October 2025 brought Amazon’s largest single-announcement layoff in company history. CEO Andy Jassy told investors the company would cut 14,000 corporate jobs, potentially expanding to 30,000 positions over time. But here’s what makes this different from every other Big Tech restructuring: Jassy explicitly positioned these cuts as “culture-driven,” not about AI or cost-cutting “right now.”
The target? Middle management layers that slow decision velocity and weaken ownership. The goal? Returning to Day 1 Culture principles through organisational flattening.
This case study is part of our comprehensive guide to AI-driven workforce restructuring, examining how the efficiency era is transforming corporate structures. While our foundational guide to understanding AI-driven workforce transformation explores the broader phenomenon, this article focuses specifically on Amazon’s execution and extractable lessons.
This AI-era restructuring offers something most Big Tech announcements don’t – transparent communication from leadership and concrete implementation details you can actually use.
You’ll find extractable lessons here on when to flatten organisations, how to communicate difficult changes, and how to balance AI investment with workforce restructuring. Amazon is executing this at $2 trillion scale, but the principles scale down.
What Exactly Happened with Amazon’s October 2025 Corporate Restructuring?
In October 2025, Amazon announced 14,000 corporate job cuts – the company’s largest single-announcement layoff. The potential expansion could reach 30,000 positions over time, representing less than 2% of Amazon’s 1.5 million workforce.
Beth Galetti, SVP of People Experience and Technology, communicated the workforce reduction to employees. Andy Jassy addressed it on the Q3 earnings call two days later. The cuts represent Amazon’s biggest job reduction since shedding 27,000 positions in late 2022.
The announcement came with an estimated $1.8 billion in severance costs. Amazon’s Q3 2025 quarterly sales grew 13% year-on-year to $180 billion.
The timing matters – this happened during massive growth, not crisis.
Middle management coordination roles across all business units are the primary targets, not specific product or functional areas. Front-line teams and individual contributors are less impacted.
Affected employees receive a 90-day internal placement period to find new roles within Amazon, plus transition support packages. The phased implementation runs through Q4 2025-Q1 2026.
Why Did Andy Jassy Frame the Layoffs as “Culture-Driven” Rather Than AI or Cost Motivated?
“The announcement that we made a few days ago was not really financially driven, and it’s not even really AI-driven, not right now at least. It really — it’s culture” – Andy Jassy on the Q3 2025 earnings call.
Jassy explained that as Amazon added headcount, locations and lines of business in recent years, “you end up with a lot more people than what you had before, and you end up with a lot more layers.” Those layers slow you down. They can weaken ownership of the people doing actual work.
This framing is different. Google emphasises efficiency and AI-driven productivity gains. Microsoft frames changes around skills-based reorganisation. Meta’s “year of efficiency” focused on cost-cutting after metaverse failures. Amazon’s positioning focuses on positive cultural goals, not productivity metrics or financial pressure. This approach contrasts sharply with companies using AI-washing to justify traditional cost-cutting, which we explore in our analysis of the efficiency era framework.
The cultural framing helps maintain employee morale by avoiding AI replacement fears. Jassy acknowledged AI’s transformative potential while separating it from current workforce decisions.
It aligns with Jassy’s broader mission since becoming CEO in 2021 – raise performance standards, enforce discipline, eliminate bureaucracy. The restructuring isn’t an isolated event. It’s part of a multi-year cultural reset.
“We are committed to operating like the world’s largest startup, and that means removing layers” – Jassy on the earnings call. The messaging accepts current pain for long-term organisational health.
What Is Amazon’s Day 1 Culture and How Does It Drive Organizational Structure?
Amazon’s “Day 1” mentality is a culture and an operating model that puts customers at the centre of everything Amazon does. Jeff Bezos wrote in his 1997 Letter to Shareholders: “This is Day 1 for the Internet, and, if we execute well, for Amazon.com.” That letter gets attached to every annual report, even now.
