Amazon lays off some employees in its advertising unit

Amazon confirmed that it began to lay off employees from its advertising department on Tuesday as part of Andy Jassy’s efforts to reduce costs.

According to an Amazon spokesperson, Paul Kotas is Amazon's senior Vice President of Advertising, IMDb, and Grand Challenge. He sent a memo to all staff informing them about the layoffs.

Kotas wrote: "As Andy explained a few months ago, during the planning process for 2023, we have been prioritizing our resources to maximize the benefits for customers and long-term success of the business." This process for Ads has included reallocating resources through shifting team members, slowing or stopping certain programmes, or concluding that we did not have the right skills to address our priority. We have taken a number of carefully-considered steps to determine the best way forward. This has led to some roles being eliminated.

Two affected employees claim that the company began notifying employees of their dismissal via email on Tuesday morning. The people who requested anonymity did so because they were not authorized to speak about the situation.

Amazon informed affected employees via email that layoffs would begin on June 20 or July 17 for those who live in New York City and New Jersey. This will be after a transition period of 60-90 days, during which time they can search for a new role within the company.

Uncertainty surrounds the number of people being laid off across the entire advertising unit. Jassy announced Amazon's intention to lay off 9,000 workers last month, in addition to the 18,000 employees already laid off last November and January. These earlier cuts were concentrated in the retail, devices and recruiting groups.

Jassy announced in March that the latest round of layoffs would affect employees at Amazon's advertising division, cloud computing division, Twitch Livestreaming division, and human resources. Around 100 Amazon video games employees were laid off earlier this month.

Amazon has announced the biggest layoffs it's ever experienced in its history. This is after a hiring frenzy during the Covid Pandemic. By the end of 2021 the company's workforce will have grown to over 1.6 million, up from the 798,000 employees in the fourth quarter 2019.

Jassy also takes on a general overview of the expenses for the company as it deals with an economic slowdown and slowing growth within its core retail business. Amazon has frozen hiring for its corporate workforce and cut some experimental projects. It also slowed the expansion of its warehouses.

Jassy's announcement of layoffs at Amazon Web Services and in advertising shows that even two of Amazon’s most profitable and largest businesses are not immune from cost-cutting.

Kotas' full message is here:

Hi Everyone,

I wanted to let you know that we have taken the difficult step this morning of notifying Amazon Ads Team members in the U.S.A. and Canada who are affected by the role reductions. In other regions we follow local policies that require extra time and processes, including consultations with employee representative groups. In other regions, we will communicate with the affected employees according to their policies and timelines. We understand that this is a big news for our entire team and want to give you more information about the decision to eliminate certain roles as well as how we will support our colleagues who are affected.

Andy explained a few weeks back that we have been prioritizing our resources throughout the planning process for 2023, with the goal of maximizing the benefits to our customers and long-term success of the business. This process for Ads has included reallocating resources, either by rearranging team members or slowing or stopping certain programs. It may also have involved concluding that we did not have the skills to meet our priorities. We have taken a number of carefully considered decisions on how to best move forward. This has led to the elimination of certain roles within our organization.

In particular, I would like to thank and acknowledge our colleagues who have been impacted for their work on behalf of Amazon Ads' customers. We are focusing on supporting our team through this transition. To this end, all employees who have had their roles eliminated will be invited to a follow-up personal meeting with the leader of their team, explaining what is next. The affected employees will be paid and receive benefits for 60 days (90 in New York or New Jersey) plus an extra severance package to assist them with finding a new job outside of Amazon.

Even in an uncertain economy, I am very optimistic about what lies ahead. We have a solid foundation, and I am personally excited about the innovation and building that is happening in our organization. Also, I want to thank you all for your empathy and support in this difficult time. If you have any questions, please contact your team leaders or MyHR.

Paul

Watch CNBC's interview with Amazon CEO Andy Jassy about message to investors, AI tools and stock prices