Dropbox cuts 16% of staff, cites new AI focus

Dropbox has announced it plans to cut 16% of its workforce, equivalent to around 500 staff, as the company bets on artificial intelligence (AI) to support future operations. 

In a statement yesterday, CEO Drew Houston outlined the reasoning behind the company’s round of layoffs, noting sluggish growth and economic headwinds have “put pressure on our customers” and the business. 

While economic factors have played a role in the decision to cut staff, Houston said that recent developments in the AI space have also played a key role. 

By cutting staff, it appears the company will be able to focus on the development of AI-supported products, on which the company has been bullish in recent months. 

“The AI era of computing has finally arrived,” he said. “We’ve believed for many years that AI will give us new superpowers and completely transform knowledge work. And we’ve been building towards this future for a long time, as this year’s product pipeline will demonstrate.”

Houston said that the acceleration of generative AI products has unfolded “more rapidly than any of us could have anticipated” and that Dropbox seeks to keep pace with competitors exploring the use of AI within core service offerings. 

Crucially, he noted, this means that the company will focus heavily on attracting staff with skill sets spanning AI and early-stage product development.

“In an ideal world, we’d simply shift people from one team to another. And we’ve done that wherever possible,” he said. “However, our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development.”

“We’ve been bringing in great talent in these areas over the last couple years and we'll need even more.”

Dropbox’s decision to cut staff comes amid a period of rising concern over the potential impact of AI on the global jobs market. 

The acceleration of generative AI products such as ChatGPT in the last six months has sparked warnings that human workers could be at risk as companies seek to integrate AI platforms and streamline processes. 

ANALYSIS

Rory Bathgate

The explicit connection between the layoffs and AI is likely to leave a bad taste in the mouths of workers who have been promised for years that these tools will assist them, rather than replace them.

Houston has said the quiet part rather loudly in his admission that Dropbox would move people around rather than engage in layoffs “in an ideal world”.

Artificial intelligence, particularly new generative AI models into which many companies have heavily invested, has arrived at an unfortunate time where worker rights and security are concerned. 

It also provides grim reading for those in the tech industry and beyond who work in a department that could soon adopt AI tools on a larger scale.

The UK’s Trades Union Congress (TUC) has already issued a warning over the potential for AI to endanger workers’ rights, and these conversations will only intensify as practice such as this continues. 

A recent study from Goldman Sachs suggested that as many as 300 million jobs worldwide could be lost to automation. 

The study, published in March, predicted that around 18% of work could become computerized and that AI-related job losses are expected to significantly impact advanced economies. 

“A new wave of AI systems may have a major impact on employment markets around the world,” the company said. “Shifts in workflows triggered by these advances could expose the equivalent of 300 million full-time jobs to automation.”

Sam Altman, CEO at OpenAI, the California tech company behind ChatGPT, has been vocal over the potential risk of AI-related job losses in recent months. 

In an interview with ABC News in March, Altman warned that he was a “little bit scared” of what generative AI tools could mean for the global labor force. 

"It’s going to eliminate a lot of current jobs, that’s true,” he said at the time. “We can make much better ones. The reason to develop AI at all is that I believe this will be - in terms of impact on our lives and improving our lives and upsides - will be the greatest technology humanity has yet developed.”