Bezos outlined fundamental measures: relentlessly focusing on customers, creating long-term value over short-term profit, and making bold bets. Those principles have remained consistent for over two decades.
Day 2 is what you’re trying to avoid. It’s when more layered organisational structures, multiple chains of approval, the need to gain consensus, and leaders playing a role in every decision grind decision-making to a halt. Day 2 is eventual stagnation and death.
Day 1 in practice relies on maintaining a long-term focus, obsessing over customers, and bold innovation. The operational mechanisms include Two-Pizza Teams, single-threaded ownership, six-page memos, and bar-raiser hiring.
Two-Pizza Teams means the team is small enough to be fed with two pizzas. Keeping teams small empowers them with the autonomy and speed they need to act as owners for their product and its customers.
The restructuring aims to remove organisational elements trending toward Day 2 characteristics. Middle management adds layers, slows decisions, requires consensus. That’s Day 2. Removing it returns to Day 1. For a detailed analysis of which roles are most vulnerable in organisational flattening, including Amazon’s specific impact on middle management, see our comprehensive vulnerability assessment.
How Does Organizational Flattening Work in Practice at Amazon?
At Amazon and AWS, Two-Pizza Teams have single-threaded ownership over a specific product or service. These are small, decentralised teams of 10 or less people with a single-threaded focus on a single service.
Single-threaded ownership extends across the full customer experience and the entire lifecycle of a product or service. Two-Pizza Teams do not hand over something they’ve launched to another team to run. They own it from ideation through execution and operations.
Two-Pizza Teams need the right resources embedded within them – engineering, testing, product and program management, operations. This structure minimises the need for matrixed communication or bureaucracy. It enables rapid decision-making by the people closest to customers’ needs.
As demands grow, rather than expanding the team, Amazon looks for ways to split teams into separate Two-Pizza Teams working on single-threaded sub-areas. This mitosis maintains a flatter organisational structure that preserves agility, autonomy, and single-threaded ownership.
Amazon fundamentally changed technical architecture to microservices to support this organisational structure. They decoupled monolithic architecture into a vast network of single, standalone services. The technical and organisational structures must reinforce each other.
The two-pizza structure promotes team accountability. Faster innovation and experimentation helps lower the costs of failure – learnings come quicker and at lower stakes.
What Role Did AI Actually Play in Amazon’s Decision to Cut 14,000 Jobs?
According to Jassy, AI is not driving the current restructuring “right now,” though Amazon acknowledges its transformative potential. Industry analysis provides additional context.
Nate Suda, senior director analyst at Gartner, states that “The data is unequivocal: nearly four in five layoffs in the first half of 2025 were entirely unrelated to AI, and less than 1% were a direct result of AI productivity”. Amazon’s move is what Gartner calls a strategic “talent remix.”
“These layoffs are a strategic reallocation of human capital to cut costs in some areas to fund high-priority, capital-intensive AI and cloud-computing investments” – Nate Suda. The company is reallocating roles, not eliminating them because AI made their roles obsolete.
The numbers tell the story. Amazon’s guidance in October for total 2024 CAPEX spend was $75 billion, but ended the year at $83.9 billion. CAPEX guidance for 2025 is a “reasonably representative” $105 billion. The vast majority goes toward expanding AWS and scaling AI infrastructure. For a detailed framework on quantifying these cost savings and measuring Amazon’s productivity claims, see our ROI analysis guide.
AI’s indirect role enables smaller teams to operate autonomously through better tools, reducing coordination overhead that middle managers previously handled. The restructuring funds AI investments through workforce reallocation rather than eliminating roles made obsolete by automation.
How Does Amazon’s Restructuring Approach Compare to Other Big Tech Companies?
Amazon isn’t the only Big Tech giant embracing the “Great Flattening”. Google and Microsoft have been trimming layers of managers too, aiming to move faster and reduce organisational layers. But the narratives differ.
