Big Tech tightens its belt amid US economic woes – Reuters

Amazon and two other big US tech companies are the latest big names in US business to sound the economic alarm, announcing job cuts and other cost containment measures as they prepare to « more difficult times ».

Ride-sharing giant Lyft Inc. revealed on Thursday that it would cut its workforce by 13%, eliminating about 700 jobs. Stripe Inc., a major payments processor, announced a 14% reduction in its workforce, putting about 1,000 people out of work. Amazon, the world’s largest retailer, has told employees it is freezing corporate hiring for at least the next few months.

“We face stubborn inflation, energy shocks, higher interest rates, shrinking capital budgets and scarcer start-up funding,” Stripe co-founders Patrick and John Collison said in a memo to employees. Stripes underestimated the impact of a widespread economic downturn, they added, and must now cut costs « to adapt to the world we are heading into. »

Many parts of the developed world appear to be heading into recession. We believe that 2022 represents the start of a different economic climate.

Lyft offered a similar explanation to its employees, saying it needs to get leaner to deal with a « likely recession » and rising insurance costs. “We have worked hard to reduce costs this summer,” co-founders Logan Green and John Zimmer said, adding that the job cuts had become necessary after a previous hiring freeze and that other measures had not tightened spending enough.

Amazon cited economic uncertainty when announcing its hiring freeze. “We face an unusual macroeconomic environment and want to balance our hiring and investments while being mindful of this economy,” Beth Galetti, senior vice president for people experience and technology, told employees. Amazon CEO Andy Jassy has taken other steps in recent months to cut costs, such as closing call centers, halting a telehealth service and canceling or postponing of the construction of a new warehouse.

Big Tech’s latest belt-tightening follows job cut announcements in recent weeks by companies including Microsoft Corp., Oracle Corp. and Facebook parent company Meta Platforms Inc. Like Amazon, Google and Apple Inc. have announced hiring freezes. Billionaire Elon Musk plans to lay off nearly half of Twitter’s 7,500 employees after completing his $44 billion takeover of the social media platform last week, according to a Bloomberg report.

Nonetheless, ahead of the midterm US congressional elections next week, President Joe Biden and members of his administration have denied that the country’s economy is collapsing. Biden, in fact, called the US economy « strong as hell. » Although Thursday brought more announcements of job cuts, White House spokeswoman Karine Jean-Pierre told reporters that the strength of the U.S. labor market is “Simply not compatible with a recession, or even with a pre-recession. We believe our economy is incredibly resilient.

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