Amazon layoffs highlight impact of AI, some experts say ‘wake-up call’

2:45A A sign is seen outside the Amazon Go store at Amazon.com Inc. headquarters on May 20, 2021 in Seattle. David Ryder/Getty Images

Amazon plans to lay off thousands of corporate workers despite billions in revenue and lucrative business lines from e-commerce to cloud computing. The reason lies in artificial intelligence, the company said in a memo to employees on Tuesday.

“Some may ask why we’re cutting roles when the company is running efficiently. good,” wrote Beth Galetti, Amazon’s senior vice president of people and technology.

“We must remember that the world is changing rapidly. This generation of artificial intelligence is the most transformative technology we’ve seen since the Internet, and it allows companies to innovate much faster than ever before,” added Galetti.

The major job cuts at the high-profile tech giant are the latest in a series of layoffs that top executives are blaming on AI, citing increased efficiency and a shift in company priorities, some experts told ABC News.

Such job losses highlight the threat AI poses, particularly to some white-collar jobs, but the technology’s ultimate impact on business remains uncertain, and other factors, such as a slowing economy, may be to blame for some of the corporate downsizing, they added.

“It’s a wake-up call. And if Amazon does it, other companies can do it, too,” Harry Holzer, a professor of public policy at Georgetown University and former chief economist at the U.S. Department of Labor, told ABC News.

But he added: “Artificial intelligence will affect many workers and businesses in ways that we can’t predict. We have to constantly monitor it and help them adapt as changes happen.”

The new round of layoffs at Amazon followed other high-profile job cuts related to artificial intelligence. Software company Salesforce cut 4,000 customer service jobs in September, just months after the company said AI could do up to 50% of its jobs. Lufthansa cut 4,000 positions the same month, citing “increasing use of artificial intelligence”

Online learning company Chegg said on Monday it has cut 45% of its global workforce, or 388 jobs, as new artificial intelligence tools significantly reduce the web traffic previously generated by Google search. Chegg has cut the number of employees as it invests its own funds in artificial intelligence in an effort to provide services with a “significantly lower cost structure,” the company said.

This year, the World Economic Forum surveyed 1,000 large companies worldwide, estimating 92 million jobs lost over the next five years as a result of AI, but expecting 170 million jobs to be created.

Amazon CEO Andy Jesse speaks during the keynote address at the AWS re:Invent 2024 conference, hosted by Amazon Web Services, at the Venetian Las Vegas on December 3, 2024 in Las Vegas. Noah Berger/Getty Images

AI-related layoffs at Amazon and some other firms reflect a “draining of middle-skilled workers,” Lynn Wu, a professor of operations, information and decision-making at the University of Pennsylvania, told ABC News.

“Amazon is not cutting warehouse workers. Robots can’t do what hands do yet,” Wu said. “And very highly skilled workers — people who design robots and create AI — are still in high demand.”

The new series of layoffs affected part of Amazon’s global workforce, which numbered 1.56 million people at the end of last year.

Amazon CEO Andy Jesse said in June that the company plans to reposition itself with artificial intelligence, telling employees in a memo that Amazon needs “fewer people to do some of the jobs that are done today and more people to do other types of jobs.”

United Parcel Service (UPS) said on Tuesday that the company has cut 14,000 management positions this year, while cutting another 34,000 operational jobs.

UPS sought to “create a more efficient operating model that is more responsive to market dynamics,” the company said, but its announcement did not mention artificial intelligence.

To be sure, some experts downplayed the impact of artificial intelligence, saying the technology’s productivity benefits remain uncertain and that recent layoffs could be attributed to a host of other factors, including the broader economic slowdown. Many economists expect AI to add new job opportunities even as it eliminates others, they said.

In August, the report was published MIT’s Media Lab found 95% of corporate AI initiatives produce zero profit. The study examined more than 300 publicly announced AI projects, drawing on more than 150 executive surveys.

“AI is an extremely useful, transformative technology, but I think we still need to do more work on it to realize its full effects,” Isabella Loaise, an MIT researcher who studies AI and the workforce, told ABC News. “The role of AI in job losses may be overstated.”

“Companies really, really want AI to work,” Loisa added, but the ultimate impact of their initiatives on the labor market remains unclear. “It’s hard to know,” she added.

Source: abcnews.go.com