Amazon Puts Alexa Under Microscope in Cost-Cutting Review

Amazon is evaluating its Alexa business as the company joins other Big Tech firms in making cost-cutting measures in the face of an economic downturn.

That’s according to a report Thursday (Nov. 9) by the Wall Street Journal, which cites internal Amazon documents that show Amazon’s devices unit, which includes its voice assistant tool Alexa, had an operating loss of more than $5 billion in recent years.

The report says Amazon is considering whether to add new capabilities to Alexa, something that would require a larger investment and would be something of a gamble, as many customers only use the device for a few functions.

This week saw Amazon debut a suite of new features in its Alexa ecosystem, coming as the company looks to connect with young users. The company has also marketed Alexa to seniors as a whole-house voice assistant.

“Even in the last year, Alexa interactions have increased by more than 30%,” Amazon spokesman Brad Glasser said in a statement Thursday to PYMNTS. “We’re as optimistic about Alexa’s future today as we’ve ever been, and it remains an important business and area of investment for Amazon.”

Amazon’s review of Alexa is part of a larger, months-long cost-cutting review, the WSJ report says.  As part of the review, the company has told employees in some divisions to seek jobs in other parts of the company, as those divisions will be suspended or shut down.

Glasser told PYMNTS the company remained “excited” about the prospects for its larger businesses, Alexa among them.

“Our senior leadership team regularly reviews our investment outlook and financial performance, including as part of our annual operating plan review, which occurs in the fall each year,” he said. “As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimize costs.”

Amazon had spoken of a company-wide belt tightening last month following a third-quarter earnings report that showed the eCommerce giant was dealing with the impact of a downturn in consumer spending.

“As we’ve done in similar times in our history, we’re taking actions to tighten our belt,” CFO Brian Olsavsky told analysts, citing unspecified corrective actions such as “pausing hiring in certain businesses” or “winding down products and services” where Amazon believes its resources would be better utilized elsewhere.