Amazon told about 16,000 corporate employees they’ll soon be out of a job early Wednesday morning. It’s part two of a 30,000-person layoff the company began in October. Taken together, it’s the largest layoff in the e-commerce giant’s history, and it marks a dramatic shift in the tech industry from a decade-long talent war to the artificial intelligence race.

Amazon still says the reduction in force is about rightsizing and reducing bureaucracy after over-hiring during the pandemic. Experts believe the repeated rounds of layoffs at Amazon and other big tech companies are intended to free up capital for multi-billion dollar datacenter projects. And although there’s little evidence that AI is replacing jobs outright, some Amazon employees say they’re increasingly asked to rely on AI tools to make up for lost headcount.

Big Tech’s big correction

When Matt McClain started at Amazon in 2020, it was a very different time. The pandemic drove millions of people out of brick-and-mortar stores and onto websites like Amazon. In response, the company hired aggressively to meet the sudden spike in demand.

Amazon’s headcount roughly doubled between 2019 and 2024. Amazon hired McClain in a workforce planning role to help predict how many employees the company would need. And because it was the era of remote work, he was able to relocate from Seattle to Tulsa to care for his ailing father.

“ When you’re in a period of massive growth, it takes a lot more people to make that happen,” McClain said.

Then everything started to change. Amazon led the charge to reverse Covid-era work from home policies, and demanded almost everyone move back to a headquarters location. As the pandemic waned, Amazon’s rate of growth slowed.

“There was a period of massive growth followed by a period of slow down and contraction,” McClain said. “And especially with our view being within talent acquisition … when there is a very quick reaction to go from massive growth to contraction, or even just stabilization, the demand for those recruiters drops so drastically. So when you say we hired more than we needed, we actually hired what we needed at the time, but we needed fewer bodies moving forward.”

At the same time, generative artificial intelligence was rewriting the tech industry’s playbook. Companies began competing to outspend each other on multi-billion dollar data center projects. Expensive tech workers began to look less like an asset, and more like a liability to the decision makers at companies like Amazon.

“ I think that there is a forcing mechanism to this as well where there’s an expectation to be more efficient by using AI,” McClain said.

So began the era of tech layoffs. Amazon and its competitors began slashing jobs in 2022, with new rounds every few months. In October, McClain found himself on the chopping block.

“ I was one of the 14,000 that were informed that there was no longer a need to show up for work,” he said.

The AI-shaped elephant in the meeting room

Amazon says the company grew too bloated during the pandemic, and lost some of its scrappy startup culture.

Speaking with The Information at Davos last week, Amazon CEO Andy Jassy reiterated the company’s goal to be “the world’s largest startup” and said pandemic over hiring led to too many layers of bureaucracy.

“ You’ve got the pre-meeting for the pre-meeting for the meeting,” he said. “People don’t show up with recommendations anymore because they know that the decision’s going to get made three meetings later.”

In the interview, Jassy said Amazon is not replacing laid off workers with AI, but some employees feel managers now expect them to use AI to pick up the slack when their teams shrink. That’s according to two senior employees who spoke on the condition of anonymity because they’re worried about losing their jobs.

Screenshots shared with KUOW show a dashboard that Amazon managers allegedly use to track how often employees use those AI tools, and both employees said they expect AI usage to be factored in during performance reviews.

An Amazon spokesperson said the company does not use AI usage as part of its evaluation process.

Trading tech talent for datacenters?

There is another, less obvious way in which the AI race may be influencing Amazon’s headcount decisions. Where, at one time, tech companies were competing for talent with ever growing salaries and benefits, they’re now fighting to outspend each other on the datacenters that power AI. That means trimming back elsewhere.

“ There’s a lot of pressure on those companies to make cuts based on the investments that they’ve made,” said Andy Challenger of the business coaching firm Challenger, Gray, and Christmas. “Whether they’re really replacing jobs with artificial intelligence today, I think is a lot less clear.”

Wednesday’s layoff comes on the heels of another restructuring announcement from Amazon. The company said Tuesday that it will close all of its Amazon Go and Amazon Fresh stores to focus its grocery business under the Whole Foods umbrella.

RELATED: Tech layoffs drive Seattle-area unemployment above 5%

In Amazon’s hometown of Seattle, tech layoffs have driven the unemployment rate in the metro area to 5.1% — well above the national average. And Challenger expects more layoffs to come this year.

Since being laid off in October, McClain has been focused on finding his next gig and writing a book based on one of Amazon’s core principles: leadership.

“I really am grateful for the time that I had at Amazon,” he said. “The leadership principles will forever change the way I operate, not just in work, but in life … I’m sad to see it over.”

News Source : https://www.opb.org/article/2026/01/28/amazon-lays-off-16000-employees-in-major-reduction-of-force/