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Tech Giants Cut Costs Despite Risky Long-term Investments: A Look at the Downsizing Strategies of Amazon, Google, and Facebook

In recent news, tech giants Amazon, Google, and Facebook have been downsizing their operations while still investing billions in risky long-term projects. The pandemic has forced these companies to make tough decisions so that they can survive the economic fallout.

Amazon recently cut employees from its AI assistant Alexa division due to an operating loss of more than $5 billion a year. This comes on the heels of its first annual net loss in 2020. To reduce costs, TCI Fund Management, which holds a large stake in Alphabet (Google’s parent company), urged Google to lay off workers and reduce spending on “moonshot” projects like Waymo. It is estimated that this Other Bets unit has brought in $3 billion over the last five years but has incurred $20 billion in operating losses.

Meanwhile, Facebook is staying committed to spending billions on the metaverse despite investor concerns. With just over 1% of global advertising dollars spent on virtual reality (VR) technology so far, many are worried about the long-term financial implications of this decision. However, Mark Zuckerberg believes that VR could be an important part of connecting people around the world—even if it takes some time for it to become profitable for Facebook.

It’s clear that companies are doing whatever they can to remain competitive during these uncertain times. While Amazon and Google are cutting back on certain expenses and projects, Facebook is taking a riskier approach by investing heavily in virtual reality. Only time will tell which strategy pays off in the long run. Either way, one thing is certain: tech giants are no longer immune to economic downturns and are having to make difficult decisions regarding their operations and investments just like everyone else.