Dropbox has announced that it would lay off 500 employees or 16% of its workforce. While the company blamed slowing growth for the decision it also attributed it to the AI pivot which made some roles redundant.
In his blog post, Dropbox CEO Drew Houston said that while the company’s business is still profitable and stable – the growth rates have come down.
He added, “Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business.”
Notably, multiple tech companies have laid off employees this year and over 200,000 tech workers have lost jobs so far in 2023 – even as the US economy added over a million jobs in the first quarter of 2023.
While most companies blamed the slowing growth and economic headwinds like Dropbox has done – there is something different with Dropbox as the company has blamed AI for the job losses – making it perhaps the first major layoff associated with AI.
In his blog, Houston said that the “AI era of computing has finally arrived” which he termed as a more “consequential” reason for the layoffs.
Dropbox Lays Off 16% of the Workforce Amid the AI Pivot
Houston said that ideally, the company would have shifted the impacted employees to other teams.
He however stressed, “our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development.”
Houston also pointed to the massive market opportunity that AI would bring for the company and said, “Over the last few months, AI has captured the world’s collective imagination, expanding the potential market for our next generation of AI-powered products more rapidly than any of us could have anticipated.”
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Notably, among the many apprehensions related to AI have been related to its impact on existing jobs.
Even OpenAI CEO Sam Altman warned that AI could “eliminate” many jobs – while adding that it would create “much better ones.”
Sam Altman Warned of Job Losses Due to AI
According to Altman, “The reason to develop AI at all, in terms of impact on our lives and improving our lives and upside, this will be the greatest technology humanity has yet developed.”
Dropbox Layoffs Show Altman’s Prophesy Might be Coming True.
Meanwhile, calls for regulating AI have been growing – and yesterday Elon Musk met lawmakers over regulatory oversight of AI.
As for tech companies, they continue to invest heavily in AI and Microsoft has committed billions of dollars to ChatGPT’s parent company OpenAI which is currently unlisted.
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As for Dropbox, Houston said he is determined to ensure that the company “is at the forefront of the AI era, just as we were at the forefront of the shift to mobile and the cloud.”
The battle for AI however looks wide open and we’ll get to know the winners and losers in due course.
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This article was written for Business 2 Community by Mohit Oberoi.
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