before ramping that up to $10 billion by 2025.
CEO Pat Gelsinger told Reuters that ‘people actions’ would be part of its cost-reduction plan.
Chipmaker Intel is reportedly planning major layoffs, likely numbering in the thousands, in the face of a slowdown in the personal computer market
The adjustments would start in the fourth quarter, Gelsinger said, but did not specify how many employees would be affected.
Some Intel divisions, including the sales and marketing group, could be cut by up to 20 permcent, Bloomberg News reported last month, citing people with knowledge of the situation.
Although Apple has not yet announced any major layoffs, CEO Tim Cook told CBS Mornings that it is slowing some hiring as well.
‘What we’re doing as a consequence of being in this period, is we’re being very deliberate in our hiring,’ he said. ‘That means we’re continuing to hire, but not everywhere in the company are we hiring.’
At the same time, though, Cook said ‘we don’t believe you can save your way to prosperity.’
‘We think you invest your way to it,’ he added.
Snap, which is the company behind Snapchat, said at the end of August that it was cutting its workforce by 20 per cent.
These job losses affected some 1,200 employees, with the company’s full-time workforce about 6,400 as of June.
Ride-hailing firm Lyft said that it would lay off 13 per cent of its workforce, or about 683 employees, after it already cut 60 jobs earlier this year and froze hiring in September.
Lyft said in a regulatory filing it would likely incur $27 to $32 million in restructuring charges related to the layoffs.
‘We are not immune to the realities of inflation and a slowing economy,’ Lyft’s founders wrote in the memo to staffers.
Ride-hailing firm Lyft said it would lay off 13 per cent of its workforce, or about 683 employees, after it already cut 60 jobs earlier this year
The company’s share price has fallen 76 per cent since the beginning of the year and currently stands at around $10, compared to nearly $45 in January.
Announcing the job cuts in a memo seen by the Wall Street Journal, Lyft founders John Zimmer and Logan Green told staff: ‘There are several challenges playing out across the economy.
‘We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up.
‘We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives.
‘Still, Lyft has to become leaner, which requires us to part with incredible team members.’
Lyft has about 4,000 employees, not including its drivers.
HALF OF CURRENT JOBS WILL BE LOST TO AI WITHIN 15 YEARS
Kai-Fu Lee, the author of AI Superpowers: China, Silicon Valley, and the New World Order, told Dailymail.com the world of employments was facing a crisis ‘akin to that faced by farmers during the industrial revolution.’
Half of current jobs will be taken over by AI within 15 years, one of China‘s leading AI experts has warned.
Kai-Fu Lee, the author of bestselling book AI Superpowers: China, Silicon Valley, and the New World Order, told Dailymail.com the world of employments was facing a crisis ‘akin to that faced by farmers during the industrial revolution.’
‘People aren’t really fully aware of the effect AI will have on their jobs,’ he said.
Lee, who is a VC in China and once headed up Google in the region, has over 30 years of experience in AI.
He believes it is imperative to ‘warn people there is displacement coming, and to tell them how they can start retraining.’
Luckily, he said all is not lost for humanity.
‘AI is powerful and adaptable, but it can’t do everything that humans do.’
Lee believe AI cannot create, conceptualize, or do complex strategic planning, or undertake complex work that requires precise hand-eye coordination.
He also says it is poor at dealing with unknown and unstructured spaces.
Crucially, he says AI cannot interact with humans ‘exactly like humans’, with empathy, human-human connection, and compassion.