Google emphasises efficiency and AI-driven productivity claims. Microsoft frames changes around skills-based transformation and cloud-first architecture. Meta’s approach focused on aggressive cost-cutting and AI investment reallocation after the metaverse pivot failed.
Amazon positions cuts as returning to cultural principles rather than responding to external technology or market pressures. Jassy’s cultural framing contrasts with competitors’ AI productivity and efficiency messaging.
The financial context is comparable across all four companies. The four hyperCAPEX companies – Amazon, Google, Meta and Microsoft – collectively spent over $251 billion on CAPEX in 2024, up 62% from 2023’s $155 billion. For fiscal year 2025, big tech’s total capital expenditure is slated to balloon enormously, surpassing $400 billion.
Everyone’s spending massive amounts on AI infrastructure. But only Amazon is framing workforce restructuring as culture-driven rather than AI-enabled or efficiency-focused.
What Communication Strategies Can CTOs Learn from Andy Jassy’s Approach?
Jassy frames difficult changes as returning to core principles rather than external necessity. The messaging separates AI’s transformative potential from current workforce decisions, reducing employee anxiety about automation.
Multiple communication channels maintained consistent narrative. Beth Galetti’s employee memo, Jassy’s investor earnings call, media statements. Beth Galetti communicated to employees that “this generation of AI is the most transformative technology we’ve seen since the Internet” while emphasising that the company needs to be organised more leanly with fewer layers.
The approach accepts current pain for long-term organisational health rather than promising immediate benefits. That’s honest. Performance standards enforcement connected to restructuring demonstrates broader cultural reset, not isolated cost-cutting.
Here’s what you can extract:
Use cultural rationale focusing on speed, ownership, and organisational health. Don’t lead with productivity metrics or cost savings.
Acknowledge transformative potential of technology while clarifying it’s not driving current decisions. Jassy didn’t deny AI’s impact – he just separated it from the workforce restructuring timeline.
Maintain consistency across all communication channels and stakeholder groups. Employees heard the cultural message from Galetti. Investors heard the same cultural message from Jassy on the earnings call. Media got the same narrative.
Connect difficult changes to broader strategic initiatives. The restructuring wasn’t presented as a standalone cost-cutting measure. It was part of ongoing performance standards enforcement and cultural evolution since 2021.
Be honest about trade-offs. Don’t promise immediate productivity gains when teams need time to adjust to increased autonomy and new responsibilities.
For a comprehensive playbook on implementing these communication strategies and change management approaches, including detailed frameworks for workforce transitions, see our full implementation guide.
How Can CTOs Implement Organizational Flattening in Their Own Companies?
Start with cultural diagnostics. Identify Day 1 vs Day 2 characteristics in your current organisation. Map approval chains and decision velocity bottlenecks to find unnecessary management layers.
Design Two-Pizza Team structures with clear single-threaded ownership boundaries. Single-threaded leaders help provide a strategic vision – and then get out of their team’s way. Team leaders need to help remove obstacles as opposed to being a barrier through which all decisions need to pass.
Align technical architecture with organisational structure. Amazon fundamentally changed technical architecture to microservices, decoupling monolithic architecture into a vast network of single, standalone services. You need the same alignment. Microservices enable team autonomy by reducing dependencies.
Phase implementation. Pilot flattening in one division before company-wide rollout. Start with pilot programmes to test applications on a smaller scale, minimising risks. Focusing on specific pilot projects helps identify challenges and refine strategies for broader implementation.
Communicate cultural rationale, not just cost or efficiency benefits. Use the Day 1 vs Day 2 framework to explain why you’re making changes. Focus on speed, ownership, and customer proximity.
Provide increased autonomy training for individual contributors taking expanded ownership. Investment in people skills must parallel investment in technology. Roughly a third of an organisation’s AI programme budget should go to people through upskilling, reskilling, change management.
