Amazon Reportedly Reviewing ‘Unprofitable’ Units. What’s Next?

Amazon is reportedly undertaking a review of “unprofitable” business units, including the devices unit responsible for the Alexa voice-activated assistant.

That report from The Wall Street Journal suggests the e-commerce company is following other tech giants in tightening the proverbial belt, although the ultimate impact on its technologists is unclear. In recent weeks, a number of prominent tech companies have unleashed layoffs, including Salesforce and Meta.

Amazon recently put a hiring freeze into place until 2023. “With the economy in an uncertain place and in light of how many people we have hired in the last few years, Andy and S-team decided this week to pause on new incremental hires in our corporate workforce,” read a note posted on Amazon’s corporate blog Nov. 2. “We anticipate keeping this pause in place for the next few months, and will continue to monitor what we’re seeing in the economy and the business to adjust as we think makes sense.” (The ‘Andy’ in that statement refers to Andy Jassy, Amazon’s CEO.)

Although Amazon enjoys a market-share advantage in tech arenas such as cloud computing (thanks to Amazon Web Services, which generates substantial profits) and voice-activated assistants (thanks to the aforementioned Alexa), its bottom line is perpetually dependent on consumer spending—and if people decide to cut back on their spending due to a recession, it could have a ripple effect on the company’s strategy. According to the Journal, Amazon’s devices unit “had an operating loss of more than $5 billion a year” in some recent years, despite the burgeoning popularity of Alexa-powered hardware.

If that didn’t make things tricky enough for Amazon’s executives, retaining valuable tech talent remains an issue within the company. In February, for example, it boosted maximum base pay for corporate and technology employees from $160,000 to $350,000. By summer, The Information reported that the company had followed up the increase in base pay by handing out “record amounts” of stock, including 138 million restricted stock units to employees in the second quarter of 2022.

Companies like Amazon can freeze hiring and examine whether to cut back on unprofitable units, but ultimately they also need highly specialized tech professionals to keep everything running. At some point, Amazon will need to begin hiring again if it wants to stay ahead of its competitors in various segments.