Measure decision velocity and ownership clarity improvements, not just headcount reduction. Track how fast teams can ship features. Track how clearly ownership boundaries are defined. Track customer satisfaction improvements from teams closer to customer needs. Our guide to measuring AI ROI and productivity gains provides detailed frameworks for quantifying these improvements.
You need governance to identify when autonomous teams duplicate work or develop redundant solutions. Two-Pizza Teams are not immune to limitations – with so many autonomous teams running fast, there is a risk of duplication and siloed development. Have mechanisms to catch and address this.
FAQ Section
How many jobs is Amazon actually cutting in this restructuring?
The announced total is approximately 14,000 positions, though this could grow to 30,000 depending on divisional restructuring outcomes. The cuts primarily target middle management layers across corporate and AWS divisions.
Is Amazon’s restructuring really about culture or is it cost-cutting disguised?
Andy Jassy explicitly positioned the restructuring as culture-driven on the Q3 2025 earnings call, emphasising return to Day 1 principles over cost reduction “right now.” However, the cuts do fund massive AI infrastructure investments ($75 billion+ in 2024) through workforce reallocation rather than pure cultural motivation.
What departments are most affected by Amazon’s layoffs?
AWS and corporate functions are explicitly mentioned as affected divisions. Middle management coordination roles across all business units are primary targets, rather than specific product or functional areas. Front-line teams and individual contributors are less impacted.
What is the timeline for Amazon’s organizational flattening?
October 2025 announcement with phased implementation through Q4 2025-Q1 2026. Affected employees receive 90-day internal placement periods to find new roles within Amazon, suggesting complete implementation by mid-2026.
How does Amazon’s Two-Pizza Team structure actually work?
Two-Pizza Teams are small autonomous units (typically 10 or fewer people) with single-threaded ownership over complete product or service experiences. Teams operate with minimal external dependencies, make decisions autonomously, and own end-to-end customer outcomes without handoffs to other teams.
What is the difference between Day 1 and Day 2 culture at Amazon?
Day 1 represents customer obsession, high-velocity decisions, nimble structures, and long-term focus. Day 2 represents bureaucracy, slow consensus-driven decisions, layered hierarchies, and eventual organisational stagnation. Amazon’s restructuring aims to remove Day 2 characteristics that accumulated over time.
Is this approach scalable for companies of different sizes?
Yes. Companies with 50-500 employees can adapt Two-Pizza Team structures and organisational flattening principles. Smaller companies actually have advantages – fewer entrenched hierarchies, easier cultural alignment, faster implementation. The key is aligning technical architecture (microservices) with organisational structure (autonomous teams).
What mistakes should CTOs avoid when implementing organizational flattening?
Common mistakes: flattening without clear ownership boundaries, eliminating coordination without enabling autonomy tools, communicating cost rationale instead of cultural benefits, moving too fast without piloting, failing to train individual contributors for expanded ownership, measuring only headcount reduction instead of decision velocity improvements.
How is Amazon’s approach different from other Big Tech layoffs?
Amazon emphasises culture and organisational velocity rather than AI productivity gains (Google), skills-based transformation (Microsoft), or efficiency/cost-cutting (Meta). Jassy explicitly separates AI’s transformative potential from current workforce decisions, an approach other Big Tech companies haven’t taken.
What support is Amazon providing to affected employees?
Affected employees receive 90-day internal placement periods to find new roles within Amazon, severance packages based on tenure, and outplacement services. Beth Galetti’s communication emphasised transition support and internal mobility opportunities before external separation.
Why is Amazon targeting middle management specifically?
Middle management layers create approval chains, slow decision velocity, and diffuse ownership accountability according to Jassy’s Day 1 Culture principles. Amazon believes individual contributors with single-threaded ownership make faster, better decisions than manager-mediated processes.
How does organizational flattening connect to Amazon’s AI investments?
The restructuring funds AI infrastructure investments ($75 billion+ in 2024 capex) through workforce cost reallocation. Additionally, AI tools reduce coordination overhead that middle managers previously handled, enabling smaller autonomous teams to operate effectively.
